Exhibit 10.5

EXECUTION VERSION

THIRD AMENDMENT AND LIMITED CONSENT TO CREDIT AGREEMENT

THIS THIRD AMENDMENT AND LIMITED CONSENT TO CREDIT AGREEMENT, dated as of the
3rd day of March, 2010 (this “Amendment”), is entered into by and among Max
Bermuda Ltd. (f/k/a Max Re Ltd.), a Bermuda company (“Max Bermuda”) and Max
Capital Group Ltd. (f/k/a Max Re Capital Ltd.), a Bermuda company (“Max Capital”
and together with Max Bermuda, each a “Borrower” and collectively the
“Borrowers”), various financial institutions which are parties hereto (the
“Lenders”), Bank of America, N.A., as fronting bank (in such capacity, the
“Fronting Bank”), Bank of America, N.A., as letter of credit administrator (in
such capacity, the “LC Administrator”) and Bank of America, N.A., as
administrative agent for the Lenders (in such capacity, the “Administrative
Agent”).

RECITALS

A. The Borrowers, the Lenders and the Administrative Agent are parties to the
Credit Agreement, dated as of August 7, 2007 (as amended, restated, supplemented
or modified from time to time and in effect on the date hereof, the “Existing
Credit Agreement”, and after giving effect to the amendments in Article II of
this Amendment, the “Credit Agreement”). Capitalized terms used herein without
definition shall have the meanings given to them in the Existing Credit
Agreement.

B. Max Capital and Harbor Point Limited, a Bermuda company organized under the
laws of Bermuda (“Harbor Point”), have proposed a business combination (the
“Amalgamation”) in which Max Capital has formed a wholly owned Subsidiary in
Bermuda in connection with the Amalgamation (“Amalco Sub”) and, pursuant to the
Amalgamation Agreement (as defined below) upon satisfaction of certain
conditions precedent, amalgamate Amalco Sub with Harbor Point with the
amalgamated company (the “Amalgamated Company”) being the amalgamated entity.
Immediately after the Amalgamation, the Amalgamated Company will directly own
100% of the equity interests of (i) Harbor Point Agency Limited and (ii) Harbor
Point Re Limited (“Harbor Point Re”). Max Capital will own 100% of the equity
interests of (i) Max Bermuda, (ii) Max USA Holdings Ltd. (“Max US”), (iii) Max
UK Holdings Ltd. (“Max UK”), (iv) Max Managers Ltd., (v) Max Capital Services
Limited and (vi) the Amalgamated Company.

C. The Borrowers desire to obtain the consent of the Required Lenders to the
Amalgamation prior to the public announcement thereof and to make certain
amendments to the Existing Credit Agreement, and the Administrative Agent and
the Required Lenders have agreed to make such amendments on the terms and
conditions set forth herein. Harbor Point is pursuing an amendment of its
Amended and Restated Credit Agreement dated as of June 12, 2007 (as amended,
restated, supplemented or otherwise modified from time to time and in effect on
the date hereof, the “Harbor Point Credit Agreement”), among Harbor Point,
Harbor Point Re, Harbor Point U.S. Holdings, Inc., Harbor Point Reinsurance
U.S., Inc. (“HPRe US”), the lenders identified therein and Bank of America,
N.A., as administrative agent, in substantially similar form as this Amendment.

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NOW THEREFORE, in consideration of the foregoing and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:

ARTICLE I

LIMITED CONSENT

1.1 Subject to the satisfaction of the conditions set forth in Section 3.1 of
this Amendment and notwithstanding anything contained in the Existing Credit
Agreement to the contrary, the undersigned Lenders hereby each offer their
limited consent to the Amalgamation and to the Parent and Amalco Sub entering
into the Amalgamation Agreement (as defined below) until the earlier of the
following (each, a “Consent Termination Event”) (i) 11:59 p.m. EDT on
September 30, 2010, if the Amalgamation shall not have been consummated and the
conditions set forth in Section 3.2 herein shall not have been satisfied by such
time; (ii) the date upon which the board of directors of either Harbor Point or
Max Capital shall have withdrawn or modified its approval of the Amalgamation in
a manner that is materially adverse to the Lenders; (iii) the date upon which
either Harbor Point or Max Capital advises the Administrative Agent, or the
Administrative Agent otherwise reasonably determines, that the Amalgamation
Agreement (as defined below) shall have been waived, amended, supplemented or
otherwise modified in a manner materially adverse to the Lenders except such
amendments or waivers as have been approved by the Administrative Agent with the
consent of the Required Lenders; or (iv) the fees (to the extent such fees are
due and payable at such time) and, to the extent invoiced, reasonable
out-of-pocket expenses (including legal fees and expenses) specified in the
engagement letter, dated March 3, 2010, among Harbor Point, Max Capital and Banc
of America Securities LLC have not been paid within two Business Days of the
Consent Effective Date (as defined below).

1.2 Upon the occurrence of any Consent Termination Event, the limited consent
set forth in Section 1.1 hereof shall upon written notice of the Administrative
Agent to each of Harbor Point and Max Capital terminate and be of no further
force or effect, and all rights and remedies with respect to the matters set
forth in Section 1.1 hereof of the Administrative Agent and the Lenders under
the Existing Credit Agreement and any other Credit Document shall, without any
further action by any Person, automatically be reinstated as if the limited
consent set forth in Section 1.1 hereof had not become effective; provided that
the occurrence of a Consent Termination Event in and of itself shall not
constitute a Default or Event of Default under the Existing Credit Agreement.
This limited consent shall not constitute or be deemed to be a waiver of,
consent to or departure from, any other term or provision in the Existing Credit
Agreement, which shall continue in full force and effect, nor shall this limited
consent constitute a course of dealing among the parties.

 

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ARTICLE II

AMENDMENTS TO CREDIT AGREEMENT

Effective as of the Third Amendment Effective Date:

2.1 Amendments to Section 1.1 Consisting of New Definitions. The following
definitions are hereby added to Section 1.1 of the Existing Credit Agreement in
appropriate alphabetical order:

Acquisition means any transaction or series of related transactions, consummated
on or after the date hereof, by which the Parent directly, or indirectly through
one or more Subsidiaries, (i) acquires any going business, division thereof or
line of business, or all or substantially all of the assets, of any Person,
whether through purchase of assets, merger or otherwise, or (ii) acquires
securities or other ownership interests of any Person that, following such
Acquisition, will be deemed a Subsidiary of the Parent.

Affected Party means a “Credit Party” as defined in either this Agreement or the
Harbor Point Credit Agreement.

Amalco Sub means the Bermuda company and Wholly Owned Subsidiary of the Parent
formed in connection with the Amalgamation.

Amalgamated Company means the Bermuda company resulting from the amalgamation of
Amalco Sub and Harbor Point.

Amalgamation means the amalgamation, pursuant to the Amalgamation Agreement, of
Amalco Sub and Harbor Point into the Amalgamated Company, with the Amalgamated
Company becoming a Wholly Owned Subsidiary of the Parent.

Amalgamation Agreement means the Agreement and Plan of Amalgamation, dated as of
March 3, 2010 by and among Harbor Point, Amalco Sub and Max Capital, in the form
attached as Annex B to the Third Amendment, as amended, modified, restated or
supplemented from time to time in accordance with the terms of the Third
Amendment.

Amalgamation Date means the date on which (a) the “Effective Time” under the
Amalgamation Agreement occurs, (b) the application for registration of an
amalgamated company in connection with the amalgamation of Amalco Sub and Harbor
Point has been filed with the proper Governmental Authority and (c) the
conditions in Article VI of the Amalgamation Agreement have been satisfied.

Attributable Indebtedness means, on any date, (a) in respect of any capital
lease of any Person, the capitalized amount thereof that would appear on a
balance sheet of such Person prepared as of such date in accordance with GAAP,
and (b) in respect of any Synthetic Lease Obligation, the capitalized amount of
the remaining lease payments under the relevant lease that would appear on a
balance sheet of such Person prepared as of such date in accordance with GAAP if
such lease were accounted for as a capital lease.

Commercial Paper means commercial paper, maturing not more than one year from
the date of issue, which is issued by an entity (except an Affiliate of the
Borrowers) rated at least A-1 by S&P or P-1 by Moody’s or the equivalent rating
from another nationally recognized agency.

 

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Credit Party means Max Capital, Max Bermuda, the Amalgamated Company and, if
such Person executes a Guaranty, Amalco Sub and Harbor Point.

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

Disposition or Dispose means the sale, transfer, license, lease or other
disposition (including any sale and leaseback transaction) of any property by
any Person, including any sale, assignment, transfer or other disposal, with or
without recourse, of any notes or accounts receivable or any rights and claims
associated therewith.

Equity Interests means, with respect to any Person, all of the shares of capital
stock of (or other ownership or profit interests in) such Person, all of the
warrants, options or other rights for the purchase or acquisition from such
Person of shares of capital stock of (or other ownership or profit interests in)
such Person, all of the securities convertible into or exchangeable for shares
of capital stock of (or other ownership or profit interests in) such Person or
warrants, rights or options for the purchase or acquisition from such Person of
such shares (or such other interests), and all of the other ownership or profit
interests in such Person (including partnership, member or trust interests
therein), whether voting or nonvoting, and whether or not such shares, warrants,
options, rights or other interests are outstanding on any date of determination.

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

ERISA Event means (a) a Reportable Event with respect to a Pension Plan; (b) a
withdrawal by any Credit Party or any ERISA Affiliate from a Pension Plan
subject to Section 4063 of ERISA during a plan year in which it was a
substantial employer (as defined in Section 4001(a)(2) of ERISA) or a cessation
of operations that is treated as such a withdrawal under Section 4062(e) of
ERISA; (c) a complete or partial withdrawal by a Credit Party or any ERISA
Affiliate from a Multiemployer Plan or notification that a Multiemployer Plan is
in reorganization; (d) the filing of a notice of intent to terminate, the
treatment of a Plan amendment as a termination under Section 4041 or 4041A of
ERISA, or the commencement of proceedings by the PBGC to terminate a Pension
Plan or Multiemployer Plan; (e) an event or condition which constitutes grounds
under Section 4042 of ERISA for the termination of, or the appointment of a
trustee to administer, any Pension Plan or Multiemployer Plan; or (f) the
imposition of any material liability under Title IV of ERISA, other than for
PBGC premiums due but not delinquent under Section 4007 of ERISA, upon any
Credit Party or any ERISA Affiliate.

 

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Financial Strength Rating means the rating that has been most recently announced
by A.M. Best Company, Inc. as the “financial strength rating” for any Material
Insurance Subsidiary.

Foreign Benefit Plan means any employee benefit plan, pension plan or welfare
plan not subject to ERISA which is maintained or contributed to for the benefit
of the employees of a Credit Party or its Subsidiaries which, under applicable
law, (a) is required to be funded through a trust or similar funding vehicle or
(b) creates or could result in a Lien on any property of a Credit Party or any
of its Subsidiaries.

Guarantee means, as to any Person, (a) any obligation, contingent or otherwise,
of such Person guaranteeing or having the economic effect of guaranteeing any
Debt or other obligation payable or performable by another Person (the primary
obligor) in any manner, whether directly or indirectly, and including any
obligation of such Person, direct or indirect, (i) to purchase or pay (or
advance or supply funds for the purchase or payment of) such Debt or other
obligation, (ii) to purchase or lease property, securities or services for the
purpose of assuring the obligee in respect of such Debt or other obligation of
the payment or performance of such Debt or other obligation, (iii) to maintain
working capital, equity capital or any other financial statement condition or
liquidity or level of income or cash flow of the primary obligor so as to enable
the primary obligor to pay such Debt or other obligation, or (iv) entered into
for the purpose of assuring in any other manner the obligee in respect of such
Debt or other obligation of the payment or performance thereof or to protect
such obligee against loss in respect thereof (in whole or in part), or (b) any
Lien on any assets of such Person securing any Debt or other obligation of any
other Person, whether or not such Debt or other obligation is assumed by such
Person (or any right, contingent or otherwise, of any holder of such Debt to
obtain any such Lien); provided, however, that (i) obligations of any Insurance
Subsidiary (including without limitation any guarantee by the Parent or any of
its Subsidiaries of such Person’s Insurance Subsidiaries’ obligations
thereunder) under Primary Policies, Reinsurance Agreements and Retrocession
Agreements (including security posted to secure obligations thereunder),
(ii) obligations of the Parent or any of its Subsidiaries to guarantee payment
of any real property lease for office premises entered into by a direct or
indirect Subsidiary of such Person in the ordinary course of business,
(iii) obligations of the Parent or any of its Subsidiaries arising in the
ordinary course of business pursuant to letters to certain insurers, reinsurers
and insurance brokers to contribute or cause to be contributed sufficient
capital surplus to any direct or indirect Subsidiary of such Person in the event
that such Subsidiary is unable or unwilling in whole or in part for financial
reasons to make payment of any of its claims, losses or expenses pursuant to
Primary Policies on or Reinsurance Agreements issued to clients of the
addressees of such letters and (iv) agreements by Max Bermuda or any other
Insurance Subsidiary in favor of any of its Insurance Subsidiaries to maintain
the capital of such Insurance Subsidiary at 150% of the required regulatory
level (collectively, the “Permitted Transactions”) shall not be deemed to be
Guarantees or constitute Debt of such Person for the purposes of this Agreement.
The amount of any Guarantee shall be deemed to be an amount equal to the stated
or determinable amount of the related primary obligation, or portion thereof, in
respect of which such Guarantee is made or, if not stated or determinable, the
maximum reasonably anticipated liability in respect

 

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thereof as determined by the guaranteeing Person in good faith, provided that
the amount of any Guarantee described in clause (b) of the immediately preceding
sentence shall be the lesser of (x) the fair market value of such assets at such
date of determination (determined in good faith by the Parent) and (y) the
amount of such Debt or other obligation of such other Person. The term Guarantee
as a verb has a corresponding meaning.

Guaranty means a guaranty substantially in the form of Annex C of the Third
Amendment.

Harbor Point means Harbor Point Limited, a Bermuda company organized under the
laws of Bermuda.

Harbor Point Credit Agreement means the Amended and Restated Credit Agreement
dated as of June 12, 2007 (as amended, restated, supplemented or otherwise
modified from time to time and in effect on the Third Amendment Effective Date)
among Harbor Point, Harbor Point Re, Harbor Point U.S. Holdings, Inc., HPRe US,
the lenders identified therein and Bank of America, N.A., as administrative
agent.

Harbor Point Credit Documents means the “Loan Documents” as defined in the
Harbor Point Credit Agreement.

Harbor Point U.S. Holdings means Harbor Point U.S. Holdings, Inc., a Delaware
corporation.

Harbor Point Re means Harbor Point Re Limited, a Bermuda company.

HPRe US means Harbor Point Reinsurance U.S., Inc., a Connecticut insurance
company.

Insurance Regulatory Authority means, with respect to any Insurance Subsidiary,
the Governmental Authority charged with regulating insurance companies or
insurance holding companies in its jurisdiction of domicile and, to the extent
that it has regulatory authority over such Insurance Subsidiary, in each other
jurisdiction in which such Insurance Subsidiary conducts business or is licensed
to conduct business.

Material Subsidiary means each of the Amalgamated Company, Max Bermuda, Harbor
Point Re, each Material Insurance Subsidiary, and each other Subsidiary (after
elimination of intercompany accounts) whose consolidated total assets or total
revenues exceed 5% of the consolidated total assets or total revenues of the
Parent and its Subsidiaries for the most recent Fiscal Quarter for which
financial statements have been delivered pursuant to Section 5.1(a)(i);
provided, however that prior to the date after the Amalgamation Date on which
financial statements are provided as required in Section 5.1, the Pro Forma
Financial Statements shall be used.

Max UK means Max UK Holdings Ltd. (f/k/a Imagine Group (UK) Limited), a company
formed under the laws of England and Wales.

 

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Multiemployer Plan means any employee benefit plan of the type described in
Section 4001(a)(3) of ERISA, to which a Credit Party or any ERISA Affiliate
makes or is obligated to make contributions, or during the preceding five plan
years, has made or been obligated to make contributions.

OFAC means the U.S. Department of the Treasury’s Office of Foreign Assets
Control, and any successor thereto.

PBGC means the Pension Benefit Guaranty Corporation.

Pension Plan means any employee pension benefit plan (as such term is defined in
Section 3(2) of ERISA), other than a Multiemployer Plan, that is subject to
Title IV of ERISA and is sponsored or maintained by a Credit Party or any ERISA
Affiliate or to which a Credit Party or any ERISA Affiliate contributes or has
an obligation to contribute, or in the case of a multiple employer or other plan
described in Section 4064(a) of ERISA, has made contributions at any time during
the immediately preceding five plan years.

Pro Forma Financial Statements means the pro forma balance sheet and income
statement giving effect to the Amalgamation and the transactions contemplated
thereby and hereby for the five fiscal years ending December 31, 2014 contained
in the Project Lighthouse Projections dated February 11, 2010 delivered to the
Lenders and any update to such pro forma balance sheet and income statement
delivered prior to the Amalgamation Date.

Proxy Statement means the joint proxy statement of the Parent and Harbor Point
and the prospectus of the Parent and Harbor Point in connection with the
solicitation of shareholder consent to the matters specified in the Amalgamation
Agreement.

Reportable Event means any of the events set forth in Section 4043(c) of ERISA,
other than events for which the 30-day notice period has been waived.

Restricted Payment means any dividend or other distribution (whether in cash,
securities or other property) with respect to any Equity Interest of a Person,
or any payment (whether in cash, securities or other property), including any
sinking fund or similar deposit, on account of the purchase, redemption,
retirement, acquisition, cancellation or termination of any such Equity
Interest, or on account of any return of capital to such Person’s stockholders,
partners or members (or the equivalent Person thereof).

Retrocession Agreements means any agreement, treaty, certificate or other
arrangement whereby any Insurance Subsidiary transfers, cedes or retrocedes to
another insurer or reinsurer all or part of such Insurance Subsidiary’s
liability under a policy or policies of insurance issued by such Insurance
Subsidiary or under a Reinsurance Agreement assumed by such Insurance
Subsidiary.

Sanctioned Country means a country subject to a sanctions program identified on
the list maintained by OFAC and available at
http://www.treas.gov/offices/enforcement/ofac/sanctions, or as otherwise
published from time to time.

 

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Sanctioned Person means (i) a Person named on the list of Specially Designated
Nationals or Blocked Persons maintained by OFAC available at
http://www.treas.gov/offices/enforcement/ofac/sdn, or as otherwise published
from time to time, or (ii) (A) an agency of the government of a Sanctioned
Country, (B) an organization controlled by a Sanctioned Country, or (C) a Person
resident in a Sanctioned Country, to the extent subject to a sanctions program
administered by OFAC.

Swap Contract means (a) any and all rate swap transactions, basis swaps, credit
derivative transactions, forward rate transactions, commodity swaps, commodity
options, forward commodity contracts, equity or equity index swaps or options,
bond or bond price or bond index swaps or options or forward bond or forward
bond price or forward bond index transactions, interest rate options, forward
foreign exchange transactions, cap transactions, floor transactions, collar
transactions, currency swap transactions, cross-currency rate swap transactions,
currency options, spot contracts, property catastrophe futures or any other
similar transactions or any combination of any of the foregoing (including any
options to enter into any of the foregoing), whether or not any such transaction
is governed by or subject to any master agreement, and (b) any and all
transactions of any kind, and the related confirmations, which are subject to
the terms and conditions of, or governed by, any form of master agreement
published by the International Swaps and Derivatives Association, Inc., any
International Foreign Exchange Master Agreement, or any other master agreement
(any such master agreement, together with any related schedules, a Master
Agreement), including any such obligations or liabilities under any Master
Agreement.

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

Synthetic Lease Obligation means the monetary obligation of a Person under (a) a
so-called synthetic, off-balance sheet or tax retention lease, or (b) an
agreement for the use or possession of property creating obligations that do not
appear on the balance sheet of such Person but which, upon the insolvency or
bankruptcy of such Person, would be characterized as the indebtedness of such
Person (without regard to accounting treatment).

Third Amendment means the Third Amendment and Limited Consent to Credit
Agreement dated as of the 3rd day of March, 2010 among Max Bermuda, Max Capital,
the Lenders party thereto and the Administrative Agent.

 

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Third Amendment Effective Date has the meaning specified in the Third Amendment.

Threshold Amount means $50,000,000.

Wholly Owned means, with respect to any Subsidiary of any Person, that 100% of
the outstanding Equity Interests of such Subsidiary is owned, directly or
indirectly, by such Person.

2.2 Amendments to Section 1.1 Consisting of Modified Definitions. The following
definitions in Section 1.1 of the Existing Credit Agreement are hereby amended
in their entirety and read as follows:

Applicable Rate means, from time to time, the following percentages per annum,
based upon the Parent Debt Rating as set forth below:

 

             Non-Use Fee     Applicable Rate
for Eurodollar
Rate Loans     Utilization
Fee     Base Rate
Loans     Letter of Credit Fee  

Pricing Level

  

Parent Debt Rating

     Tranche A     Tranche B     Tranche B     Tranche B     Tranche B    
Tranche A     Tranche B  

1

   ³ A-/A3      0.125 %    0.250 %    1.900 %    0.100 %    0.000 %    0.500 % 
  1.900 % 

2

   BBB+/Baa1      0.125 %    0.300 %    2.150 %    0.100 %    0.000 %    0.500
%    2.150 % 

3

   BBB/Baa2      0.125 %    0.375 %    2.400 %    0.100 %    0.000 %    0.500 % 
  2.400 % 

4

   BBB-/Baa3      0.125 %    0.450 %    2.650 %    0.100 %    0.000 %    0.500
%    2.650 % 

5

   <BBB-/Baa3      0.125 %    0.600 %    3.150 %    0.100 %    0.000 %    0.500
%    3.150 % 

however, the Tranche A Letter of Credit fee will equal 0.700% any time the
Financial Strength Rating of Max Bermuda is below A-.

Parent Debt Rating means, as of any date of determination, the rating as
determined by either S&P or Moody’s (collectively, the “Parent Debt Ratings”) of
the Parent’s non-credit-enhanced, senior unsecured long-term debt; provided that
(a) if the respective Parent Debt Ratings issued by the foregoing rating
agencies differ by one level, then the Pricing Level for the higher of such
Parent Debt Ratings shall apply (with the Parent Debt Rating for Pricing Level 1
being the highest and the Parent Debt Rating for Pricing Level 5 being the
lowest); (b) if there is a split in Parent Debt Ratings of more than one level,
then the Pricing Level that is one level lower than the Pricing Level of the
higher Parent Debt Rating shall apply; (c) if Parent has only one Parent Debt
Rating, the Pricing Level that is one level lower than that of such Parent Debt
Rating shall apply; and (d) if Parent does not have any Parent Debt Rating,
Pricing Level 5 shall apply.

Each change in the Applicable Rate resulting from a publicly announced change in
the Parent Debt Rating shall be effective during the period commencing on the
date of the public announcement of each upgrade or downgrade and ending on the
date immediately preceding the effective date of the next such change.

 

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Base Rate means for any day a fluctuating rate per annum equal to the highest of
(a) the Federal Funds Rate plus 1/2 of 1%, (b) the rate of interest in effect
for such day as publicly announced from time to time by Bank of America as its
“prime rate” and (c) the Eurodollar Rate for a one-month Interest Period
commencing on such day plus 1%. The “prime rate” is a rate set by Bank of
America based upon various factors including Bank of America’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 Bank of America shall
take effect at the opening of business on the day specified in the public
announcement of such change.

Cash means (a) Dollars held in a Custody Account or (b) any overnight or other
investment money market funds of the Securities Intermediary (or an Affiliate of
such Securities Intermediary) at which a Custody Account is held.

Cash Equivalents means, at any time:

(a) time deposits, certificates of deposit or money market deposits, maturing
not more than two years after the date of determination, which are issued by a
financial institution which is rated at least AA- by S&P or Aa3 by Moody’s
(whether or not a Lender);

(b) any repurchase agreement with a term of one year or less which

(i) is entered into with

(A) any Lender, or

(B) any other commercial banking institution which is rated at least BBB- by S&P
or Baa3 by Moody’s or 2 or above by the National Association of Insurance
Commissioners, and

(ii) is secured by a fully perfected Lien in any obligation of the type
described in any of clauses (a) through (c) that has a market value at the time
such repurchase agreement is entered into of not less than 100% of the
repurchase obligation of such Lender (or other commercial banking institution)
thereunder;

(c) investments in money market funds that invest solely in Cash Equivalents
described in clauses (a) and (b); and

(d) investments in short-term asset management accounts offered by any Lender
for the purpose of investing in loans to any corporation (other than an
Affiliate of the Borrowers) organized under the laws of any state of the United
States or of the District of Columbia and rated at least A-1 by S&P or P-1 by
Moody’s.

Change of Control means an event or series of events by which:

(a) any “person” or “group” (as such terms are used in Sections 13(d) and 14(d)
of the Securities Exchange Act of 1934, but excluding any employee benefit plan
of such person or its subsidiaries, and any person or entity acting in its
capacity as trustee,

 

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agent or other fiduciary or administrator of any such plan) becomes the
“beneficial owner” (as defined in Rules 13d-3 and 13d-5 under the Securities
Exchange Act of 1934, except that a person or group shall be deemed to have
“beneficial ownership” of all securities that such person or group has the right
to acquire (such right, an “option right”), whether such right is exercisable
immediately or only after the passage of time), directly or indirectly, of at
least 51% or more of the equity securities of the Parent entitled to vote for
members of the board of directors or equivalent governing body of the Parent on
a fully-diluted basis (and taking into account all such securities that such
person or group has the right to acquire pursuant to any option right) without
regard to the voting limitations set forth in the Organization Documents of the
Parent;

(b) during any period of 12 consecutive months, a majority of the members of the
board of directors or other equivalent governing body of the Parent cease to be
composed of individuals (i) who were members of that board or equivalent
governing body on the first day of such period, (ii) whose election or
nomination to that board or equivalent governing body was approved by
individuals referred to in clause (i) above constituting at the time of such
election or nomination at least a majority of that board or equivalent governing
body or (iii) whose election or nomination to that board or other equivalent
governing body was approved by individuals referred to in clauses (i) and
(ii) above constituting at the time of such election or nomination at least a
majority of that board or equivalent governing body (excluding, in the case of
both clause (ii) and clause (iii), any individual whose initial nomination for,
or assumption of office as, a member of that board or equivalent governing body
occurs as a result of an actual or threatened solicitation of proxies or
consents for the election or removal of one or more directors by any person or
group other than a solicitation for the election of one or more directors by or
on behalf of the board of directors); or

(c) the Parent fails to own, directly or indirectly, free and clear of all
Liens, 100% of the Equity Interests of Max Bermuda, the Amalgamated Company,
Harbor Point Re, Harbor Point U.S. Holdings, Inc. or HPRe US or any other Person
who becomes a “Designated Borrower” under the Harbor Point Credit Agreement
without regard to any voting limitations set forth in the Organization Documents
of such Subsidiary.

Consolidated Net Income means, for any period, for the Parent and its
Subsidiaries on a consolidated basis, the net income of the Parent and its
Subsidiaries (excluding extraordinary gains but including extraordinary losses)
for that period calculated in accordance with GAAP.

Credit Documents means this Agreement, each Guaranty, each Letter of Credit, LC
Application and LC Amendment Application, the Fee Letter, the Security
Agreement, and all other agreements, instruments, certificates, documents,
schedules or other written indicia delivered by a Credit Party in connection
with any of the foregoing.

 

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Debt means, as to any Person at a particular time, without duplication, all of
the following, whether or not included as indebtedness or liabilities in
accordance with GAAP:

(a) all obligations of such Person for borrowed money and all obligations of
such Person evidenced by bonds, debentures, notes, loan agreements or other
similar instruments;

(b) all direct or contingent obligations of such Person arising under bankers’
acceptances, bank guaranties, surety bonds and similar instruments and all
obligations of such Person in respect of letters of credit;

(c) all obligations of such Person under any Swap Contract or Total Return
Equity Swap;

(d) all obligations of such Person to pay the deferred purchase price of
property or services (other than trade accounts payable in the ordinary course
of business);

(e) indebtedness (excluding prepaid interest thereon) secured by a Lien on
property owned or being purchased by such Person (including indebtedness arising
under conditional sales or other title retention agreements), whether or not
such indebtedness shall have been assumed by such Person or is limited in
recourse;

(f) capital leases and Synthetic Lease Obligations;

(g) all obligations of such Person to purchase, redeem, retire, defease or
otherwise make any payment in respect of any Equity Interest in such Person or
any other Person, valued, in the case of a redeemable preferred interest, at the
greater of its voluntary or involuntary liquidation preference plus accrued and
unpaid dividends; and

(h) all Guarantees of such Person in respect of any of the foregoing.

For all purposes hereof, the Debt of any Person shall include the Debt of any
partnership or joint venture (other than a joint venture that is itself a
corporation or limited liability company) in which such Person is a general
partner or a joint venturer, except to the extent such Debt is expressly made
non-recourse to such Person. Debt shall not include (i) obligations arising from
the honoring of a check, draft or similar instrument against insufficient funds
provided such obligation is extinguished within three Business Days of its
incurrence, (ii) obligations of any Insurance Subsidiary under any Primary
Policy, Reinsurance Agreement or Retrocession Agreement, or (iii) compensatory
grants of equity awards in respect of the Parent’s Equity Interests (including,
without limitation, options, restricted stock and restricted stock units) on
account of the performance of services.

Eligible Investments means Cash, Cash Equivalents, Commercial Paper, MBS
Investments, Corporate/Municipal Securities, Government Debt and G7 Securities
which (a) have the required rating as set forth on Schedule 1.2, (b) are capable
of being marked to market on a daily basis and (c) are held in the Custody
Account.

ERISA means the Employee Retirement Income Security Act of 1974.

 

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Eurodollar Rate means, for any Interest Period with respect to (a) any
Eurodollar Rate Loan, the rate per annum equal to the British Bankers
Association LIBOR Rate (“BBA LIBOR”), as published by Reuters (or other
commercially available source providing quotations of BBA LIBOR as designated by
the Administrative Agent from time to time) at approximately 11:00 a.m., London
time, two Business Days prior to the commencement of such Interest Period, for
Dollar deposits (for delivery on the first day of such Interest Period) with a
term equivalent to such Interest Period and (b) any Base Rate Loan, the BBA
LIBOR at approximately 11:00 a.m., London time, on the date of determination for
Dollar deposits being delivered in the London interbank eurodollar market for a
term of one month commencing that day. If such rate is not available at such
time for any reason, then the “Eurodollar Rate” for such Interest Period shall
be the rate per annum determined by the Administrative Agent to be the rate at
which deposits in Dollars for delivery on the first day of such Interest Period
in same day funds in the approximate amount of the Eurodollar 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 to
major banks in the London interbank eurodollar market at their request at
approximately 11:00 a.m. (London time) two Business Days prior to the
commencement of such Interest Period.

Fair Market Value means (a) with respect to any publicly traded security (other
than those set forth in clause (b)) the closing price for such security on the
largest exchange on which such security is traded (or if not traded on an
exchange, then the average of the closing bid and ask prices quoted
over-the-counter) on the date of the determination (as such prices are reported
in The Wall Street Journal (Midwest Edition) or if not so reported, in any
nationally recognized financial journal or newspaper), (b) with respect to Cash,
Cash Equivalents and Commercial Paper, the amounts thereof, and (c) with respect
to any Investment (other than those set forth in clauses (a), and (b)), the
price for such Investment on the date of calculation obtained from a generally
recognized source approved by the Administrative Agent or the most recent bid
quotation from such approved source (or, if no generally recognized source
exists as to a particular Investment, any other source specified by the Parent
to which the Administrative Agent does not reasonably object). With respect to
Investments denominated in a currency other than Dollars, the Dollar equivalent
thereof (using a method agreed upon by the Parent and the Administrative Agent)
shall be used for purposes of determining the Fair Market Value of such
Investment.

Investment means as to any Person, any investment of any Person, whether by
means of security purchase, capital contribution, loan, time deposit or
otherwise, and shall include Cash, Cash Equivalents and Commercial Paper.

Investment Portfolio means, as of any date, the Fixed Maturities and Alternative
Investments of Max Bermuda and its Subsidiaries as shown on Max Bermuda’s
balance sheet.

Material Adverse Effect means a material adverse effect upon (a) the business,
assets, properties, results of operations or condition (financial or otherwise)
of the Parent and its Subsidiaries, taken as a whole, (b) the ability of any
Credit Party to perform its

 

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payment or other material obligations under this Agreement or any of the other
Credit Documents to which it is a party or (c) the legality, validity or
enforceability of this Agreement or any of the other Credit Documents against
any Credit Party party thereto or the rights and remedies of the Administrative
Agent and the Lenders hereunder and thereunder.

Material Insurance Subsidiary means Max Bermuda, Harbor Point Re, HPRe US and
each other Insurance Subsidiary whose consolidated total assets or total
revenues exceed 5% of the consolidated total assets or total revenues of the
Parent and its Subsidiaries for the most recent fiscal quarter for which
financial statements have been delivered pursuant to Section 5.1(a) or (b);
provided, however that prior to the date after the Amalgamation Date on which
financial statements are provided as required in Section 5.1, the Pro Forma
Financial Statements shall be used.

Material Party means each Credit Party, each Material Insurance Subsidiary and
each other Subsidiary whose consolidated total assets or total revenues exceed
5% of the consolidated total assets or total revenues of the Parent and its
Subsidiaries for the most recent fiscal quarter for which financial statements
have been delivered pursuant to Section 5.1(a) or (b); provided, however that
prior to the date after the Amalgamation Date on which financial statements are
provided as required in Section 5.1, the Pro Forma Financial Statements shall be
used.

MBS Investments means MBS (Agency CMOs) which constitute TACs, PACs and
Sequentials (as such terms are defined by Bloomberg Inc.) and shall not include
Support Tranches (as such term is defined by Bloomberg Inc.) and MBS (Agency
Pass-Throughs). The weighted average duration of such MBS Investments shall be
less than or equal to seven years. The maximum weighted average life of any
single MBS Investment shall not exceed 12 years. The Fair Market Value of all
MBS Investments included within Eligible Investments shall not exceed 30% of the
total Fair Market Value. To the extent MBS Investments included within Eligible
Investments violate the restrictions set forth herein, the Fair Market Value of
such MBS Investments shall be excluded from the Tranche A Borrowing Base;
provided, however, that only those MBS Investments having the lowest aggregate
Fair Market Value whose exclusions will result in compliance shall be excluded
from the Tranche A Borrowing Base.

Net Worth means, for any Person and its consolidated Subsidiaries, shareholders’
equity calculated in accordance with GAAP.

Parent Debt means the consolidated Debt of the Parent and its Subsidiaries. For
purposes of calculating consolidated Debt (i) the amount of any net obligation
under any Swap Contract on any date shall be deemed to be the Swap Termination
Value thereof as of such date, (ii) the amount of any capital lease or Synthetic
Lease Obligation as of any date shall be deemed to be the amount of Attributable
Indebtedness in respect thereof as of such date, (iii) the amount of any Debt
described in clause (e) of the definition of Debt shall be the lesser of the
fair market value of such assets at such date of determination (determined in
good faith by the Parent) and the amount of such Debt, (iv) Debt under clause
(b) of the definition thereof shall be included only to the extent that payments
have

 

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been made or draws have been honored under such instruments but not reimbursed,
and (v) Debt shall not include any payment of obligations arising under a
repurchase, securities loan or similar agreement, except for the excess of the
payment of obligations for which such Person is liable under such agreement over
the value of the collateral securing such payment obligations.

Plan means any employee benefit plan (as such term is defined in Section 3(3) of
ERISA) established by a Credit Party or, with respect to any such plan that is
subject to Section 412 of the Code or Title IV of ERISA, any ERISA Affiliate.

Total Return Equity Swap shall mean (a) Debt of Max Bermuda secured by the
common shares of MDS which is incurred for the purpose of acquiring assets which
qualify to be held in trusts which secure Max Bermuda’s obligations under
Reinsurance Agreements and Primary Policies, and (b) any substantially similar
financial arrangement or transaction entered into by Max Bermuda.

2.3 Amendments to Section 1.1 Consisting of Deleting Definitions. The following
definitions in Section 1.1 of the Existing Credit Agreement are hereby deleted:
ABS, Acquisition Closing Date, Capital Stock, Capitalized Lease, Contingent
Liabilities, Hedging Obligations, Imagine UK, MBS (Non-Agency CMOs), Permitted
Guarantees, Purchase Money Debt, Purchase Money Lien and UK Acquisition.

2.4 Amendment to Section 2.14 (Mandatory Reduction). Section 2.14(a) of the
Existing Credit Agreement is amended in its entirety to read as follows:

[Intentionally Omitted.]

2.5 Amendment to Section 2.15 (Fees). Section 2.15(c) of the Existing Credit
Agreement is amended in its entirety to read as follows:

“(c) Max Bermuda shall pay to the Administrative Agent for the account of each
Lender in accordance with its Percentage, a utilization fee equal to the
Applicable Rate times the aggregate principal amount of outstanding Loans on
each day that the aggregate principal amount of outstanding Loans exceed 50% of
the combined Tranche B Commitments in effect (or, if terminated, in effect
immediately prior to such termination). The utilization fee shall be due and
payable quarterly in arrears on the last Business Day of each March, June,
September and December commencing on the first such date to occur after the
Amalgamation Date through the Final Expiry Date of the Tranche B Obligations.
Utilization fees shall accrue at all times, including at any time during which
one or more of the conditions in Article VIII are not met.”

2.6 Amendment to Section 2.16(a) (Computation of Fees and Interest).
Section 2.16(a) of the Existing Credit Agreement is amended in its entirety to
read as follows:

“(a) All computations of interest for LC Advances and Base Rate Loans 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

 

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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,
subject to Section 2.10(d), bear interest for one day.”

2.7 Amendment to Section 4.1 (Due Organization). Section 4.1(c) is amended by
inserting the words “except when the failure to do so would not have a Material
Adverse Effect” at the end thereof.

2.8 Amendment to Section 4.2 (Litigation and Contingent Liabilities). The last
sentence of Section 4.2 of the Existing Credit Agreement is amended in its
entirety to read as follows:

“other than any liability incident to such claims, litigation or proceedings,
the Parent and its Subsidiaries have no material Guarantees.”

2.9 Amendment to Section 4.3 (Employee Benefit Plans). Section 4.3 of the
Existing Credit Agreement is amended in its entirety to read as follows:

“SECTION 4.3 ERISA.

(a) Except as could not reasonably be expected to have a Material Adverse
Effect: (i) each Plan is in compliance in all material respects with the
applicable provisions of ERISA, the Code and other Federal or state laws and
(ii) each Plan that is intended to qualify under Section 401(a) of the Code has
received a favorable determination letter from the IRS or an application for
such a letter is currently being processed by the IRS with respect thereto and,
to the best knowledge of the Parent, nothing has occurred which would prevent,
or cause the loss of, such qualification. The Parent and each ERISA Affiliate
have made all required contributions to each Plan subject to Section 412 of the
Code, and no application for a funding waiver or an extension of any
amortization period pursuant to Section 412 of the Code has been made with
respect to any Plan.

(b) There are no pending or, to the best knowledge of the Parent, threatened
claims, actions or lawsuits, or action by any Governmental Authority, with
respect to any Plan that could reasonably be expected to have a Material Adverse
Effect. There has been no prohibited transaction or violation of the fiduciary
responsibility rules with respect to any Plan that has resulted or could
reasonably be expected to result in a Material Adverse Effect.

(c)(i) No ERISA Event has occurred or is reasonably expected to occur that could
reasonably be expected to have a Material Adverse Effect; (ii) neither the
Parent nor any ERISA Affiliate has incurred, or reasonably expects to incur, any
material liability under Title IV of ERISA with respect to any Pension Plan
(other than (x) premiums due and not delinquent under Section 4007 of ERISA and
(y) required contributions thereto); (iii) no Credit Party nor any ERISA
Affiliate has incurred, or reasonably expects to incur, any material liability
(and no event has occurred which, with the giving of notice under Section 4219
of ERISA, would result in material liability) under Sections 4201 or 4243 of
ERISA with respect to a Multiemployer Plan; and (iv) no Credit Party nor any
ERISA Affiliate has engaged in a transaction that could be subject to Sections
4069 or 4212(c) of ERISA.

 

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(d) With respect to any Foreign Benefit Plan, (i) except as could not reasonably
be expected to have a Material Adverse Effect, each Foreign Benefit Plan is in
compliance in all material respects with applicable law, (ii) the aggregate of
the accumulated benefit obligations under all Foreign Benefit Plans does not
exceed the current fair market value of the assets held in the trust or similar
funding vehicles for such Foreign Benefit Plans in an amount in excess of the
Threshold Amount, and (iii) reasonable reserves have been established in
accordance with prudent business practice or where required by ordinary
accounting practices in the jurisdiction in which such Foreign Benefit Plan is
maintained. There are no material actions, suits or claims (other than routine
claims for benefits) pending, or to the knowledge of the Parent threatened
against it or any of its Subsidiaries with respect to any Foreign Benefit Plan
which could reasonably be expected to result in a Material Adverse Effect.”

2.10 Amendment to Section 4.4 (Regulated Entities). Section 4.4 of the Existing
Credit Agreement is hereby amended by replacing the words “Neither the Parent
nor Max Bermuda” in the first sentence with “Neither the Parent nor any of its
Subsidiaries”.

2.11 Amendment to Section 4.12 (Financial Condition). Section 4.12 of the
Existing Credit Agreement is hereby amended by adding the following:

“The Pro Forma Financial Statements reflect adjustments made on a pro forma
basis to give effect to the consummation of the Amalgamation in accordance with
Regulation S-X of the Securities Act of 1933. The Pro Forma Financial Statements
have been prepared based on stated assumptions made in good faith and having a
reasonable basis set forth therein, present fairly in all material respects the
consolidated financial condition of Max Capital and Harbor Point and their
Subsidiaries on an unaudited pro forma basis as of the date set forth therein
after giving effect to the consummation of the Amalgamation.”

2.12 Amendments to Section 8.2 (Conditions to Credit Extensions). Section 8.2 of
the Existing Credit Agreement is hereby amended as follows:

(i) Section 8.2(b) of the Existing Credit Agreement in its entirety to read as
follows

“(b) No Default. No Default or Event of Default shall have occurred and be
continuing or will result from the making of the Credit Extensions and no
Default or Event of Default shall have occurred and be continuing under the
Credit Documents or the Harbor Point Credit Agreement or will result from the
making of the Credit Extensions.”

(ii) Section 8.2(c) of the Existing Credit Agreement in its entirety to read as
follows:

“(c) All warranties and representations contained in this Agreement (other than
Section 4.2 except in the case of the initial Credit Extension) and the other
Credit Documents shall be true and correct in all material respects as of the
date of any Credit Extension, with the same effect as though made on the date of
and concurrently with the

 

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making of such Credit Extension (except where such representation speaks as of
specified date) and (ii) all covenants contained herein and in the Credit
Documents to be performed by the Credit Parties prior to the date of any Credit
Extension shall have been performed.”

2.13 Amendments to Covenants and Events of Default. Articles V, VI and VII of
the Existing Credit Agreement are hereby amended by substituting Annex A
attached hereto therefor.

2.14 Amendments to Schedules. Schedules 1.1 (Concentration Limits) and 1.2
(Borrowing Base Calculation) of the Existing Credit Agreement are hereby amended
by substituting Schedules 1.1 and 1.2 attached hereto therefor.

ARTICLE III

CONDITIONS OF EFFECTIVENESS

3.1 The limited consent set forth in Article I of this Amendment shall become
effective as of the date (the “Consent Effective Date”) when, and only when,
each of the following conditions precedent shall have been satisfied:

(a) The Administrative Agent shall have received a counterpart of this Amendment
executed and delivered by the Borrowers, the Administrative Agent and the
Required Lenders (with ten counterparts to be delivered after the Consent
Effective Date).

(b) The representations and warranties of the Borrowers contained in the
Existing Credit Agreement and the other Credit Documents are true and correct in
all material respects as of the Consent Effective Date, with the same effect as
though made on such date (unless stated to relate solely to an earlier date, in
which case such representations and warranties shall be true and correct in all
material respects as of such earlier date).

(c) An amendment to the Harbor Point Credit Agreement in substantially the same
form as this Amendment has been executed and delivered by Harbor Point, Harbor
Point Re, Harbor Point U.S. Holdings, Inc., HPRe US, the Administrative Agent
and the Required Lenders (as defined in the Harbor Point Credit Agreement) and
the conditions precedent set forth in Section 3.1 thereof shall have been
satisfied.

(d) No Default or Event of Default has occurred and is continuing or will result
from the execution and delivery or effectiveness of Article I of this Amendment
or the Amalgamation Agreement.

(e) There has not occurred since December 31, 2009 any Material Adverse Effect
(as defined in the Existing Credit Agreement).

 

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3.2 The amendments set forth in Article II of this Amendment shall become
effective as of the date (the “Third Amendment Effective Date”) when, and only
when, each of the following conditions precedent shall have been satisfied or
waived:

(a) The Administrative Agent shall have received the following (in such number
as the Administrative Agent may deem appropriate):

(i) A Guaranty in substantially the form of Annex C to this Amendment executed
and delivered by each of Max Capital, the Amalgamated Company, and, if required
by the Administrative Agent in its sole discretion, Harbor Point and Amalco Sub,
pursuant to which such Person guarantees the Obligations of the Borrowers under
the Credit Agreement;

(ii) Legal opinions of counsel to the Credit Parties (including, without
limitation, opinions of New York and Bermuda counsel) as may be reasonably
requested by the Administrative Agent;

(iii) A certificate of an Executive Officer of each Borrower certifying that
after giving effect to the amendments in Article II and filing of the
Amalgamation Agreement:

(A) No Default or Event of Default has occurred and is continuing or will result
from the execution and delivery or effectiveness of the amendments set forth
herein or the Amalgamation;

(B) The representations and warranties of the Credit Parties (other than
Sections 4.3 and 4.12, in each case, with respect to Harbor Point) contained in
the Credit Agreement and the other Credit Documents are true and correct in all
material respects as of the Third Amendment Effective Date, with the same effect
as though made on such date (unless stated to relate solely to an earlier date,
in which case such representations and warranties shall be true and correct in
all material respects as of such earlier date);

(C) There are no material insurance regulatory proceedings pending or, to the
knowledge of such Executive Officer, threatened against Max Capital, the
Amalgamated Company or any Insurance Subsidiary in any jurisdiction; and

(D) There has not occurred since December 31, 2009 (x) any Material Adverse
Effect described in clauses (b) or (c) of the definition thereof in the Existing
Credit Agreement after giving effect to the amendment to such definition
contained in this Amendment or (y) any Material Adverse Effect (as defined in
Section 8.13 of the Amalgamation Agreement) on Max Capital and its Subsidiaries
(after giving effect to the Amalgamation).

(iv) A certificate of the secretary or an assistant secretary of each Credit
Party (other than the Amalgamated Company), in form and substance reasonably
satisfactory to the Administrative Agent, certifying (A) that attached thereto
is a true and complete copy of the certificate of incorporation, memorandum of
association (or another similar governing document) and all amendments thereto
of such Credit Party, certified as of a recent date by the Registrar of
Companies for the Bermuda Ministry of Finance, and that the same has not been
amended since the date of such certification, (B) that attached thereto is a
true and complete copy of the Bye-laws or similar governing document of such
Credit Party, as then in effect and as in effect at all times from the date on
which the

 

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resolutions referred to in clause (C) below were adopted to and including the
date of such certificate, and (C) that attached thereto is a true and complete
copy of resolutions adopted by the board of directors (or similar governing
body) of such Credit Party authorizing the execution, delivery and performance
of the Credit Documents (and, if applicable, the Amalgamation Agreement) to
which such Credit Party is or becomes a party, and (D) as to the incumbency and
genuineness of the signature of each officer of such Credit Party executing any
such Credit Documents, and attaching all such copies of the documents described
above;

(v) A certificate of the secretary or an assistant secretary of the Amalgamated
Company, in form and substance reasonably satisfactory to the Administrative
Agent, certifying (A) that attached thereto is a true and complete copy of the
application for registration of an amalgamated company and resulting memorandum
of association of the Amalgamated Company and that the same has been presented
for filing with the Registrar of Companies for the Bermuda Ministry of Finance,
(B) that attached thereto is a true and complete copy of the Bye-laws or similar
governing document of the Amalgamated Company then in effect and as in effect at
all times from the date on which the resolutions referred to in clause (C) below
were adopted to and including the date of such certificate, and (C) that
attached thereto is a true and complete copy of resolutions adopted by the board
of directors (or similar governing body) of the Amalgamated Company authorizing
the execution, delivery of the Guaranty and the performance of the Guaranty, and
the other Credit Documents to which it is a party, and (D) as to the incumbency
and genuineness of the signature of each officer of the Amalgamated Company
executing the Guaranty or any of the other Credit Documents, and attaching all
such copies of the documents described above;

(vi) If there has been a material change from the Pro Forma Financial Statements
delivered to the Lenders prior to the date of this Amendment, an update of such
Pro Forma Financial Statements;

(vii) A Compliance Certificate executed by Max Capital calculated on a pro forma
basis as of the date of the most recent year to date update of the Pro Forma
Financial Statements after giving effect to the Amalgamation and this Amendment
and certifying as to the Parent Debt Rating;

(viii) A Borrowing Base Certificate executed by Max Bermuda calculated as of the
close of business one Business Day prior to the Third Amendment Effective Date
giving effect to the Amendments;

(ix) The investment guidelines for Max Capital and its Subsidiaries which will
be in effect on the Amalgamation Date;

(x) Satisfactory confirmation from A.M. Best Company, Inc. that the current
Financial Strength Rating of Max Bermuda and Harbor Point Re is “A-” (stable) or
better (even if such Financial Strength Rating is different than the Financial
Strength Rating, if any, required under the Amalgamation Agreement); and

 

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(xi) True, complete and correct copies of the Amalgamation Agreement which shall
be in full force and effect and shall not have been amended in a manner that is
materially adverse to the Lenders since the Consent Effective Date (except for
such amendments as have been approved by the Administrative Agent (with the
consent of the Required Lenders)) and, to the extent not included as Exhibits to
the Amalgamation Agreement, the other material documents required to be executed
in connection with the Closing (as defined in the Amalgamation Agreement).

(b) All approvals, permits and consents of any Governmental Authorities
(including, without limitation, all relevant Insurance Regulatory Authorities)
in each jurisdiction where any of Max Capital, Amalco Sub, Harbor Point, Harbor
Point Re, HPRe US or Max Bermuda underwrite or engage in material business or of
other Persons (the failure of which to obtain would reasonably likely be
materially detrimental to the Credit Parties or the Lenders), if any, required
to be obtained prior to the Closing (as defined in the Amalgamation Agreement)
in connection with the execution and delivery of the Amalgamation Agreement,
this Amendment (including the effectiveness of the amendments herein) and the
other Credit Documents and the consummation of the transactions contemplated
hereby and thereby shall have been obtained (without the imposition of
restrictions or conditions that are materially adverse to the Administrative
Agent, the Fronting Bank or the Lenders with respect to the transactions
contemplated hereby), and all related filings, if any, shall have been made, and
all such approvals, permits, consents and filings shall be in full force and
effect and the Administrative Agent shall have received such copies thereof as
it shall have reasonably requested; all applicable waiting periods shall have
expired or terminated, and no order, injunction or decree shall have been
entered by, any Governmental Authority, in each case to enjoin, restrain,
restrict, set aside or prohibit, or impose materially adverse conditions upon,
the Amalgamation, this Amendment or any of the other Credit Documents or the
consummation of the transactions contemplated hereby or thereby that, in any
case, would or would reasonably be expected to have a Material Adverse Effect
described in clauses (b) or (c) of the definition thereof in the Existing Credit
Agreement after giving effect to the amendment to such definition contained in
this Amendment or any Regulatory Material Adverse Effect (as defined in the
Amalgamation Agreement).

(c) All conditions precedent to the Effective Time (as defined in the
Amalgamation Agreement) shall have been satisfied or otherwise waived (with the
approval of the Administrative Agent, it being agreed that a change to the
Financial Strength Rating condition precedent in the Amalgamation Agreement
shall not require the consent of the Administrative Agent), all necessary
filings in connection therewith shall have been made, and the Third Amendment
Effective Date will be the same as the Amalgamation Date.

(d) The “First Amendment Effective Date” under the Harbor Point Credit Agreement
will occur concurrently with the Third Amendment Effective Date hereunder and
either (x) no amendments to other credit facilities of Harbor Point and its
Subsidiaries or Max Capital and its Subsidiaries, as applicable, shall be
necessary in connection with the consummation of the Amalgamation or (y) if any
such amendments are required, such amendments are, or concurrently with the
Third Amendment Effective Date will become, effective.

 

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(e) The Credit Parties shall have provided the Administrative Agent and the
Lenders with all necessary information, documents and certificates as the
Administrative Agent and the Lenders may reasonably request in order to comply
with the Patriot Act and related “Know Your Customer” rules and regulations.

(f) There has not occurred since December 31, 2009 (i) any Material Adverse
Effect described in clauses (b) or (c) of the definition thereof in the Existing
Credit Agreement after giving effect to the amendment to such definition
contained in this Amendment or (ii) any Material Adverse Effect (as defined in
Section 8.13 of the Amalgamation Agreement) on Max Capital and its Subsidiaries
(after giving effect to the Amalgamation).

(g) The representations and warranties of the Credit Parties contained in the
Credit Agreement and the other Credit Documents are true and correct in all
material respects as of the Third Amendment Effective Date, with the same effect
as though made on such date (unless stated to relate solely to an earlier date,
in which case such representations and warranties shall be true and correct in
all material respects as of such earlier date).

(h) No Default or Event of Default has occurred and is continuing or will result
from the effectiveness of the Amendments in Article II hereof or the
Amalgamation Agreement.

(i) All fees and reasonable out-of-pocket expenses of the Administrative Agent
and the Arranger (including, without limitation, reasonable and documented legal
fees and expenses invoiced prior to such date) in connection with the Third
Amendment Effective Date shall have been paid.

(j) A letter from the process agent agreeing to the service of process terms of
each Guaranty or other Credit Document requiring the same.

(k) Such other documents, certificates, opinions and instruments in connection
with the transactions contemplated hereby as the Administrative Agent shall have
reasonably requested.

ARTICLE IV

CONFIRMATION OF REPRESENTATIONS AND WARRANTIES

Each Credit Party hereby represents and warrants, on and as of the Consent
Effective Date and the Third Amendment Effective Date, that (i) the
representations and warranties applicable to such Credit Party contained in the
Credit Agreement and the other Credit Documents are true and correct in all
material respects on and as of the Consent Effective Date and the Third
Amendment Effective Date, both immediately before and after giving effect to the
applicable provisions of this Amendment (except to the extent any such
representation or warranty is expressly stated to have been made as of a
specific date, in which case such representation or warranty shall be true and
correct in all material respects as of such date), (ii) this Amendment has been
duly authorized, executed and delivered by such Credit Party and constitutes the
legal, valid and binding obligation of such Credit Party enforceable against it
in accordance with its terms, subject to general principles of equity
(regardless of whether considered in a proceeding in equity or at law) and to
applicable bankruptcy, insolvency, and

 

22

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similar laws affecting the enforcement of creditors’ rights generally, (iii) no
Default or Event of Default shall have occurred and be continuing on the Consent
Effective Date and the Third Amendment Effective Date, both immediately before
and after giving effect to the applicable provisions of this Amendment, (iv) the
Credit Parties have heretofore furnished to the Administrative Agent true and
complete copies of the Amalgamation Agreement (including all exhibits and
schedules) and all amendments, modifications and waivers relating thereto
(collectively, the “Amalgamation Documents”) and (v) as of the Third Amendment
Effective Date, none of the Amalgamation Documents has been amended, modified or
supplemented, nor any condition or provision thereof waived, in each case in a
manner materially adverse to the Lenders other than as approved by the
Administrative Agent with the consent of the Required Lenders, and each such
Amalgamation Document is in full force and effect, to the extent applicable.

ARTICLE V

ACKNOWLEDGEMENT AND CONFIRMATION OF THE CREDIT PARTIES

Each of the Credit Parties hereby confirms and agrees that, after giving effect
to the applicable provisions of this Amendment, the Credit Agreement and the
other Credit Documents remain in full force and effect and enforceable against
the Credit Parties in accordance with their respective terms, subject to general
principles of equity (regardless of whether considered in a proceeding in equity
or at law) and to applicable bankruptcy, insolvency, and similar laws affecting
the enforcement of creditors’ rights generally and shall not be discharged,
diminished, limited or otherwise affected in any respect, and represents and
warrants to the Lenders that it has no knowledge of any claims, counterclaims,
offsets, or defenses to or with respect to its obligations under the Credit
Documents, or if such Credit Party has any such claims, counterclaims, offsets,
or defenses to the Credit Documents or any transaction related to the Credit
Documents, the same are hereby waived, relinquished, and released in
consideration of the execution of this Amendment. This acknowledgement and
confirmation by the Credit Parties is made and delivered to induce the
Administrative Agent and the Lenders to enter into this Amendment, and each of
the Credit Parties acknowledges that the Administrative Agent and the Lenders
would not enter into this Amendment in the absence of the acknowledgement and
confirmation contained herein.

ARTICLE VI

MISCELLANEOUS

6.1 Governing Law. This Amendment shall be governed by and construed and
enforced in accordance with the laws of the State of New York.

6.2 Full Force and Effect. Except as expressly amended hereby, the Existing
Credit Agreement shall continue in full force and effect in accordance with the
provisions thereof on the date hereof. From and after the Third Amendment
Effective Date, any reference to the Credit Agreement or any of the other Credit
Documents in any Credit Document shall refer to the Existing Credit Agreement
and Credit Documents as amended hereby. This Amendment is limited as specified
and shall not constitute or be deemed to constitute an amendment, modification
or waiver of any provision of the Credit Agreement except as expressly set forth
herein. This Amendment shall constitute a Credit Document under the terms of the
Credit Agreement.

 

23

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6.3 Expenses. All reasonable fees and expenses of counsel to the Administrative
Agent, and all reasonable out-of-pocket costs and expenses of the Administrative
Agent, in each case, in connection with the preparation, negotiation, execution
and delivery of this Amendment and the other Credit Documents delivered in
connection herewith shall have been paid to the extent invoiced.

6.4 Severability. To the extent any provision of this Amendment is prohibited by
or invalid under the applicable law of any jurisdiction, such provision shall be
ineffective only to the extent of such prohibition or invalidity and only in any
such jurisdiction, without prohibiting or invalidating such provision in any
other jurisdiction or the remaining provisions of this Amendment in any
jurisdiction.

6.5 Successors and Assigns. This Amendment shall be binding upon, inure to the
benefit of and be enforceable by the respective successors and permitted assigns
of the parties hereto.

6.6 Construction. The headings of the various sections and subsections of this
Amendment have been inserted for convenience only and shall not in any way
affect the meaning or construction of any of the provisions hereof.

6.7 Counterparts. This Amendment may be executed in any number of counterparts
and by different parties hereto on separate counterparts, each of which when so
executed and delivered shall be an original, but all of which shall together
constitute one and the same instrument. Delivery of an executed signature page
of this Amendment by facsimile transmission or electronic “.pdf” file shall be
effective as delivery of a manually executed counterpart hereof.

[THE BALANCE OF THIS PAGE IS INTENTIONALLY LEFT BLANK]

 

24

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

 

MAX CAPITAL GROUP LTD. By:  

/s/ Joseph W. Roberts

Name:  

Joseph W. Roberts

Title:  

EVP & CFO

MAX BERMUDA LTD. By:  

/s/ Angelo Guagliano

Name:  

Angelo Guagliano

Title:  

CEO

 

SIGNATURE PAGE TO

THIRD AMENDMENT AND LIMITED CONSENT

TO CREDIT AGREEMENT

S-1

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

BANK OF AMERICA, N.A., as Administrative Agent, LC Administrator, Fronting Bank
and as a Lender By:  

/s/ illegible signature

Name:  

 

Title:  

 

 

SIGNATURE PAGE TO

THIRD AMENDMENT AND LIMITED CONSENT

TO CREDIT AGREEMENT

S-2

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

CITIBANK, N.A. By:  

/s/ illegible signature

Name:  

 

Title:  

 

 

SIGNATURE PAGE TO

THIRD AMENDMENT AND LIMITED CONSENT

TO CREDIT AGREEMENT

S-3

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

ING BANK N.V., LONDON BRANCH By:  

/s/ illegible signature

Name:  

 

Title:  

 

By:  

/s/ illegible signature

Name:  

 

Title:  

 

 

SIGNATURE PAGE TO

THIRD AMENDMENT AND LIMITED CONSENT

TO CREDIT AGREEMENT

S-4

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

WACHOVIA BANK, NATIONAL ASSOCIATION By:  

/s/ illegible signature

Name:  

 

Title:  

 

 

SIGNATURE PAGE TO

THIRD AMENDMENT AND LIMITED CONSENT

TO CREDIT AGREEMENT

S-5

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

THE BANK OF NEW YORK MELLON By:  

/s/ illegible signature

Name:  

 

Title:  

 

 

SIGNATURE PAGE TO

THIRD AMENDMENT AND LIMITED CONSENT

TO CREDIT AGREEMENT

S-6

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

CREDIT SUISSE AG, NEW YORK BRANCH,

F/K/A CREDIT SUISSE, NEW YORK BRANCH

By:  

/s/ illegible signature

Name:  

 

Title:  

 

By:  

/s/ illegible signature

Name:  

 

Title:  

 

 

SIGNATURE PAGE TO

THIRD AMENDMENT AND LIMITED CONSENT

TO CREDIT AGREEMENT

S-7

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

WEBSTER BANK, NATIONAL ASSOCIATION By:  

/s/ illegible signature

Name:  

 

Title:  

 

 

SIGNATURE PAGE TO

THIRD AMENDMENT AND LIMITED CONSENT

TO CREDIT AGREEMENT

S-8

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

EXECUTION VERSION

Annex A

ARTICLE V

AFFIRMATIVE COVENANTS

So long as any Lender shall have any Commitment hereunder, any LC Obligation,
Loan or other Obligation hereunder (other than any contingent indemnification
liability that is not then payable) shall remain unpaid or unsatisfied, or any
Letter of Credit shall remain outstanding, the Parent and each Credit Party
shall, and shall to the extent required pursuant to the applicable provisions of
this Article V, cause each of their respective Subsidiaries to (provided that
each Credit Party covenants solely with respect to itself and its respective
Subsidiaries):

SECTION 5.1 Reports, Certificates and Other Information. Furnish or cause to be
furnished to the Administrative Agent for distribution to the Lenders:

(a) GAAP Financial Statements:

(i) Within 45 days after the close of each of the first three Fiscal Quarters of
each Fiscal Year beginning with the Fiscal Quarter ending after the Amalgamation
Date (A) of Max Bermuda, a copy of the unaudited consolidated balance sheets of
Max Bermuda and its Subsidiaries, as of the close of such quarter and the
related statements of income and cash flows for that portion of the Fiscal Year
ending as of the close of such Fiscal Quarter, all prepared in accordance with
GAAP (subject to normal year-end adjustments and the absence of footnotes) and
accompanied by the certification of an Executive Officer of Max Bermuda that all
such financial statements are complete and correct and present fairly, in all
material respects, in accordance with GAAP (subject to normal year-end
adjustments and the absence of footnotes) the consolidated results of operations
and cash flows of Max Bermuda and its Subsidiaries as at the end of such Fiscal
Quarter and for the period then ended, (B) of the Parent, a copy of the
unaudited consolidated balance sheets of the Parent, as of the close of such
quarter and the related consolidated statements of income and cash flows for
that portion of the Fiscal Year ending as of the close of such Fiscal Quarter,
all prepared in accordance with GAAP (subject to normal year-end adjustments and
the absence of footnotes) and accompanied by the certification of an Executive
Officer of the Parent that all such financial statements are complete and
correct and present fairly, in all material respects, in accordance with GAAP
(subject to normal year-end adjustments and the absence of footnotes) the
consolidated results of operations and cash flows of the Parent as at the end of
such Fiscal Quarter and for the period then ended and (C) of the Amalgamated
Company, a copy of the unaudited consolidated balance sheets of the Amalgamated
Company, as of the close of such quarter and the related consolidated statements
of income and cash flows for that portion of the Fiscal Year ending as of the
close of such Fiscal Quarter, all prepared in accordance with GAAP (subject to
normal year-end adjustments and the absence of footnotes) and accompanied by the
certification of an Executive Officer of the

 

ANNEX A-1

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

Amalgamated Company that all such financial statements are complete and correct
and present fairly, in all material respects, in accordance with GAAP (subject
to normal year-end adjustments and the absence of footnotes) the consolidated
results of operations and cash flows of the Amalgamated Company as at the end of
such Fiscal Quarter and for the period then ended.

(ii) Within 90 days after the close of each Fiscal Year beginning with the
Fiscal Year ended 2009, (A) of Max Bermuda, a copy of the annual audited
consolidated financial statements of Max Bermuda and its Subsidiaries consisting
of balance sheets and statements of income and retained earnings and cash flows,
setting forth in comparative form in each case the figures for the previous
Fiscal Year, which financial statements shall be prepared in accordance with
GAAP, certified without material qualification by KPMG or any other firm of
independent certified public accountants of recognized national standing
selected by the Parent and reasonably acceptable to the Required Lenders that
all such financial statements are complete and correct and present fairly, in
all material respects, in accordance with GAAP the financial position and the
results of operations and cash flows of Max Bermuda and its Subsidiaries as at
the end of such year and for the period then ended, (B) of the Parent, a copy of
the annual audited financial statements of the Parent consisting of consolidated
and consolidating balance sheets and consolidated and consolidating statements
of income and retained earnings and cash flows, setting forth in comparative
form in each case the figures for the previous Fiscal Year, which financial
statements shall be prepared in accordance with GAAP, certified without material
qualification by KPMG or any other firm of independent certified public
accountants of recognized national standing selected by the Parent and
reasonably acceptable to the Required Lenders that all such financial statements
are complete and correct and present fairly, in all material respects, in
accordance with GAAP the financial position and the results of operations and
cash flows of the Parent as at the end of such year and for the period then
ended and (C) of the Amalgamated Company, a copy of the annual audited financial
statements of the Amalgamated Company consisting of consolidated and
consolidating balance sheets and consolidated and consolidating statements of
income and retained earnings and cash flows, setting forth in comparative form
in each case the figures for the previous Fiscal Year, which financial
statements shall be prepared in accordance with GAAP, certified without material
qualification by KPMG or any other firm of independent certified public
accountants of recognized national standing selected by the Parent and
reasonably acceptable to the Required Lenders that all such financial statements
are complete and correct and present fairly, in all material respects, in
accordance with GAAP the financial position and the results of operations and
cash flows of the Amalgamated Company as at the end of such year and for the
period then ended.

(b) SAP Financial Statements. Within 30 days after the transmittal thereof to
any Governmental Authority, any Annual Statement or quarterly statutory
statements required to be delivered to such Governmental Authority by a Credit
Party or any Material Insurance Subsidiary prepared in conformity with the
requirements thereof.

 

ANNEX A-2

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

(c) Monthly Report and Borrowing Base Certificate. As soon as available, but in
any event within 25 days after the end of each calendar month of each Fiscal
Year, (i) a report listing Max Bermuda’s Eligible Investments and (ii) a
Borrowing Base Certificate executed by an Executive Officer. For purposes of
such report and of completing the Borrowing Base Certificate required under this
Section 5.1(c), each Eligible Investment shall be valued based on its Fair
Market Value as at the last Business Day of the calendar month for which such
report or Borrowing Base Certificate is being delivered.

(d) SEC Filings, etc. Promptly after the same are available, copies of each
annual report, proxy or financial statement or other report or communication
sent to the stockholders of the Parent or any other Credit Party (except (i) any
stockholder reports prepared internally for Subsidiaries (and not for the use of
or distribution to third parties) and (ii) notices given pursuant to the
management rights letter agreements between the Parent or any other Credit Party
and certain shareholders), and copies of all annual, regular, periodic and
special reports and registration statements which the Parent or any other
Material Party may file or be required to file with the SEC under Section 13 or
15 of the Securities Exchange Act of 1934, and not otherwise required to be
delivered to the Administrative Agent pursuant hereto.

(e) Additional Borrowing Base Certificates. Promptly, at the request of the
Administrative Agent, a Borrowing Base Certificate for any given Business Day
executed by an Executive Officer of Max Bermuda.

(f) Notice of Default, etc. Promptly (and in any event within two Business Days)
after any Executive Officer of any Credit Party knows or has reason to know of
the existence of any Default, any ERISA Event or any development or other
information which would have a Material Adverse Effect, telephonic or
telegraphic notice specifying the nature of such Default, ERISA Event or
development or information, including the anticipated effect thereof, which
notice shall be promptly confirmed in writing within two Business Days;

(g) Other Information. The following certificates and other information which
shall be delivered promptly after (and in any event within five Business Days
after) receipt of:

(i) Copies of any financial examination reports by a Governmental Authority with
respect to any Material Insurance Subsidiary relating to the insurance business
of such Material Insurance Subsidiary (when, and if, prepared); provided,
interim reports shall only be required to be delivered hereunder at such time as
such Credit Party has knowledge that a final report will not be issued and
delivered to the Administrative Agent within 90 days of any such interim report.

(ii) Copies of all filings (other than nonmaterial filings) with Governmental
Authorities by any Material Insurance Subsidiary, including, without limitation,
filings which seek approval of Governmental Authorities with respect to
transactions between any Credit Party or any Material Insurance Subsidiary and
its Affiliates.

(iii) Notice of proposed or actual suspension, termination or revocation of any
material license of any Material Insurance Subsidiary by any Governmental
Authority or of receipt of notice from any Governmental Authority notifying a
Credit Party or any Material Insurance Subsidiary of a hearing relating to such
a suspension, termination or revocation, including any request by a Governmental
Authority which commits any Credit Party or any Material Insurance Subsidiary to
take, or refrain from taking, any action or which otherwise materially and
adversely affects the authority of any Credit Party or any Material Insurance
Subsidiary to conduct its business.

 

ANNEX A-3

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

(iv) Notice of any pending or threatened (in writing) investigation or
regulatory proceeding (other than routine periodic investigations or reviews) by
any Governmental Authority concerning the business, practices or operations of
any Credit Party or any Material Insurance Subsidiary.

(v) Notice of any actual or, to the knowledge of any Credit Party, proposed
material changes in the Insurance Code governing the investment or dividend
practices of any Credit Party or any Material Insurance Subsidiary that could
reasonably be expected to adversely affect such Person in any material respect.

(vi) Notice of any material change in accounting policies or financial reporting
practices by the Parent or any other Credit Party except as required or
permitted by GAAP or SAP, as applicable.

(vii) Promptly upon the announcement thereof, any change in the Parent Debt
Rating or in the Financial Strength Rating of Max Bermuda, Harbor Point Re or
HPRe US.

(h) Compliance Certificates. Concurrently with the delivery to the
Administrative Agent of the GAAP financial statements under Sections 5.1(a)(i)
and 5.1(a)(ii), for each Fiscal Quarter and Fiscal Year of the Borrowers, and at
any other time no later than ten Business Days following a written request of
the Administrative Agent, a duly completed Compliance Certificate, signed by the
chief executive officer, chief financial officer, chief risk officer or chief
operating officer of the Parent.

(i) Notice of Litigation, License, etc. Promptly upon learning of the occurrence
of any of the following, written notice thereof, describing the same and the
steps being taken by the Parent or any other Credit Party with respect thereto:
(i) the institution of, or any adverse determination in, any litigation,
arbitration proceeding or governmental proceeding which could, if adversely
determined, be reasonably expected to have a Material Adverse Effect and which
is not Ordinary Course Litigation, (ii) the institution of, or any adverse
determination in, any litigation or arbitration proceeding with respect to a
Reinsurance Agreement or Primary Policy (x) issued by Max Bermuda or any of its
Subsidiaries involving unreserved claims in excess of 10% of Max Bermuda’s Net
Worth, (y) issued by Insurance Subsidiaries of Max US Holdings involving
unreserved claims in excess of 10% of the Parent’s Net Worth, or (z) issued by
Insurance Subsidiaries of the Amalgamated Company involving unreserved claims in
excess of 10% of the Amalgamated Company’s Net Worth; (iii) the commencement of
any dispute which could reasonably be expected to lead to the modification,
transfer, revocation, suspension or termination of this Agreement or any Credit
Document; or (iv) any event which could be reasonably expected to have a
Material Adverse Effect.

 

ANNEX A-4

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

(j) Other Information. From time to time such other information concerning the
Parent and its Subsidiaries as the Administrative Agent or any Lender through
the Administrative Agent may reasonably request.

Documents required to be delivered pursuant to Section 5.1(a)(i) or (ii) or
Section 5.1(d) (to the extent any such documents are included in materials
otherwise filed with the SEC) may be delivered electronically and if so
delivered, shall be deemed to have been delivered on the date (i) on which the
Borrowers post such documents, or provide a link thereto on the Parent’s or Max
Bermuda’s respective website on the Internet at the respective website address
listed on Schedule 10.2; or (ii) on which such documents are posted on the
Borrowers’ behalf on an Internet or intranet website, if any, to which each
Lender and the Administrative Agent have access (whether a commercial,
third-party website or whether sponsored by the Administrative Agent); provided
that: (i) the Borrowers shall deliver paper copies of such documents to the
Administrative Agent or any Lender that requests the Borrowers to deliver such
paper copies until a written request to cease delivering paper copies is given
by the Administrative Agent or such Lender and (ii) the Borrowers shall notify
the Administrative Agent and each Lender (by telecopier or electronic mail) of
the posting of any such documents and provide to the Administrative Agent by
electronic mail electronic versions (i.e., soft copies) of such documents.
Notwithstanding anything contained herein, in every instance the Borrowers shall
be required to provide paper copies of the Compliance Certificates required by
Section 5.1(h) to the Administrative Agent. Except for such Compliance
Certificates, the Administrative Agent shall have no obligation to request the
delivery or to maintain copies of the documents referred to above, and in any
event shall have no responsibility to monitor compliance by the Borrowers with
any such request for delivery, and each Lender shall be solely responsible for
requesting delivery to it or maintaining its copies of such documents.

The Borrowers hereby acknowledge that (a) the Administrative Agent and/or the
Arranger will make available to the Lenders and the Fronting Bank materials
and/or information provided by or on behalf of the Borrowers hereunder
(collectively, “Borrower Materials”) by posting the Borrower Materials on
IntraLinks or another similar electronic system (the “Platform”) and (b) certain
of the Lenders may be “public-side” Lenders (i.e., Lenders that do not wish to
receive material non-public information with respect to either Borrower or its
securities) (each, a “Public Lender”). The Borrowers hereby agree that (w) all
Borrower Materials that are to be made available to Public Lenders shall be
clearly and conspicuously marked “PUBLIC” which, at a minimum, shall mean that
the word “PUBLIC” shall appear prominently on the first page thereof; (x) by
marking Borrower Materials “PUBLIC,” the Borrowers shall be deemed to have
authorized the Administrative Agent, the Arranger, the Fronting Bank and the
Lenders to treat such Borrower Materials as not containing any material
non-public information with respect to either Borrower or its securities for
purposes of United States Federal and state securities laws (provided, however,
that to the extent such Borrower Materials constitute Information, they shall be
treated as set forth in Section 10.8); (y) all Borrower Materials marked
“PUBLIC” are permitted to be made available through a portion of the Platform
designated “Public Investor”; and (z) the Administrative Agent and the Arranger
shall be entitled to treat any Borrower Materials that are not marked “PUBLIC”
as being suitable only for posting on a portion of the Platform not designated
“Public Investor.”

 

ANNEX A-5

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SECTION 5.2 Corporate Existence, Foreign Qualification; Permits. (a) Preserve,
renew and maintain in full force and effect the legal existence and good
standing of each Credit Party and each Material Subsidiary under the laws of the
jurisdiction of its organization except in a transaction permitted by
Section 6.5 and except to the extent that the failure to do so could not
reasonably be expected to have a Material Adverse Effect; and (b) take all
reasonable action to maintain all rights, privileges, permits, licenses and
franchises necessary in the normal conduct of the respective businesses of each
Credit Party and each Material Subsidiary, except to the extent that failure to
do so could not reasonably be expected to have a Material Adverse Effect.

SECTION 5.3 Books, Records and Inspections. (a) Maintain proper books of record
and account, in which materially complete, true and correct entries in
conformity with GAAP consistently applied shall be made of all financial
transactions and matters involving the assets and business of the Parent or such
Subsidiary, as the case may be; (b) maintain such books of record and account in
material conformity with all applicable requirements of any Governmental
Authority having regulatory jurisdiction over the Parent or such Subsidiary, as
the case may be; and (c) permit designated representatives of the Administrative
Agent to visit and inspect any of its properties, to examine its corporate,
financial and operating records, and make copies thereof or abstracts therefrom,
and to discuss its affairs, finances and accounts with its directors, officers,
and independent public accountants (provided that the Borrowers shall be given
the opportunity to participate in any discussion or meeting with such
independent accountants so long as no Event of Default then exists), all at the
expense of the Administrative Agent and at such reasonable times during normal
business hours and as often as may be reasonably desired, upon reasonable
advance notice to the Borrowers; provided, however, that during the continuance
of an Event of Default, the Administrative Agent (or any of its designated
representatives) may do any of the foregoing at the expense of the Borrowers at
any time during normal business hours and without advance notice.

SECTION 5.4 Insurance. Maintain with financially sound and reputable insurance
companies not Affiliates of the Parent, insurance with respect to its properties
that are material to the business of the Parent and the other Credit Parties
taken as a whole against loss or damage of the kinds customarily insured against
by Persons engaged in the same or similar business, of such types and in such
amounts as are customarily carried under similar circumstances by such other
Persons.

SECTION 5.5 Payment of Obligations. Pay, and cause each Material Party to pay,
and discharge as the same shall become due and payable, all its obligations and
liabilities, including (a) all tax liabilities, assessments and governmental
charges or levies upon it or its properties or assets, unless the same are being
contested in good faith by appropriate proceedings diligently conducted and
adequate reserves in accordance with GAAP are being maintained by such Borrower
or such Subsidiary; (b) all lawful claims which, if unpaid, would by law become
a Lien upon its property not otherwise permitted under Section 6.8; and (c) all
Debt in excess of the Threshold Amount, as and when due and payable, but subject
to any subordination provisions contained in any instrument or agreement
evidencing such Debt.

SECTION 5.6 Compliance with Laws. Comply in all material respects with all
Requirements of Law, except in such instances in which (a) such Requirement of
Law is being contested in good faith by appropriate proceedings diligently
conducted; or (b) the failure to comply therewith could not reasonably be
expected to have a Material Adverse Effect.

 

ANNEX A-6

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

SECTION 5.7 Maintenance of Properties. (a) Maintain, preserve and protect all of
its material properties and equipment necessary in the operation of its business
in good working order and condition, ordinary wear and tear excepted; and
(b) make all necessary repairs thereto and renewals and replacements thereof
except where the failure to comply with clause (a) and/or (b) could not
reasonably be expected to have a Material Adverse Effect.

SECTION 5.8 Conduct of Business. Engage primarily in the insurance and
reinsurance business and such other businesses described in the Proxy Statement.

SECTION 5.9 Use of Credit Extensions. Request Letters of Credit only to support
obligations of Max Bermuda or any of its Insurance Subsidiaries under
Reinsurance Agreements and Primary Policies and regulatory purposes and use Loan
proceeds only for general corporate purposes of the Borrowers.

SECTION 5.10 Further Assurances. Promptly upon the request of the Administrative
Agent, Max Bermuda shall execute, acknowledge, deliver and record and do any and
all such further acts and deeds as the Administrative Agent may reasonably
request from time to time in order to ensure that the obligations of Max Bermuda
hereunder are secured by a first priority (subject only to Liens described in
Sections 6.8(b) and (o)) perfected interest in the assets of Max Bermuda stated
to be pledged pursuant to the Security Agreement and to perfect and maintain the
validity, effectiveness and priority of the Security Agreement and the Liens
intended to be created thereby. Notwithstanding the provisions of Section 3 of
the Control Agreement entered into on August 7, 2007, without the prior written
consent of the Administrative Agent, Max Bermuda shall not give directions or
entitlement orders to The Bank of New York Mellon (or another Securities
Intermediary party to a Control Agreement with respect to a Custody Account) to
make a delivery to Max Bermuda or any other Person of assets or properties
(other than dividends and interest on the Eligible Investments) from the Custody
Account except in connection with the sale, investment or reinvestment of an
Eligible Investment the proceeds of which will be deposited into the Custody
Account. The Administrative Agent, on behalf of the Lenders, agrees that
provided (i) no Event of Default exists and is continuing and (ii) after giving
effect to the proposed delivery, the Tranche A Borrowing Base is equal to or in
excess of the Tranche A Obligations, as the case may be, the Administrative
Agent shall consent to any such delivery within one Business Day of the request.

SECTION 5.11 Collateral Requirements. (a) Max Bermuda shall cause the Tranche A
Borrowing Base at all times to be equal to or greater than the Tranche A
Obligations. If at any time the Tranche A Borrowing Base is less than the
Tranche A Obligations, Max Bermuda shall immediately (and in any event within
two Business Days) deposit into the Custody Account Eligible Investments, or
reduce the Tranche A Obligations, or a combination of the foregoing, in an
amount sufficient to eliminate such excess.

(b) The minimum weighted average credit quality rating of the Eligible
Investments in the Custody Account shall be at least AA/Aa2 or the equivalent
and the Eligible Investments in the Custody Account shall not exceed the
Concentration Limits; provided, however, that Max Bermuda shall not be in
violation of this Section 5.11(b) if such violation occurs as a result of a
change in the Fair Market Value or ratings of such Eligible Investments (as
opposed to a change in the makeup of such Eligible Investments) unless such
deficiency exists for 30 days.

 

ANNEX A-7

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SECTION 5.12 OFAC; PATRIOT Act Compliance. In each case only if and to the
extent that it is subject to OFAC (i) refrain from doing business in a
Sanctioned Country or with a Sanctioned Person in violation of the economic
sanctions of the United States administered by OFAC, and (ii) provide, to the
extent commercially reasonable, such information and take such actions as are
reasonably requested by the Administrative Agent or any Lender in order to
assist the Administrative Agent and the Lenders in maintaining compliance with
the PATRIOT Act.

ARTICLE VI

NEGATIVE COVENANTS

So long as any Lender shall have any Commitment hereunder, any LC Obligation,
Loan or other Obligation hereunder (other than any contingent indemnification
liability that is not then payable) shall remain unpaid or unsatisfied, or any
Letter of Credit shall remain outstanding, the Parent and each Credit Party
shall not, and, to the extent expressly required pursuant to the applicable
provisions of this Article VI, shall not permit any of its respective
Subsidiaries to (provided that each Credit Party covenants solely with respect
to itself and its respective Subsidiaries):

SECTION 6.1 Minimum Net Worth. Permit the Net Worth of the Parent and its
consolidated Subsidiaries to be less than the sum of (a) the Minimum Net Worth,
plus (b) an amount equal to 25% of positive Consolidated Net Income of the
Parent in each Fiscal Quarter of the applicable Fiscal Year ending after the
Amalgamation Date, plus (c) an amount equal to 50% of the aggregate increases in
shareholders’ equity of the Parent by reason of the issuance and sale of Equity
Interests in the Parent, or other capital contributions in each Fiscal Quarter
of the applicable Fiscal Year ending after the Amalgamation Date. The initial
Minimum Net Worth shall be an amount equal to 70% of the pro forma Net Worth as
of the most recent Fiscal Quarter ending prior to the Amalgamation Date shown on
the Pro Forma Financial Statements minus, in the event that an extraordinary
dividend is paid by the Parent or the Parent repurchases some of its Equity
Interests on or before the date which is twelve months following the
Amalgamation Date, the lesser of (x) 70% of the amount of such dividend payment
and stock repurchase payment and (y) $350,000,000. Commencing on the first date
after the Amalgamation Date that financial statements are delivered pursuant to
Section 5.1(a)(ii), the Minimum Net Worth will be recalculated to be the greater
of (x) the required Minimum Net Worth as of the first day of the previous Fiscal
Year (without giving effect to the increases referred to in the previous
sentence) and (y) 65% of the Net Worth of the Parent as of such Fiscal Year end.
For purposes of this Section 6.1, Net Worth will exclude any extraordinary gains
realized in connection with the Amalgamation.

SECTION 6.2 Parent Debt to Total Capitalization Ratio. Permit the Parent Debt to
Total Capitalization Ratio to be greater than 35%. For purposes of determining
the Parent Debt to Total Capitalization Ratio, only that portion of the Total
Return Equity Swaps, including notional value additions, which is treated as
indebtedness by A.M. Best Company will be included as Debt. As of the date of
the Third Amendment, A.M. Best Company currently treats 0% of the existing Total
Return Equity Swap as indebtedness.

 

ANNEX A-8

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SECTION 6.3 Financial Strength Rating. Permit the Financial Strength Rating of
Max Bermuda, Harbor Point Re or HPRe US to fall below the rating of “B++”.

SECTION 6.4 Debt. Create, incur, assume or suffer to exist any Debt of the
Parent’s Subsidiaries, except:

(a) Debt under the Credit Documents;

(b) obligations (contingent or otherwise) existing or arising under any Swap
Contract entered into by such Person in the ordinary course of business for the
purpose of hedging currency, commodity or interest rate risk and not for
purposes of speculation or taking a “market view”;

(c) Debt for standby letters of credit issued to secure liabilities under
Primary Policies or Reinsurance Agreements entered into in the ordinary course
of business;

(d) Debt owed by any Subsidiary to the Parent or any of its Subsidiaries;
provided that if such Debt is owed by an Affected Party such Affected Party’s
Debt, if any, is subordinate to Debt under this Agreement and under the Harbor
Point Credit Agreement (including any Guarantees of such Debt) on terms
satisfactory to the Administrative Agent;

(e) Debt of any Subsidiary in connection with securities lending arrangements
with financial institutions in the ordinary course of business;

(f) Debt in connection with Total Return Equity Swaps provided the total
aggregate amount outstanding at any time does not exceed an amount equal to 10%
of the Investment Portfolio;

(g) unsecured Debt of Max US Holdings and its Subsidiaries not to exceed
$150,000,000;

(h) Debt of Max UK for standby letters of credit which have been, or may from
time to time in the future be, issued to provide funds at Lloyd’s to support
Lloyd’s syndicate commitments of Max UK and its Subsidiaries;

(i) Debt under the Harbor Point Credit Agreement including Guarantees of such
Debt;

(j) Debt not included in clauses (a) through (i), provided that the aggregate
amount of all such Debt at any one time outstanding does not exceed
$150,000,000; and

(k) Debt arising under Guarantees made by any Subsidiary of Debt owed by any of
its Subsidiaries of the type described in clauses (a) through (j) above,
provided that if such Guarantee guarantees Debt of a Credit Party, such
Subsidiary has also guaranteed the obligations of such Credit Party hereunder.

 

ANNEX A-9

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SECTION 6.5 Mergers, Consolidations, Acquisitions and Dispositions. Merge,
dissolve, liquidate, amalgamate, consolidate with or into another Person, or
Dispose of (whether in one transaction or in a series of transactions) all or
substantially all of its assets (whether now owned or hereafter acquired) to or
in favor of any Person or make any Acquisition, except that, so long as no
Default or Event of Default exists or would result therefrom:

(a) any Subsidiary (other than the Amalgamated Company, Harbor Point Re and Max
Bermuda) may merge, amalgamate or consolidate with another Subsidiary so long as
(i) if either such Subsidiary is a Wholly Owned Subsidiary, the surviving Person
shall (or, in the case of an amalgamation, the amalgamated entity shall), after
giving effect to such merger, amalgamation or consolidation, be a Wholly Owned
Subsidiary; and (ii) if structured as a merger, amalgamation or consolidation
and a Credit Party is a party thereto, (A) a Credit Party is the surviving
entity (or, if an amalgamation, the amalgamated entity shall be liable for such
Credit Party’s obligations), and (B) the Administrative Agent shall have
received such documents, certificates and opinions in connection with such
merger, amalgamation or consolidation affirming the effectiveness of this
Agreement and the other Credit Documents and the liability of the Credit Parties
(including, in the case of an amalgamation, the amalgamated entity) for the
Obligations as it shall have reasonably requested;

(b) the Amalgamated Company may merge, amalgamate or consolidate with Max
Capital so long as Max Capital is the surviving entity (or, in the case of an
amalgamation, the amalgamated entity shall be liable for all of the Parent’s
obligations) provided the Administrative Agent shall have received such
documents, certificates and opinions in connection with such merger,
amalgamation or consolidation affirming the effectiveness of this Agreement and
the other Credit Documents and the liability of Max Capital (or, in the case of
an amalgamation, such amalgamated entity) for the Obligations as it shall have
reasonably requested;

(c) any Subsidiary (other than the Amalgamated Company, Harbor Point Re and Max
Bermuda) may merge, consolidate or amalgamate with any Person who is not a
Subsidiary and the Parent or any Subsidiary (including the Amalgamated Company,
Harbor Point Re and Max Bermuda) may make an Acquisition provided (i) the Parent
provides the Lenders with a pro forma Compliance Certificate giving effect to
such merger, consolidation, amalgamation, or Acquisition, (ii) (x) the purchase
price paid in connection with any single merger, consolidation, amalgamation or
Acquisition does not exceed $400,000,000 and (y) the aggregate purchase price
paid by the Parent and all of its Subsidiaries in connection with all mergers,
consolidations, amalgamations and Acquisitions since the Amalgamation Date does
not exceed $600,000,000, (iii) in the case of a merger, consolidation or
amalgamation, a Subsidiary shall be the continuing or surviving Person and, if
any Wholly Owned Subsidiary is merging, consolidating or amalgamating with
another Person, such Subsidiary (or, in the case of an amalgamation, the
amalgamated entity) shall continue to be Wholly Owned after such merger,
consolidation or amalgamation and (iv) if a Credit Party is involved, the
Administrative Agent shall have received such documents, certificates and
opinions in connection with such merger, amalgamation or consolidation affirming
the effectiveness of this Agreement and the other Credit Documents and the
liability of the Credit Parties for the Obligations as it shall have reasonably
requested;

 

ANNEX A-10

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(d) Max Bermuda may enter into Total Return Equity Swaps permitted under
Section 6.4(f) and Dispositions of assets subject thereto; and

(e) any Subsidiary (other than the Amalgamated Company, Harbor Point Re and Max
Bermuda) may Dispose of all or substantially all of its assets (upon voluntary
liquidation or otherwise) to a Credit Party, to any one or more other Wholly
Owned Subsidiaries or to one of its Subsidiaries.

SECTION 6.6 Other Agreements. Enter into any agreement containing any provision
which would be violated or breached by the performance of obligations hereunder
or under any instrument or document delivered or to be delivered by it hereunder
or in connection herewith.

SECTION 6.7 Transactions with Affiliates. Enter into, or cause, suffer or permit
to exist, any arrangement, transaction or contract with any of its Affiliates
unless such arrangement, transaction or contract is on an arm’s length basis;
provided that the foregoing restriction shall not apply to (i) Permitted
Transactions, (ii) transactions between or among the Parent and any of its
Wholly Owned Subsidiaries or between and among any Wholly Owned Subsidiaries,
(iii) Restricted Payments permitted pursuant to Section 6.10, (iv) reasonable
and customary fees paid to members of the board of directors (or similar
governing body) of the Parent and its Subsidiaries and reimbursement of
reasonable expenses of directors of the Parent and its Subsidiaries,
(v) compensation arrangements for officers and other employees of the Parent and
its Subsidiaries entered in the ordinary course of business, (vi) the provision
of director’s, officer’s and employee’s indemnification and insurance in the
ordinary course of business or in accordance with the terms of the Amalgamation
Agreement and (vii) the issuance of any new warrant or the amendment of any
existing warrant to purchase shares of common stock of Parent in accordance with
the terms of the Amalgamation Agreement.

SECTION 6.8 Liens. Create, incur, assume or suffer to exist any Lien upon any of
its property, assets or revenues, whether now owned or hereafter acquired, other
than the following:

(a) Liens pursuant to any Credit Document;

(b) Liens for Taxes not yet due or which are being contested in good faith and
by appropriate proceedings, if adequate reserves with respect thereto are
maintained on the books of the applicable Person in accordance with GAAP;

(c) carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s or other
like Liens arising in the ordinary course of business which are not overdue for
a period of more than 60 days or which are being contested in good faith and by
appropriate proceedings, if adequate reserves with respect thereto are
maintained on the books of the applicable Person;

(d) Liens of landlords or of mortgagees of landlords arising by operation of law
or pursuant to the terms of real property leases, provided that the rental
payments secured thereby are not yet due and payable;

 

ANNEX A-11

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(e) pledges or deposits in the ordinary course of business in connection with
workers’ compensation, unemployment insurance and other forms of governmental
insurance or benefits and Liens pursuant to Letters of Credit or other security
arrangements in connection with such insurance or benefits, other than any Lien
imposed by ERISA;

(f) deposits to secure the performance of bids, trade contracts and leases
(other than Debt), statutory obligations, surety and appeal bonds, performance
bonds and other obligations of a like nature incurred in the ordinary course of
business;

(g) easements, rights-of-way, restrictions, minor defects or irregularities in
title and other similar encumbrances affecting real property which, in the
aggregate, do not materially interfere with the ordinary conduct of the business
of the Parent and its Subsidiaries as a whole;

(h) Liens securing judgments for the payment of money not constituting an Event
of Default under Section 7.1(l);

(i) Liens on assets held in trust in respect of, or deposited or segregated to
secure, liabilities under any Primary Policies or Reinsurance Agreements or
securing Debt permitted under Section 6.4(c);

(j) Liens securing Debt permitted under Section 6.4(f) and 6.4(h);

(k) Liens on Eligible Investments securing the Harbor Point Credit Agreement;

(l) Liens securing Debt permitted under Section 6.4(j) provided that the amount
of the Debt secured thereby does not exceed $75,000,000 at any time;

(m) Liens arising out of the refinancing, extension, renewal or refunding of any
Debt secured by any Lien permitted by any clause of this Section 6.8, provided
that such Debt is not increased and is not secured by additional assets;

(n) Liens on any asset subject to any trust or other account arising out of
regulatory requirements to the extent that such Liens are required by an
applicable Insurance Regulatory Authority for such Person to maintain such
obligations;

(o) bankers’ Liens, rights of setoff and similar Liens arising in the ordinary
course of business on operating accounts (including any related securities
accounts) maintained by the Parent or any of its Subsidiaries in the ordinary
course of business; and

(p) Liens arising in connection with securities lending arrangements with
financial institutions in the ordinary course of business;

provided, however, that no Lien (other than Liens pursuant to Sections 6.8(a) or
(b) or with respect to the Collateral, Liens of the type permitted in
Section 6.8(o) with respect to the applicable control agreement) shall be
permitted to exist on the Equity Interest in any Insurance Subsidiaries or on
the Collateral.

 

ANNEX A-12

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SECTION 6.9 Restrictions on Negative Pledge Agreements. Enter into any
Contractual Obligation that limits the ability (a) of an Affected Party (other
than the Parent) to make Restricted Payments to any other Affected Party, (b) of
an Affected Party to transfer property to any other Affected Party, (c) of the
Parent or any other Affected Party to Guarantee the Debt under the Credit
Documents of a Borrower or (d) of the Parent or any other Affected Party to
create, incur, assume or suffer to exist Liens on property of such Person to
secure the Obligations under this Agreement or the Harbor Point Credit
Agreement; provided, however, that this Section shall not prohibit such
limitations existing under or by reason of (i) applicable law, (ii) this
Agreement or any other Credit Document, (iii) the Harbor Point Credit Agreement
or any other Harbor Point Credit Document, (iv) customary provisions restricting
subletting or assignment in any lease governing any leasehold interest of the
Parent or any of its Subsidiaries, (v) customary provisions restricting
assignment in any licensing agreement (in which the Parent or any of its
Subsidiaries is the licensee) or other contract (including leases) entered into
by the Parent or any of its Subsidiaries in the ordinary course of business,
(vi) restrictions and conditions on the transfer of or granting of a Lien on any
asset subject to a Lien permitted by Section 6.8, (vii) restrictions and
conditions on the transfer of any asset pending the close of the sale of such
asset, (viii) agreements entered into by an Insurance Subsidiary with any
Insurance Regulatory Authority, (ix) restrictions described in clauses
(a) through (d) above in partnership agreements, limited liability company
organization governance documents, joint venture agreements and other similar
agreements entered into in the ordinary course of business, (x) restrictions on
cash or other deposits or net worth requirements imposed by counterparties under
Insurance Policies, Reinsurance Agreements and Retrocession Agreements entered
into in the ordinary course of business; provided that in the case of this
clause (x), (1) the encumbrances and restrictions contained in such agreement or
net worth requirements taken as a whole are not materially more favorable to the
beneficiary thereof than the encumbrances and restrictions contained in this
Agreement, or (2) if such encumbrance or restriction is not materially more
disadvantageous to the Affected Parties than is customary in comparable
transactions and such encumbrance or restriction will not materially affect the
ability of the Affected Parties to pay the Obligations, (xi) restrictions or
conditions imposed by any agreement relating to secured Debt permitted by this
Agreement if such restrictions or conditions apply only to the property or
assets securing such Debt, (xii) restrictions and conditions imposed by any
agreement relating to Debt permitted by (A) Section 6.4(i) or (B) Sections
6.4(c), 6.4(g), 6.4(h) and 6.4(j), provided that, with respect to this clause B,
(1) such restrictions and conditions apply only to the Subsidiary (and its
respective Subsidiaries) incurring such Debt and (2) with respect to
restrictions of the type described in clause (a), (b) or (c) above, each such
restriction, taken as a whole, is no more restrictive than the corresponding
restriction contained in this Agreement, and (3) such restrictions do not
prohibit such Subsidiary (and its respective Subsidiaries) from granting Liens
to secure the Obligations under this Agreement or the Harbor Point Credit
Agreement, (xiii) restrictions on the Parent and its Subsidiaries pursuant to
the Max US Holdings Indenture, and (xiv) restrictions on Max Bermuda and its
Subsidiaries pursuant to the Credit Agreement, dated as of December 21, 2006,
between Max Bermuda and The Bank of Nova Scotia, provided that (A) the
commitment under such credit agreement shall not exceed $75,000,000, (B) such
credit agreement permits Max Bermuda to make Restricted Payments and (C) such
credit agreement permits Max Bermuda and any Subsidiary that is an Affected
Party to Guarantee the Debt under this Agreement and the Harbor Point Credit
Agreement.

 

ANNEX A-13

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SECTION 6.10 Restricted Payments, Etc. (a) Declare or pay any dividends on any
of the Equity Interests in the Parent, (b) purchase any Equity Interests in the
Parent or (c) set aside funds for any of the foregoing, except that the Parent
may declare or pay dividends on, or make distributions in respect of, any of its
Equity Interests and the Parent may purchase any of its Equity Interests
provided no Default or Event of Default has occurred and is continuing before or
after giving effect to the declaration or payment of such dividends,
distributions, or purchases.

ARTICLE VII

EVENTS OF DEFAULT AND THEIR EFFECT

SECTION 7.1 Events of Default. Each of the following shall constitute an Event
of Default under this Agreement:

(a) Non-Payment of Credit Extension. Default in the payment when due of any LC
Advance or any amount of principal on any Loan.

(b) Non-Payment of Interest, Fees, etc. Any Borrower fails to pay within three
Business Days after the same becomes due, any interest on any Loan or on any LC
Obligation, or any fee due hereunder, or any other amount payable hereunder or
under any other Credit Document.

(c) Non-Payment of Other Debt. (i) Any “Event of Default” (as such term is
defined in the Harbor Point Credit Agreement) shall have occurred, (ii) any
Material Party (A) fails to make any payment when due (whether by scheduled
maturity, required prepayment, acceleration, demand, or otherwise) in respect of
any other Debt or Guarantee (other than Debt hereunder and Debt under Swap
Contracts) having an aggregate principal amount of more than the Threshold
Amount, or (B) fails to observe or perform any other agreement or condition
relating to any such Debt or Guarantee having an aggregate principal amount of
more than the Threshold Amount or contained in any instrument or agreement
evidencing, securing or relating thereto, and, in each case, such default
continues for more than the period of grace, if any, therein specified, the
effect of which default is to cause, or to permit the holder or holders of such
Debt or the beneficiary or beneficiaries of such Guarantee (or a trustee or
agent on behalf of such holder or holders or beneficiary or beneficiaries) to
cause, with the giving of notice if required, such Debt to be demanded or to
become due or to be repurchased, prepaid, defeased or redeemed (automatically or
otherwise), or an offer to repurchase, prepay, defease or redeem such Debt to be
made, prior to its stated maturity, or such Guarantee to become payable or cash
collateral in respect thereof to be demanded; or (iii) there occurs under any
Swap Contract an Early Termination Date (as defined in such Swap Contract)
resulting from (A) any event of default under such Swap Contract as to which a
Material Party is the sole Defaulting Party (as defined in such Swap Contract)
or (B) any Additional Termination Event (as so defined) under such Swap Contract
as to which a Material Party is the sole Affected Party (as so defined) and, in
either event, the Swap Termination Value owed by a Material Party as a result
thereof is greater than the Threshold Amount.

 

ANNEX A-14

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(d) Bankruptcy, Insolvency, etc. Any Material Party institutes or consents to
the institution of any proceeding under any Debtor Relief Law, or makes an
assignment for the benefit of creditors; or applies for or consents to the
appointment of any receiver, trustee, custodian, conservator, liquidator,
rehabilitator or similar officer for it or for all or any material part of its
property; or any receiver, trustee, custodian, conservator, liquidator,
rehabilitator or similar officer is appointed without the application or consent
of such Person and the appointment continues undischarged or unstayed for 60
calendar days; or any proceeding under any Debtor Relief Law relating to any
such Person or to all or any material part of its property is instituted without
the consent of such Person and continues undismissed or unstayed for 60 calendar
days, or an order for relief is entered in any such proceeding; or any Material
Party becomes unable or admits in writing its inability or fails generally to
pay its debts as they become due, or any writ or warrant of attachment or
execution or similar process is issued or levied against all or any material
part of the property of any such Person and is not released, vacated or fully
bonded within 60 days after its issue or levy.

(e) Financial Statements. Failure by any Credit Party required to comply with
its covenants set forth in Section 5.1 and continuance of such failure for five
Business Days after notice thereof from the Administrative Agent.

(f) Specific Defaults. Failure by a Credit Party to comply with the covenants
set forth in Sections 5.2, 5.9, 5.11, 6.1, 6.2, 6.3, 6.4, 6.5, 6.8, 6.9 or 6.10.

(g) Non-compliance With Other Provisions. Failure by a Credit Party to comply
with or to perform any provision of this Agreement or any other Credit Document
(and not constituting an Event of Default under any of the other provisions of
this Article VII) and such failure continues for 30 days from the earliest of
(i) the date an Executive Officer has knowledge of such failure or (ii) the date
the Administrative Agent or the Required Lenders give notice of such failure.

(h) Warranties and Representations. Any representation, warranty, certification
or statement of fact made or deemed made by or on behalf of any Credit Party
herein, in any other Credit Document, or in any document delivered by or on
behalf of such Credit Party in connection herewith or therewith shall be
incorrect or misleading in any material respect when made or deemed made.

(i) Employee Benefit Plans. (i) An ERISA Event occurs with respect to a Pension
Plan or Multiemployer Plan which has resulted or could reasonably be expected to
result in liability of a Borrower under Title IV of ERISA to the Pension Plan,
Multiemployer Plan or the PBGC in an aggregate amount in excess of the Threshold
Amount, or (ii) the Parent or any ERISA Affiliate fails to pay when due, after
the expiration of any applicable grace period, any installment payment with
respect to its withdrawal liability under Section 4201 of ERISA under a
Multiemployer Plan in an aggregate amount in excess of the Threshold Amount; or
(iii) institution of any steps by the Parent or any other Person to terminate a
Foreign Benefit Plan if as a result of such termination, the Parent or any of
its respective Subsidiaries could be required to make a contribution to such
Foreign Benefit Plan, or could incur a liability or obligation to such Foreign
Benefit Plan, in excess of the Threshold Amount, or (iv) a contribution failure
with respect to any Foreign Benefit Plan sufficient to give rise to a Lien under
applicable law in excess of the Threshold Amount occurs.

 

ANNEX A-15

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(j) Credit Documents. Any Credit Document, at any time after its execution and
delivery and for any reason other than as expressly permitted hereunder or
thereunder or satisfaction in full of all the Obligations, ceases to be in full
force and effect; or any Credit Party contests in any manner the validity or
enforceability of any Credit Document or denies that it has any liability or
obligation under any Credit Document, or purports to revoke, terminate or
rescind any Credit Document other than in accordance with the terms of any such
Credit Document or the Administrative Agent shall fail to have a first priority
perfected Lien on any Collateral (subject only to Liens described in
Section 6.8(b) and (o)).

(k) Change in Control. A Change in Control occurs.

(l) Judgments. There is entered against any Affected Party (i) a final judgment
or order for the payment of money in an aggregate amount exceeding the Threshold
Amount (to the extent not paid, fully bonded or covered by independent
third-party insurance as to which the surety or insurer does not dispute
coverage), or (ii) any one or more non-monetary final judgments that have, or
could reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect and, in either case, such judgment shall not have been
discharged or vacated or had execution thereof stayed pending appeal within 60
days after entry of such judgment.

SECTION 7.2 Effect of Event of Default. If any Event of Default described in
Section 7.1(e) shall occur and is continuing, all Obligations shall become
immediately due and payable, and Max Bermuda shall become immediately obligated
to deliver to the Administrative Agent cash collateral in an amount equal to
102% of the outstanding LC Obligations all without notice of any kind; and, in
the case of any other Event of Default, the Administrative Agent may, and upon
the written request of the Required Lenders shall, terminate the Aggregate
Commitments hereunder and declare all or any portion of the Obligations to be
due and payable, and/or demand that Max Bermuda immediately deliver to the
Administrative Agent Cash and Cash Equivalents in an amount equal to 102% of the
outstanding LC Obligations whereupon the Aggregate Commitments shall terminate
and all or such portion of the Obligations shall become immediately due and
payable, and/or demand that Max Bermuda immediately deliver to the
Administrative Agent Cash and Cash Equivalents in an amount equal to the
outstanding LC Obligations all without further notice of any kind. The
Administrative Agent shall promptly advise the Borrowers of any such declaration
but failure to do so shall not impair the effect of such declaration.
Notwithstanding the foregoing, the effect as an Event of Default of any event
described in Section 7.1(a) may not be waived except by consent of all of the
Lenders and acknowledged by the Administrative Agent in writing.

SECTION 7.3 LC Collateral Account.

(a) If at any time after Max Bermuda has been required to deposit amounts in the
LC Collateral Account (or maintain Collateral in the Custody Account) pursuant
to Section 2.14, the Administrative Agent determines that the amount on deposit
in the LC Collateral Account or the Custody Account, as applicable, is less than
102% of the amount of the respective outstanding

 

ANNEX A-16

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LC Obligations for which such Collateral has been deposited, the Administrative
Agent may demand Max Bermuda to deposit, and Max Bermuda shall, upon such demand
and without any further notice, pay to the Administrative Agent for deposit in
the LC Collateral Account or deposit in the Custody Account, as applicable,
funds necessary to cure any shortfall.

(b) The Administrative Agent may, at any time or from time to time apply
Collateral held in the LC Account or the Custody Account pursuant to
Section 2.14 to the payment of the LC Obligations for which such Collateral was
deposited then due and payable by Max Bermuda to the Fronting Bank, the Lenders
or the Administrative Agent under the Credit Documents

(c) Neither Max Bermuda nor any Person claiming on behalf of or through Max
Bermuda shall have any right to withdraw any of the Collateral held in the LC
Collateral Account until all of the LC Obligations for which such Collateral has
been deposited have been indefeasibly paid in full, the applicable Commitments
have been terminated and applicable Letters of Credit have been terminated or
expired, at which time any Collateral remaining in the LC Collateral Account
shall be returned by the Administrative Agent to Max Bermuda. Notwithstanding
the foregoing, in the event that the amount of the Collateral held in the LC
Account or the Custody Account pursuant to Section 2.14 exceeds the amount
required to be deposited pursuant thereto, upon request of Max Bermuda, the
Administrative Agent will release the excess Collateral.

 

ANNEX A-17

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ANNEX B

[Agreement and Plan of Amalgamation dated as of March 3, 2010 by and among
Harbor Point,

Amalco Sub and Max Capital]

See Exhibit 2.1 of the Current Report on Form 8-K

 

Annex B

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ANNEX C

GUARANTY AGREEMENT

THIS GUARANTY AGREEMENT, dated as of the      day of             , 20[    ]
(this “Guaranty”), is made by [NAME OF GUARANTOR], a Bermuda company, (the
“Guarantor”), in favor of the Guaranteed Parties (as hereinafter defined).
Capitalized terms used herein without definition shall have the meanings given
to them in the Credit Agreement referred to below.

RECITALS

A. Max Bermuda Ltd., a Bermuda company (“Max Bermuda”), Max Capital Group Ltd.,
a Bermuda company (“Max Capital” and collectively with Max Bermuda, the
“Borrowers”), certain Lenders, and Bank of America, N.A., as administrative
agent for the Lenders (in such capacity, the “Administrative Agent”), are
parties to a Credit Agreement, dated as of August 7, 2007 (as amended, modified,
restated or supplemented from time to time, the “Credit Agreement”), providing
for the availability of certain credit facilities to the Borrowers upon the
terms and conditions set forth therein.

B. Harbor Point Limited, a Bermuda company (“Harbor Point”), Max Capital and
[Amalco Sub], a Bermuda company and a Wholly Owned Subsidiary of Max Capital
(“Amalco Sub”) have entered into the Amalgamation Agreement pursuant to which
Amalco Sub and Harbor Point will amalgamate into an amalgamated Bermuda company
(the “Amalgamated Company”) resulting in the Amalgamated Company being a Wholly
Owned Subsidiary of Max Capital. It is a condition to the Lenders’ consent to
the amendment to the Credit Agreement in connection with the Amalgamation and
further extensions of credit to the Borrowers under the Credit Agreement that
the Guarantor shall have agreed, by executing and delivering this Guaranty, to
guarantee to the Guaranteed Parties (as hereinafter defined) the payment in full
of the Guaranteed Obligations (as hereinafter defined). The Guaranteed Parties
are relying on this Guaranty in their decision to consent to the amendment to
the Credit Agreement in connection with the Amalgamation and extend further
credit to the Borrowers under the Credit Agreement, and would not do so without
this Guaranty.

C. From and after the Amalgamation Date, [the Guarantor and] Max Bermuda will be
Wholly Owned Subsidiaries of Max Capital, and the Guarantor will benefit from
the extension of credit to [the Borrowers][Max Bermuda] under the Credit
Agreement, which benefits are hereby acknowledged, and accordingly desires to
execute and deliver this Guaranty.1

 

 

1

Adjust as necessary in connection with guaranty of Max Capital, the Amalgamated
Company, Harbor Point or Amalco Sub.

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STATEMENT OF AGREEMENT

NOW, THEREFORE, in consideration of the foregoing and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, to
induce the Lenders, the Administrative Agent, the Fronting Bank and the LC
Administrator (collectively, the “Guaranteed Parties”) to consent to the
Amalgamation and to induce the Lenders and the Fronting Bank to extend credit to
the [Borrowers][Max Bermuda] thereunder and in recognition of the direct
benefits to be received by the Guarantor from the proceeds of the Loans and the
issuance of the Letters of Credit the Guarantor hereby agrees as follows:

1. Guaranty. The Guarantor hereby unconditionally, absolutely and irrevocably
guarantees, as a primary obligor and not merely as surety, the full and punctual
payment when due (whether at stated maturity, upon acceleration or otherwise) of
all Obligations to the Guaranteed Parties of [each of the Borrowers][Max
Bermuda] under the Credit Documents including, without limitation, the LC
Obligations owing by Max Bermuda to the Guaranteed Parties pursuant to the
Credit Agreement (the “Guaranteed Obligations”). This Guaranty is a guaranty of
payment and not of collection. Upon failure by [any Borrower][Max Bermuda] to
pay punctually any of the Guaranteed Obligations when due and payable (whether
at stated maturity, upon acceleration or otherwise), the Guarantor agrees to pay
forthwith on demand from the Administrative Agent the amount then due and not so
paid at the place and in the manner specified in the Credit Agreement

2. Guaranty Unconditional. The obligations of the Guarantor under this Guaranty
shall be unconditional, absolute and irrevocable and, without limiting the
generality of the foregoing, shall not be released, discharged or otherwise
affected by:

(a) any extension, renewal, settlement, compromise, waiver or release (including
with respect to any Collateral) in respect of any obligation of any other
obligor under any of the Credit Documents, by operation of law or otherwise;

(b) any modification or amendment of or supplement to any of the Credit
Documents;

(c) any release, non-perfection or invalidity of any direct or indirect security
for any obligation of any other obligor under any of the Credit Documents;

(d) any change in the corporate existence, structure or ownership of any
obligor, or any insolvency, bankruptcy, reorganization or other similar
proceeding affecting any other obligor or its assets or any resulting release or
discharge of any obligation of any other obligor contained in any of the Credit
Documents;

(e) the existence of any claim, set-off or other rights which any obligor may
have at any time against any other obligor, the Administrative Agent, any
Issuer, any Lender or any other corporation or person, whether in connection
with any of the Credit Documents or any unrelated transactions, provided that
nothing herein shall prevent the assertion of any such claim by separate suit or
compulsory counterclaim;

(f) any invalidity or unenforceability relating to or against any other obligor
for any reason of any of the Credit Documents, or any provision of applicable
law or regulation purporting to prohibit the payment by any other obligor of
principal, interest or any other amount payable under any of the Credit
Documents;

 

2

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(g) any law, regulation or order of any jurisdiction, or any other event,
affecting any term of any obligation of the Lenders’ rights with respect
thereto; or

(h) any other act or omission to act or delay of any kind by any obligor, the
Administrative Agent, any Issuer, any Lender or any other corporation or person
or any other circumstance whatsoever (other than the defense of payment) which
might, but for the provisions of this paragraph, constitute a legal or equitable
discharge of or defense to the Guarantor’s obligations under this Guaranty.

3. Discharge Only upon Payment in Full; Reinstatement in Certain Circumstances.
The Guarantor’s obligations under this Guaranty shall remain in full force and
effect until the Commitments of the Lenders under the Credit Agreement shall
have expired or been terminated, no Letters of Credit shall be outstanding and
all Obligations payable by the Borrowers under the Credit Documents shall have
been paid in full in cash. If at any time any payment of the principal of or
interest on any Loan or any LC Obligation or any Obligation due and payable by
[a Borrower][Max Bermuda] under the Credit Documents is rescinded or must be
otherwise restored or returned upon the insolvency, bankruptcy or reorganization
of [a Borrower][Max Bermdua] or otherwise, the Guarantor’s obligations under
this Guaranty with respect to such payment shall be reinstated as though such
payment had been due but not made at the time of such reinstatement.

4. Waiver by the Guarantor. The Guarantor irrevocably waives acceptance hereof,
presentment, demand, protest and any notice not provided for herein, as well as
any requirement that at any time any action be taken by any corporation or
person against any other obligor or any other corporation or person. The
Guarantor warrants and agrees that each waiver set forth in this Section 4 is
made with full knowledge of its significance and consequences, and such waivers
shall be effective to the maximum extent permitted by law.

5. Subrogation. The Guarantor hereby unconditionally and irrevocably agrees not
to exercise any rights that it may now have or hereafter acquire against [any
Borrower][Max Bermdua] that arise from the existence, payment, performance or
enforcement of the Guarantor’s obligations under or in respect of this Guaranty,
including, without limitation, any right of subrogation, reimbursement,
exoneration, contribution or indemnification and any right to participate in any
claim or remedy of any Lender, any Issuer or the Administrative Agent against
any other Credit Party 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
any other Credit Party 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 (a) the
Guarantor shall have paid in full in cash all Guaranteed Obligations payable to
the Guaranteed Parties under this Guaranty (and all reasonable out-of-pocket
expenses incurred by any of the Guaranteed Parties (including the reasonable
fees, charges and disbursements of any counsel for the Guaranteed Parties)), in
connection with the enforcement or protection of its rights under this Guaranty
and (b) the Commitments of the Lenders under the Credit Agreement shall have

 

3

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expired or been terminated, no Letters of Credit shall be outstanding and all
Obligations payable by the Borrowers under the Credit Documents shall have been
paid in full in cash. If any amount shall be paid to the Guarantor in violation
of the immediately preceding sentence at any time prior to the date all
Commitments of the Lenders under the Credit Agreement shall have terminated, no
Letters of Credit shall be outstanding and all Obligations payable by the
Borrowers under the Credit Documents shall have been paid in full in cash, such
amount shall be received and held in trust for the benefit of the Lenders, shall
be segregated from other property and funds of the Guarantor and shall forthwith
be paid or delivered to the Administrative Agent in the same form as so received
(with any necessary endorsement or assignment) to be credited and applied to all
amounts payable under this Guaranty, whether matured or unmatured, in accordance
with the terms of the Credit Documents, or to be held as collateral for any
amounts payable under this Guaranty thereafter arising. If (i) the Guarantor
shall have paid in full in cash all Guaranteed Obligations payable to the
Guaranteed Parties under this Guaranty (and all reasonable out-of-pocket
expenses incurred by any of the Guaranteed Parties (including the reasonable
fees, charges and disbursements of any counsel for the Guaranteed Parties)), in
connection with the enforcement or protection of its rights under this Guaranty
and (ii) the Commitments of the Lenders under the Credit Agreement shall have
expired or been terminated, no Letters of Credit shall be outstanding and all
Obligations payable by the Borrowers under the Credit Documents shall have been
paid in full in cash, the Guaranteed Parties will, at the Guarantor’s request
and expense, execute and deliver to the Guarantor appropriate documents, without
recourse and without representation or warranty, necessary to evidence the
transfer by subrogation to the Guarantor of an interest in the obligations
resulting from such payment made by the Guarantor pursuant to this Guaranty.

6. Stay of Acceleration. If acceleration of the time for payment of any amount
payable by [any Borrower][Max Bermuda] under any of the Credit Documents is
stayed upon the insolvency, bankruptcy or reorganization of [such Borrower][Max
Bermuda], all such Obligations otherwise subject to acceleration under the terms
of the Credit Agreement shall nonetheless be payable by the Guarantor under this
Guaranty forthwith on demand by the Administrative Agent.

7. Continuing Guaranty; Assignments. This Guaranty is a continuing guaranty and
shall (a) remain in full force and effect until (i) the Guarantor shall have
paid in full in cash all Guaranteed Obligations payable to the Guaranteed
Parties under this Guaranty (and all reasonable out-of-pocket expenses incurred
by any of the Guaranteed Parties (including the reasonable fees, charges and
disbursements of any counsel for the Guaranteed Parties)), in connection with
the enforcement or protection of its rights under this Guaranty and (ii) the
Commitments of the Lenders under the Credit Agreement shall have expired or been
terminated, no Letters of Credit shall be outstanding and all Obligations
payable by the Borrowers under the Credit Documents shall have been paid in full
in cash, (b) be binding upon the Guarantor, its successors and assigns and
(c) inure to the benefit of and be enforceable by the Lenders, the Issuers and
the Administrative Agent and their successors, transferees and assigns. Without
limiting the generality of clause (c) of the immediately preceding sentence, any
Lender may assign or otherwise transfer all or any portion of its rights and
obligations under the Credit Agreement to any other Person, and such other
Person shall thereupon become vested with all the benefits in respect thereof
granted to such Lender herein or otherwise, in each case as and to the extent
provided in Section 10.7 of the Credit Agreement.

 

4

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8. Payments; Application; Set-Off.

(a) All payments made by the Guarantor hereunder will be made in Dollars to the
Administrative Agent, without set-off, counterclaim or other defense and, in
accordance with the Credit Agreement, free and clear of and without deduction
for any Taxes, each Guarantor hereby agreeing to comply with and be bound by the
provisions of the Credit Agreement in respect of all payments made by it
hereunder.

(b) All payments made hereunder shall be applied in accordance with the
provisions of the Credit Agreement.

(c) Upon failure of the Guarantor to make any payment required hereunder, each
Guaranteed Party and each of their respective Affiliates is hereby authorized at
any time and from time to time, to the fullest extent permitted by applicable
law, to set off and apply any and all deposits (general or special, time or
demand, provisional or final, in whatever currency) at any time held and other
obligations (in whatever currency) at any time owing by such Guaranteed Party or
any such Affiliate to or for the credit or the account of the Guarantor against
any and all of the obligations of the Guarantor now or hereafter existing under
this Guaranty or any other Credit Document to such Guaranteed Party,
irrespective of whether or not such Guaranteed Party shall have made any demand
under this Guaranty or any other Credit Document and although such obligations
of the Guarantor may be contingent or unmatured or are owed to a branch or
office of such Guaranteed Party different from the branch or office holding such
deposit or obligated on such indebtedness. The rights of each Guaranteed Party
and their respective Affiliates under this subsection are in addition to other
rights and remedies (including other rights of set-off) that such Guaranteed
Parties or their respective Affiliates may have. Each Guaranteed Party agrees to
notify the Guarantor and the Administrative Agent promptly after any such
set-off and application; provided that the failure to give such notice shall not
affect the validity of such set-off and application.

9. No Waiver. The rights and remedies of the Guaranteed Parties expressly set
forth in this Guaranty and the other Credit Documents are cumulative and in
addition to, and not exclusive of, all other rights and remedies available at
law, in equity or otherwise. No failure or delay on the part of any Guaranteed
Party in exercising any right, power or privilege shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right, power or
privilege preclude any other or further exercise thereof or the exercise of any
other right, power or privilege or be construed to be a waiver of any Default or
Event of Default. No course of dealing between the Guarantor and the Guaranteed
Parties or their agents or employees shall be effective to amend, modify or
discharge any provision of this Guaranty or any other Credit Document or to
constitute a waiver of any Default or Event of Default. No notice to or demand
upon the Guarantor in any case shall entitle the Guarantor to any other or
further notice or demand in similar or other circumstances or constitute a
waiver of the right of any Guaranteed Party to exercise any right or remedy or
take any other or further action in any circumstances without notice or demand.

10. Enforcement. The Guaranteed Parties agree that this Guaranty may be enforced
only by the Administrative Agent, acting upon the instructions or with the
consent of the Required Lenders as provided for in the Credit Agreement, and
that no Guaranteed Party shall

 

5

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have any right individually to enforce or seek to enforce this Guaranty or to
realize upon any Collateral or other security given to secure the payment and
performance of the Guarantor’s obligations hereunder. The obligations of the
Guarantor hereunder are independent of the Guaranteed Obligations, and a
separate action or actions may be brought against the Guarantor whether or not
action is brought against any other Credit Party and whether or not any other
Credit Party is joined in any such action.

11. Amendments, Waivers, etc. No amendment, modification, waiver, discharge or
termination of, or consent to any departure by the Guarantor from, any provision
of this Guaranty, shall be effective unless in a writing signed by the
Administrative Agent and such of the Lenders as may be required under the
provisions of the Credit Agreement to concur in the action then being taken, and
then the same shall be effective only in the specific instance and for the
specific purpose for which given.

12. Addition, Release of Guarantors. The Guarantor agrees that its obligations
hereunder shall not be discharged, limited or otherwise affected by reason of
the Administrative Agent’s actions in releasing any other guarantor, in each
case without the necessity of giving notice to or obtaining the consent of the
Guarantor.

13. Continuing Guaranty; Term; Successors and Assigns; Assignment; Survival.
This Guaranty is a continuing guaranty and covers all of the Guaranteed
Obligations as the same may arise and be outstanding at any time and from time
to time from and after the date hereof, and shall (i) remain in full force and
effect until satisfaction of the provisions of Section 3, (ii) be binding upon
and enforceable against the Guarantor and its successors and assigns (provided,
however, that the Guarantor may not sell, assign or transfer any of its rights,
interests, duties or obligations hereunder without the prior written consent of
the Lenders) and (iii) inure to the benefit of and be enforceable by each
Guaranteed Party and its successors and assigns.

14. Governing Law; Consent to Jurisdiction; Appointment of Borrower as
Representative; Process Agent; Attorney-in-Fact.

(a) This Guaranty shall be governed by, and construed and enforced in accordance
with, the laws of the State of New York.

(b) Each party hereto irrevocably and unconditionally submits, for itself and
its property, to the nonexclusive jurisdiction of the courts of the State of New
York sitting in New York County and of the United States District Court of the
Southern District of New York, and any appellate court from any thereof, in any
action or proceeding arising out of or relating to this Guaranty or any other
Credit Document, or for recognition or enforcement of any judgment, and each of
the parties hereto irrevocably and unconditionally agrees that all claims in
respect of any such action or proceeding may be heard and determined in such
state court or, to the fullest extent permitted by applicable law, in such
federal court. Each of the parties hereto agrees that a final judgment in any
such action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law.
Nothing in this Guaranty or in any other Credit Document shall affect any right
that any Guaranteed Party may otherwise have to bring any action or proceeding
relating to this Guaranty or any other Credit Document against the Guarantor or
its properties in the courts of any jurisdiction.

 

6

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(c) The Guarantor irrevocably and unconditionally waives, to the fullest extent
permitted by applicable law, any objection that it may now or hereafter have to
the laying of venue of any action or proceeding arising out of or relating to
this Guaranty or any other Credit Document in any court referred to in
Section 14(b). Each of the parties hereto hereby irrevocably waives, to the
fullest extent permitted by applicable law, the defense of an inconvenient forum
to the maintenance of such action or proceeding in any such court.

(d) The Guarantor hereby irrevocably designates, appoints and empowers CT
Corporation (the “Service of Process Agent”), with offices on the date hereof at
111 Eighth Avenue, 13th Floor, New York, New York 10011, as its designee,
appointee and agent to receive, accept and acknowledge for and on its behalf,
and in respect of its property, service of any and all legal process, summons,
notices and documents which may be served in any such action or proceeding. If
for any reason such designee, appointee and agent shall cease to be available to
act as such, the Guarantor agrees to designate a new designee, appointee and
agent in New York City on the terms and for the purposes of this provision
reasonably satisfactory to the Administrative Agent under this Guaranty.

15. Waiver of Jury Trial. EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY
JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING
TO THIS GUARANTY OR ANY OTHER CREDIT DOCUMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH
PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY
OTHER PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PERSON
WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND
(B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER
INTO THIS GUARANTY AND THE OTHER CREDIT DOCUMENTS BY, AMONG OTHER THINGS, THE
MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.

16. Notices. All notices and other communications provided for herein shall be
in writing and shall be delivered by hand or overnight courier service, mailed
by certified or registered mail or sent by telecopier as follows: (a) if to the
Guarantor, in care of [applicable Guarantor] at the address for notices [set
forth in the Credit Agreement][set forth below its signature hereto], and (b) if
to any Guaranteed Party, at its address for notices set forth in the Credit
Agreement; in each case, as such addresses may be changed from time to time
pursuant to the Credit Agreement, and with copies to such other Persons as may
be specified under the provisions of the Credit Agreement. Notices sent by hand
or overnight courier service, or mailed by certified or registered mail, shall
be deemed to have been given when received; notices sent by telecopier shall be
deemed to have been given when sent (except that, if not given during normal
business hours for the recipient, shall be deemed to have been given at the
opening of business on the next business day for the recipient). Notices
delivered through electronic communications to the extent provided in the Credit
Agreement shall be effective as provided therein.

 

7

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17. Severability. To the extent any provision of this Guaranty is prohibited by
or invalid under the applicable law of any jurisdiction, such provision shall be
ineffective only to the extent of such prohibition or invalidity and only in
such jurisdiction, without prohibiting or invalidating such provision in any
other jurisdiction or the remaining provisions of this Guaranty in any
jurisdiction.

18. Limitation. Notwithstanding any other provision of this Guaranty to the
contrary, in the event that any action is brought seeking to invalidate the
Guarantor’s obligations under this Guaranty under any fraudulent conveyance or
fraudulent transfer theory, the Guarantor shall be liable under this Guaranty
only for an amount equal to the maximum amount of liability that could have been
incurred under applicable law by the Guarantor under any guarantee of the
Guaranteed Obligations (or any portion thereof) at the time of the execution and
delivery of this Guaranty (or, if such date is determined not to be the
appropriate date for determining the enforceability of the Guarantor’s
obligations under this Guaranty 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.

19. Construction. The headings of the various sections and subsections of this
Guaranty have been inserted for convenience only and shall not in any way affect
the meaning or construction of any of the provisions hereof. Unless the context
otherwise requires, words in the singular include the plural and words in the
plural include the singular.

20. Counterparts; Effectiveness. This Guaranty may be executed in any number of
counterparts and by different parties hereto on separate counterparts, each of
which when so executed and delivered shall be an original, but all of which
shall together constitute one and the same instrument. This Guaranty shall
become effective upon the execution and delivery by the Guarantor of a
counterpart hereof.

21. Representations and Warranties.2

The Guarantor represents and warrants to the Guaranteed Parties that:

(a) Organization, etc. The Guarantor (i) is duly organized, validly existing and
in good standing under the laws of the jurisdiction of its incorporation;
(ii) is duly qualified to do business in each jurisdiction where the nature of
its business makes such qualification necessary, except where the failure to be
so qualified would not have a Material Adverse Effect; and (iii) has full
corporate power and authority to own its property and conduct its business as
presently conducted by it, except where the failure to be so qualified would not
have a Material Adverse Effect.

(b) Authorization; No Conflict. The execution and delivery by the Guarantor of
this Guaranty and the performance by the Guarantor of its obligations hereunder
are within the corporate powers of the Guarantor, have been duly authorized by
all necessary corporate action

 

 

2

Sections 20-22 will be included except in the guarantee of Max Capital.

 

8

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on the part of the Guarantor (including any necessary shareholder action), have
received all necessary governmental approval (if any shall be required), and do
not and will not (a) violate any provision of law or any order, decree or
judgment of any court or other government agency which is binding on the
Guarantor; (b) contravene or conflict with, or result in a breach of, any
provision of the Organization Documents of the Guarantor or of any material
agreement, indenture, instrument or other document, or any judgment, order or
decree, which is binding on the Guarantor; or (c) result in, or require, the
creation or imposition of any Lien on any property of the Guarantor.

(c) Validity and Binding Nature. This Guaranty is the legal, valid and binding
obligation of the Guarantor, enforceable against the Guarantor in accordance
with its terms, except that enforceability may be limited by bankruptcy,
insolvency, fraudulent conveyance, fraudulent transfer, reorganization,
moratorium or other similar laws now or hereafter in effect relating to
creditors’ rights generally and by general principles of equity (regardless of
whether enforcement is sought in equity or at law).

(d) Independent Credit Decision. The Guarantor has, independently and without
reliance upon the Administrative Agent or any other Guaranteed Party and based
on such documents and information as it has deemed appropriate, made its own
credit analysis and decision to enter into this Guaranty and each other Credit
Document to which it is or is to be a party, and has established adequate means
of obtaining from each Parent on a continuing basis information pertaining to,
and is now and on a continuing basis will be completely familiar with, the
business, condition (financial or otherwise), operations, performance,
properties and prospects of the Parent.

(e) Investment Company Act. Neither the Guarantor nor any of its Subsidiaries is
an “investment company” or a company “controlled” by an “investment company,”
within the meaning of the Investment Company Act of 1940, as amended.

(f) Information. All written information heretofore or contemporaneously
herewith furnished by the Guarantor to any Guaranteed Party for purposes of or
in connection with this Guaranty and the transactions contemplated thereby and
hereby is, and all written information hereafter furnished by or on behalf of
the Guarantor to any Guaranteed Party pursuant hereto or thereto or in
connection herewith or therewith (in each case taken as a whole as modified or
supplemented by other information so furnished) will be, true and accurate in
every material respect on the date as of which such information is dated or
certified, and none of such information is or will be incomplete by omitting to
state any material fact necessary to make such information not misleading in
light of the circumstances under which they were made, provided that, with
respect to projected financial information, the Guarantor represents only that
such information was prepared in good faith based upon assumptions the Guarantor
believed were reasonable at the time of preparation thereof, it being understood
by the Guaranteed Parties that such projections as to future events are not to
be viewed as facts and that actual results during the period or periods covered
by such projections may differ from projected results.

21. Credit Agreement Covenants. The Guarantor will comply, and cause its
Subsidiaries to comply, with the covenants set forth in Articles V and VI of the
Credit Agreement to the extent that such covenants apply to the Guarantor or any
of its Subsidiaries.

 

9

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22. Currency Indemnification. The obligations of the Guarantor, in respect of
any sum due to the Administrative Agent or any other Guaranteed Party hereunder
shall, notwithstanding any judgment in a currency (the “Judgment Currency”)
other than the currency in which such sum was originally denominated (the
“Original Currency”), be discharged only to the extent that following receipt by
the Administrative Agent or such Guaranteed Party of any sum adjudged to be so
due in the Judgment Currency, the Administrative Agent or such Guaranteed Party,
in accordance with normal banking procedures, purchases the Original Currency
with the Judgment Currency. If the amount of Original Currency so purchased is
less than the sum originally due to the Administrative Agent or such Guaranteed
Party, the Guarantor agrees, as a separate obligation and notwithstanding any
such judgment, to indemnify the Administrative Agent or such Guaranteed Party,
as the case may be, against such loss, and if the amount of Original Currency so
purchased exceeds the sum originally due to the Administrative Agent or such
Guaranteed Party, as the case may be, the Administrative Agent or such
Guaranteed Party agrees to remit such excess to the Guarantor.

23. This Guaranty is a Credit Document.

[Signatures follow]

 

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

 

[NAME OF GUARANTOR] By:  

 

Name:  

 

Title:  

 

 

[Address for Notices:

 

 

Attention:   Telephone:   Telecopier:   Electronic
Mail:                            ]

 

Accepted and agreed to:

BANK OF AMERICA, N.A.,

as Administrative Agent

By:  

 

Name:  

 

Title:  

 

 

S-1

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SCHEDULE 1.1

CONCENTRATION LIMITS

 

Eligible Investments

   Limitation per
Issuer (as Percentage
of all such
Eligible Investments)    Limitation per
Issue (as Percentage
of all such
Eligible Investments)  

Corporate/Municipal Securities

   N/A    7.5 % 

G7 Securities

   N/A    7.5 % 

 

SCHEDULE 1.1

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SCHEDULE 1.2

BORROWING BASE CALCULATION

 

Eligible Investments

  Applicable Percentage of
Fair Market Value  

Cash

  100 % 

Cash Equivalents

  100 % 

Commercial Paper

  98 % 

Government Debt with maturities of less than five years

  98 % 

Government Debt with maturities of five years or more

  95 % 

MBS (Agency Pass-Throughs) rated AAA by S&P or Aaa by Moody’s or Better

  90 % 

MBS (Agency CMOs) rated AAA by S&P or Aaa by Moody’s or better

  90 % 

G7 Dollar denominated and non-Dollar denominated Securities issued by the
Governments of Germany or the United Kingdom or agencies thereof

  95 % 

G7 Dollar denominated and non-Dollar denominated Securities issued by the
Governments of France, Japan or Canada or agencies thereof

  93 % 

G7 Dollar denominated and non-Dollar denominated Securities issued by the
Government of Italy or agencies thereof

  92 % 

Corporate/Municipal Securities rated AAA by S&P or Aaa by Moody’s

  94 % 

Corporate/Municipal Securities rated at least AA- by S&P or Aa3 by Moody’s

  93 % 

Corporate/Municipal Securities rated at A- by S&P or A3 by Moody’s

  92 % 

 

SCHEDULE 2.1