exv10w32



 




Exhibit 10.32



Execution Copy




 





$220,000,000

CREDIT AGREEMENT




dated as of January 31, 2007




among




AFFIRMATIVE INSURANCE HOLDINGS, INC.,

as Borrower




THE LENDERS PARTY HERETO




and




CREDIT SUISSE, CAYMAN ISLANDS BRANCH

as Administrative Agent and Collateral Agent




 






CREDIT SUISSE SECURITIES (USA) LLC,

as Sole Bookrunner and Sole Lead Arranger




 





 









 





TABLE OF CONTENTS




	 	 	 	 	 
	 	 	PAGE
	ARTICLE I.
	 	 	 	 
	 
	 	 	 	 
	Definitions
	 	 	 	 
	 
	 	 	 	 
	SECTION 1.01. Defined Terms
	 	 	1	 
	SECTION 1.02. Terms Generally
	 	 	32	 
	SECTION 1.03. Classification of Loans and Borrowings
	 	 	33	 
	SECTION 1.04. Pro Forma Calculations
	 	 	33	 
	 
	 	 	 	 
	ARTICLE II.
	 	 	 	 
	 
	 	 	 	 
	The Credits
	 	 	 	 
	 
	 	 	 	 
	SECTION 2.01. Commitments
	 	 	33	 
	SECTION 2.02. Loans
	 	 	34	 
	SECTION 2.03. Borrowing Procedure
	 	 	36	 
	SECTION 2.04. Repayment of Loans; Evidence of Debt
	 	 	36	 
	SECTION 2.05. Fees
	 	 	37	 
	SECTION 2.06. Interest on Loans
	 	 	38	 
	SECTION 2.07. Default Interest
	 	 	38	 
	SECTION 2.08. Alternate Rate of Interest
	 	 	39	 
	SECTION 2.09. Termination and Reduction of Commitments
	 	 	39	 
	SECTION 2.10. Conversion and Continuation of Borrowings
	 	 	40	 
	SECTION 2.11. Repayment of Term Borrowings
	 	 	41	 
	SECTION 2.12. Prepayment
	 	 	42	 
	SECTION 2.13. Mandatory Prepayments
	 	 	43	 
	SECTION 2.14. Reserve Requirements; Change in Circumstances
	 	 	45	 
	SECTION 2.15. Change in Legality
	 	 	46	 
	SECTION 2.16. Indemnity
	 	 	47	 
	SECTION 2.17. Pro Rata Treatment
	 	 	47	 
	SECTION 2.18. Sharing of Setoffs
	 	 	48	 
	SECTION 2.19. Payments
	 	 	48	 
	SECTION 2.20. Taxes
	 	 	49	 
	SECTION 2.21. Assignment of Commitments Under Certain Circumstances; Duty to
Mitigate
	 	 	50	 
	SECTION 2.22. Swingline Loans
	 	 	52	 
	SECTION 2.23. Letters of Credit
	 	 	53	 
	SECTION 2.24. Incremental Facilities
	 	 	57	 
	SECTION 2.25. Extension of Revolving Credit Maturity Date
	 	 	60	 






i









 






	 	 	 	 	 
	 	 	PAGE
	ARTICLE III.
	 	 	 	 
	 
	 	 	 	 
	Representations and Warranties
	 	 	 	 
	 
	 	 	 	 
	SECTION 3.01. Organization; Powers
	 	 	61	 
	SECTION 3.02. Authorization; No Conflicts
	 	 	62	 
	SECTION 3.03. Enforceability
	 	 	62	 
	SECTION 3.04. Governmental Approvals
	 	 	62	 
	SECTION 3.05. Financial Statements
	 	 	62	 
	SECTION 3.06. No Material Adverse Change
	 	 	63	 
	SECTION 3.07. Title to Properties; Possession Under Leases
	 	 	63	 
	SECTION 3.08. Subsidiaries
	 	 	65	 
	SECTION 3.09. Litigation; Compliance with Laws
	 	 	65	 
	SECTION 3.10. Agreements
	 	 	66	 
	SECTION 3.11. Federal Reserve Regulations
	 	 	66	 
	SECTION 3.12. Investment Company Act
	 	 	66	 
	SECTION 3.13. Use of Proceeds
	 	 	66	 
	SECTION 3.14. Tax Returns
	 	 	67	 
	SECTION 3.15. No Material Misstatements; Acquisition Documentation
	 	 	67	 
	SECTION 3.16. Employee Benefit Plans
	 	 	67	 
	SECTION 3.17. Environmental Matters
	 	 	68	 
	SECTION 3.18. Insurance
	 	 	69	 
	SECTION 3.19. Security Documents
	 	 	69	 
	SECTION 3.20. Location of Real Property
	 	 	70	 
	SECTION 3.21. Labor Matters
	 	 	70	 
	SECTION 3.22. Liens
	 	 	70	 
	SECTION 3.23. Intellectual Property
	 	 	70	 
	SECTION 3.24. Solvency
	 	 	70	 
	SECTION 3.25. Acquisition Documentation
	 	 	71	 
	SECTION 3.26. Permits
	 	 	71	 
	SECTION 3.27. Reinsurance Agreements
	 	 	71	 
	SECTION 3.28. Premium Finance Agreements
	 	 	72	 
	SECTION 3.29. Senior Indebtedness
	 	 	72	 
	SECTION 3.30. Closing Date Inactive Subsidiaries
	 	 	72	 
	 
	 	 	 	 
	ARTICLE IV.
	 	 	 	 
	 
	 	 	 	 
	Conditions of Lending
	 	 	 	 
	 
	 	 	 	 
	SECTION 4.01. All Credit Events
	 	 	72	 
	SECTION 4.02. First Credit Event
	 	 	73	 






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	 	 	PAGE
	ARTICLE V.
	 	 	 	 
	 
	 	 	 	 
	Affirmative Covenants
	 	 	 	 
	SECTION 5.01. Existence; Businesses and Properties
	 	 	78	 
	SECTION 5.02. Insurance
	 	 	79	 
	SECTION 5.03. Obligations and Taxes
	 	 	79	 
	SECTION
5.04. Financial Statements, Reports, etc.
	 	 	79	 
	SECTION 5.05. Litigation and Other Notices
	 	 	82	 
	SECTION 5.06. Information Regarding Collateral
	 	 	83	 
	SECTION 5.07. Maintaining Records; Access to Properties and Inspections;
Environmental Assessments
	 	 	83	 
	SECTION 5.08. Use of Proceeds
	 	 	84	 
	SECTION 5.09. Additional Collateral, etc
	 	 	84	 
	SECTION 5.10. Further Assurances
	 	 	87	 
	SECTION 5.11. Interest Rate Protection
	 	 	88	 
	SECTION 5.12. Maintain Reinsurance
	 	 	88	 
	SECTION 5.13. Tax Sharing Arrangements
	 	 	88	 
	 
	 	 	 	 
	ARTICLE VI.
	 	 	 	 
	 
	 	 	 	 
	Negative Covenants
	 	 	 	 
	 
	 	 	 	 
	SECTION 6.01. Indebtedness
	 	 	89	 
	SECTION 6.02. Liens
	 	 	90	 
	SECTION 6.03. Sale and Lease-Back Transactions
	 	 	92	 
	SECTION 6.04. Investments, Loans and Advances
	 	 	92	 
	SECTION 6.05. Mergers, Consolidations, Sales of Assets and Acquisitions
	 	 	93	 
	SECTION 6.06. Restricted Payments; Restrictive Agreements
	 	 	94	 
	SECTION 6.07. Transactions with Affiliates
	 	 	95	 
	SECTION 6.08. Business of the Borrower and Subsidiaries; Limitation on Hedging
Agreements
	 	 	95	 
	SECTION 6.09. Other Indebtedness and Agreements; Amendments to Acquisition
Documentation
	 	 	96	 
	SECTION 6.10. Capital Expenditures
	 	 	97	 
	SECTION 6.11. Interest Coverage Ratio
	 	 	97	 
	SECTION 6.12. Leverage Ratio
	 	 	98	 
	SECTION 6.13. Minimum Risk-Based Capital Ratio
	 	 	99	 
	SECTION 6.14. Combined Ratio
	 	 	99	 
	SECTION 6.15. Fixed Charge Coverage Ratio
	 	 	99	 
	SECTION 6.16. Consolidated Net Worth
	 	 	99	 
	SECTION 6.17. Fiscal Year
	 	 	99	 
	 
	 	 	 	 
	ARTICLE VII. Events of Default
	 	 	 	 
	 
	 	 	 	 
	ARTICLE VIII.
	 	 	 	 
	 
	 	 	 	 
	The Agents and the Arranger
	 	 	 	 






iii









 






	 	 	 	 	 
	 	 	PAGE
	ARTICLE IX.
	 	 	 	 
	 
	 	 	 	 
	Miscellaneous
	 	 	 	 
	 
	 	 	 	 
	SECTION 9.01. Notices
	 	 	105	 
	SECTION 9.02. Survival of Agreement
	 	 	106	 
	SECTION 9.03. Binding Effect
	 	 	106	 
	SECTION 9.04. Successors and Assigns
	 	 	106	 
	SECTION 9.05. Expenses; Indemnity
	 	 	110	 
	SECTION 9.06. Right of Setoff
	 	 	111	 
	SECTION 9.07. Applicable Law
	 	 	111	 
	SECTION 9.08. Waivers; Amendment
	 	 	112	 
	SECTION 9.09. Interest Rate Limitation
	 	 	113	 
	SECTION 9.10. Entire Agreement
	 	 	113	 
	SECTION 9.11. WAIVER OF JURY TRIAL
	 	 	113	 
	SECTION 9.12. Severability
	 	 	113	 
	SECTION 9.13. Counterparts
	 	 	114	 
	SECTION 9.14. Headings
	 	 	114	 
	SECTION 9.15. Jurisdiction; Consent to Service of Process
	 	 	114	 
	SECTION 9.16. Confidentiality
	 	 	114	 
	SECTION 9.17. Delivery of Lender Addenda
	 	 	115	 






Exhibits and Schedules




	 	 	 
	Exhibit A

	 	Form of Administrative Questionnaire
	Exhibit B

	 	Form of Affiliate Subordination Agreement
	Exhibit C

	 	Form of Assignment and Acceptance
	Exhibit D

	 	Form of Borrowing Request
	Exhibit E

	 	Form of Guarantee and Collateral Agreement
	Exhibit F

	 	Form of Lender Addendum
	Exhibit G

	 	Form of Mortgage (Owned and Leased Real Property)
	Exhibit H

	 	Form of Perfection Certificate
	Exhibit I

	 	Form of Non-Bank Certificate
	Exhibit J

	 	Form of Opinion of McDermott Will & Emery
	Exhibits K-1, K-2, K-3

	 	Forms of Premium Finance Agreements






	 	 	 
	Schedule 1.01(a)

	 	Mortgaged Properties
	Schedule 1.01(b)

	 	Subsidiary Guarantors
	Schedule 3.08

	 	(a)Subsidiaries
	Schedule 3.08(b)

	 	Additional Prohibitions and Restrictions
	Schedule 3.09

	 	Litigation
	Schedule 3.17

	 	Environmental Matters






iv









 






	 	 	 
	Schedule 3.18

	 	Insurance
	Schedule 3.19(a)

	 	UCC Filing Offices
	Schedule 3.19(c)

	 	Mortgage Filing Offices
	Schedule 3.20

	 	Owned and Leased Real Property
	Schedule 3.25

	 	Acquisition Documentation
	Schedule 3.26

	 	Regulated Insurance Subsidiary Permits
	Schedule 6.01

	 	Existing Indebtedness
	Schedule 6.02

	 	Existing Liens
	Schedule 6.04

	 	Existing Investments






v









 





     CREDIT AGREEMENT dated as of January 31, 2007 (this “Agreement”), among AFFIRMATIVE
INSURANCE HOLDINGS, INC., a Delaware corporation, (the “Borrower”), the LENDERS from time
to time party hereto, and CREDIT SUISSE, CAYMAN ISLANDS BRANCH as administrative agent (in such
capacity and together with its successors, the “Administrative Agent”).



     The parties hereto agree as follows:



ARTICLE I.




Definitions




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



     “2004 Debentures” shall mean the $30,928,000 aggregate principal amount of Junior
Subordinated Debt Securities due 2035 issued by Borrower to Affirmative Trust I, as the same may be
amended, supplemented or otherwise modified from time to time in accordance with this Agreement.



     “2005 Debentures” shall mean the $25,774,000 aggregate principal amount of Junior
Subordinated Debt Securities due 2035 issued by Borrower to Affirmative Trust II, as the same may
be amended, supplemented or otherwise modified from time to time in accordance with this Agreement.



     “ABR”, when used in reference to any Loan or Borrowing, refers to whether such Loan,
or the Loans comprising such Borrowing, are bearing interest at a rate determined by reference to
the Alternate Base Rate.



     “Acquired Entity” shall have the meaning assigned to such term in the definition of
Permitted Acquisition.



     “Acquisition” shall mean the acquisition by the Borrower pursuant to the Purchase
Agreement of all the Equity Interests in USAgencies from the Sellers, with the Sellers receiving an
aggregate amount of $200,000,000 in cash (the “Acquisition Consideration”).



     “Acquisition Consideration” shall have the meaning assigned to such term in the
definition of “Acquisition”.



     “Acquisition Documentation” shall mean, collectively, the Purchase Agreement and all
schedules, exhibits, annexes and amendments thereto and all side letters and agreements affecting
the terms thereof or entered into in connection therewith, as the same may be amended, supplemented
or otherwise modified from time to time in accordance with this Agreement.



     “Acquisition Transactions” shall mean, collectively, (a) the Acquisition, including
the payment of the Acquisition Consideration, (b) the obtaining by the Borrower of the Facility
provided for by this Agreement, (c) the repayment by the Borrower of all amounts outstanding
under the Existing Credit Facilities, the termination of the Existing Credit Facilities and, in
each



 









 







case, the release of all Liens and guarantees granted in respect thereof, in each case in a
manner satisfactory to the Administrative Agent and (d) the payment of fees and expenses incurred
in connection with the foregoing.



     “Adjusted Book Value” shall mean, at the applicable date, the Book Value on such date
adjusted to disregard the positive or negative effects, net of taxes, of (a) unrealized gains or
losses accruing on the investment portfolio after June 30, 2006, (b) any losses or expenses that
are the result of a natural catastrophe occurring after the effective date of the Purchase
Agreement, (c) any claim settlement of the business interruption insurance claim currently being
negotiated with Hartford Insurance Company recognized after the effective date of the Purchase
Agreement, (d) any prior treaty year ceding commission adjustments paid or payable by GMAC RE
Corporation (“GMAC”) and recorded after the effective date of the Purchase Agreement, (e)
any current treaty year ceding commission adjustments resulting from a change in the commission
rate that are paid or payable by GMAC and recorded after the effective date of the Purchase
Agreement, and (f) after the tax effect of any Transaction Expenses (as defined in the Purchase
Agreement) to the extent such expenses have reduced Book Value prior to the applicable date.



     “Adjusted LIBO Rate” shall mean, with respect to any Eurodollar Borrowing for any
Interest Period, an interest rate per annum equal to the product of (a) the LIBO Rate in effect for
such Interest Period and (b) Statutory Reserves.



     “Administrative Agent” shall have the meaning assigned to such term in the preamble.



     “Administrative Agent Fees” shall have the meaning assigned to such term in Section
2.05(b).



     “Administrative Questionnaire” shall mean an Administrative Questionnaire in the form
of Exhibit A, or such other form as may be supplied from time to time by the Administrative Agent.



     “Affiliate” shall mean, when used with respect to a specified person, another person
that directly, or indirectly through one or more intermediaries, Controls or is Controlled by or is
under common Control with the person specified; provided, however, that, for
purposes of Section 6.07. , the term “Affiliate” shall also include any person that
directly or indirectly owns 10% or more of any class of Equity Interests of the person specified or
that is an officer or director of the person specified.



     “Affiliate Subordination Agreement” shall mean an Affiliate Subordination Agreement in
the form of Exhibit B pursuant to which intercompany obligations and advances owed by any Loan
Party are subordinated to the Obligations.



     “Affirmative Intercompany Tax Agreement” shall have the meaning assigned to such term
in Section 5.13.



     “Affirmative Trust I” shall mean Affirmative Insurance Holdings Statutory Trust I, a
special purpose statutory Delaware business trust established by Borrower, of which Borrower holds
all the common securities, which purchased from Borrower the 2004 Debentures.



2









 





     “Affirmative Trust II” shall mean Affirmative Insurance Holdings Statutory Trust II, a
special purpose statutory Delaware business trust established by Borrower, of which Borrower holds
all the common securities, which purchased from Borrower the 2005 Debentures.



     “Agents” shall have the meaning assigned to such term in Article VIII.



     “Aggregate Revolving Credit Exposure” shall mean the aggregate amount of the Lenders’
Revolving Credit Exposures.



     “Agreement” shall have the meaning assigned to such term in the preamble.



     “Alternate Base Rate” shall mean, for any day, a rate per annum equal to the greater
of (a) the Prime Rate in effect on such day and (b) the Federal Funds Effective Rate in effect on
such day plus 1/2 of 1%. Any change in the Alternate Base Rate due to a change in the Prime Rate
or the Federal Funds Effective Rate shall be effective as of the opening of business on the
effective date of such change in the Prime Rate or the Federal Funds Effective Rate, respectively.



     “A.M. Best” shall mean A.M. Best & Company, Inc.



     “Applicable Margin” shall mean, (y) with respect to the Loans that are Eurodollar
Loans, 3.50% per annum and (z) with respect to Loans that are ABR Loans, 2.50 % per annum.



     “Approved Premium Finance Facility” shall means any line or lines of credit with an
aggregate principal amount of not greater than $50,000,000, entered into by Premium Finance Co.,
the proceeds of which are used solely to fund loans to retail customers who are purchasing
nonstandard automobile insurance from any Regulated Insurance Subsidiary of the Borrower and which
such loans are secured by the unearned portion of the insurance premiums being so financed;
provided that (a) such Approved Premium Finance Facility may be secured solely by the
assets of the Premium Finance Co. (which may include, without limitation, a pledge of eligible
accounts receivable of the Premium Finance Co., as well as the rights under such accounts
receivable to insurance policies, proceeds thereof and refunds of unearned premiums thereunder
pledged by insurance policyholders financed by the borrowers under any such Approved Premium
Finance Facility); (b) such Approved Premium Finance Facility shall not be secured by any Equity
Interests of Borrower or any Subsidiary thereof (including, without limitation, Premium Finance
Co.); (c) such Approved Premium Finance Facility shall not be secured by the assets of Borrower or
any Subsidiary thereof (other than as provided for in clause (a) above); (d) such Approved Premium
Finance Facility shall not be guaranteed by any Subsidiary of Borrower (other than Premium Finance
Co. and its Subsidiaries); (e) such Approved Premium Finance Facility shall not be guaranteed by
any Regulated Insurance Subsidiary; (f) such Approved Premium Finance Facility shall not be
exchangeable or convertible into Indebtedness or Equity Interests of Borrower or any Subsidiary
thereof; (g) such Approved Premium Finance Facility shall not prohibit, restrict or impose any
condition upon the ability of any Subsidiary (including any Premium Finance Co. or any of its
Subsidiaries) to pay dividends or other distributions with respect to any of its Equity Interests
or to make or repay loans or advances to the Borrower or any other Subsidiary (including any Premium Finance Co.
or any of its Subsidiaries) or to Guarantee Indebtedness of the Borrower or any other Subsidiary
under this Agreement or the other Loan Documents; and (h) the documents and other agreements



3









 







executed by Premium Finance Co. in connection with such Approved Premium Finance Facility shall
otherwise be reasonably satisfactory in form and substance to the Administrative Agent.



     “Arranger” shall mean CS Securities acting in its capacity as sole bookrunner and sole
lead arranger for the Facilities.



     “Asset Sale” shall mean the sale, lease, sub-lease, sale and leaseback, assignment,
conveyance, transfer, issuance or other disposition (by way of merger, casualty, condemnation or
otherwise) by the Borrower or any Subsidiary (other than Premium Finance Co.) to any person other
than the Borrower or any Subsidiary Guarantor of (a) any Equity Interests of any of the
Subsidiaries or (b) any other assets of the Borrower or any of the Subsidiaries, including Equity
Interests of any person that is not a Subsidiary (other than inventory, obsolete or worn out
assets, scrap and Permitted Investments, in each case disposed of in the ordinary course of
business); provided that any asset sale or series of related asset sales described in
clause (b) above having a value not in excess of, in the aggregate, $1,000,000 annually, shall be
deemed not to be an “Asset Sale” for purposes of this Agreement.



     “Assignment and Acceptance” shall mean an assignment and acceptance entered into by a
Lender and an assignee (with the consent of any person whose consent is required by Section 9.04.
), and accepted by the Administrative Agent, in the form of Exhibit C or such other form as shall
be approved by the Administrative Agent.



     “Authorized Control Level” shall mean “Authorized Control Level Risk-Based Capital” as
defined by the NAIC as of December 31, 1994, as such definition has been amended from time to time,
and as applied in the context of the Risk-Based Capital Guidelines promulgated by the NAIC.



     “Benefit Plan” shall mean any employee pension benefit plan (other than a
Multiemployer Plan) subject to the provisions of Title IV of ERISA or Section 412 of the Tax Code
or Section 307 of ERISA, and in respect of which the Borrower or any ERISA Affiliate is (or, if
such plan were terminated, would under Section 4069 of ERISA be deemed to be) an “employer” as
defined in Section 3(5) of ERISA.



     “Board” shall mean the Board of Governors of the Federal Reserve System of the United
States of America.



     “Book Value” shall mean at the applicable date an amount equal to all of the assets of
USAgencies minus all of the liabilities of USAgencies as set forth on the consolidated balance
sheet of USAgencies at such date, prepared in accordance with GAAP consistent with past practices.



     “Borrower” shall have the meaning assigned to such term in the preamble.



     “Borrower Subordinated Notes” shall mean (i) the 2004 Debentures and (ii) the 2005
Debentures.



     “Borrower Trust Preferred Note Documents” shall mean each of the indentures under
which each of the Borrower Subordinated Notes is issued and all other instruments, agreements



4









 







and other documents evidencing or governing each of the Borrower Subordinated Notes or providing any
Guarantee or other right in respect thereof, as the same may be amended, supplemented or otherwise
modified from time to time in accordance with this Agreement.



     “Borrowing” shall mean (a) Loans of the same Class and Type made, converted or
continued on the same date and, in the case of Eurodollar Loans, as to which a single Interest
Period is in effect, or (b) a Swingline Loan.



     “Borrowing Request” shall mean a request by the Borrower in accordance with the terms
of Section 2.03. and substantially in the form of Exhibit D, or such other form as shall be
approved by the Administrative Agent.



     “Breakage Event” shall have the meaning assigned to such term in Section 2.16.



     “Business” shall mean the businesses of the Borrowers and its subsidiaries limited to
the provision of nonstandard automobile insurance and the premium finance thereof, including
businesses incidental thereto.



     “Business Day” shall mean any day other than a Saturday, Sunday or day on which
commercial banks in New York City are authorized or required by law to close; provided,
however, that when used in connection with a Eurodollar Loan (including with respect to all
notices and determinations in connection therewith and any payments of principal, interest or other
amounts thereon), the term “Business Day” shall also exclude any day on which banks are not
open for dealings in dollar deposits in the London interbank market.



     “Capital Expenditures” shall mean, for any period, with respect to any person, (a) the
additions to property, plant and equipment and other capital expenditures of such person and its
consolidated subsidiaries that are (or should be) set forth in a consolidated statement of cash
flows of such person for such period prepared in accordance with GAAP and (b) Capital Lease
Obligations incurred by such person and its consolidated subsidiaries during such period.



     “Capital Lease Obligations” of any person shall mean the obligations of such person to
pay rent or other amounts under any lease of (or other arrangement conveying the right to use) real
or personal property, or a combination thereof, which obligations are required to be classified and
accounted for as capital leases on a balance sheet of such person under GAAP, and the amount of
such obligations at any time shall be the capitalized amount thereof at such time determined in
accordance with GAAP.



     “Cash Capital Expenditures” shall mean any Capital Expenditures the source of funds
for which was not or is not proceeds of any Indebtedness (whether or not subordinate to any other
obligation of any person).



     “Cash Flow” shall mean, for any relevant 12 month fiscal period, the sum, without
duplication, of (i) for the Borrower, USAgencies and their respective subsidiaries (other than the
Regulated Insurance Subsidiaries and other than Premium Finance Co. and its Subsidiaries)
Consolidated EBITDA for the relevant period, (ii) all state and federal income tax expenses
incurred by the Regulated Insurance Subsidiaries for the relevant period, and (iii) the lesser
of (a) combined statutory earnings for all Regulated Insurance Subsidiaries for the December
31st



5









 







calendar period most recently ended prior to the relevant period, and (b) the sum
of 10% of surplus of all Regulated Insurance Subsidiaries as of the last day of the December
31st calendar period most recently ended prior to the relevant period, provided
that for purposes of calculating Cash Flow for any period (A) the Cash Flow of USAgencies and of
any other Acquired Entity acquired by the Borrower or any Subsidiary (other than Premium Finance
Co.) pursuant to a Permitted Acquisition during such period shall be included on a pro forma basis
for such period (assuming the consummation of such acquisition and the incurrence or assumption of
any Indebtedness in connection therewith occurred as of the first day of such period) and (B) the
Cash Flow of any person or line of business sold or otherwise disposed of by the Borrower or any
Subsidiary during such period for shall be excluded for such period (assuming the consummation of
such sale or other disposition and the repayment of any Indebtedness in connection therewith
occurred as of the first day of such period). The preceding formula shall be adjusted on a
proportionate basis for any relevant period that is not a fiscal twelve month period.



     A “Change in Control” shall be deemed to have occurred if (a) the Permitted
Holders shall fail to own directly or indirectly, beneficially and of record, Equity Interests
representing at least the Required Minimum Percentage of the aggregate ordinary voting power and
aggregate equity value represented by the issued and outstanding Equity Interests in the Borrower,
(b) any “person” or “group” (within the meaning of Rule 13d5 of the Securities Exchange Act of 1934
as in effect on the date hereof) other than the Permitted Holders shall own directly or indirectly,
beneficially or of record, Equity Interests representing a greater percentage of either the
aggregate ordinary voting power or the aggregate equity value represented by the issued and
outstanding Equity Interests in the Borrower then held, directly or indirectly, beneficially and of
record, by the Permitted Holders; (c) a majority of the seats (other than vacant seats) on the
board of directors of the Borrower shall at any time be occupied by persons who are not Continuing
Directors; (d) Borrower shall at any time fail to own directly or indirectly, beneficially and of
record, 100% of each class of issued and outstanding Equity Interests in each of its direct
whollyowned Subsidiaries free and clear of all Liens (other than Liens created by the Guarantee and
Collateral Agreement); or (e) any change of control (or similar event, however denominated) with
respect to the Borrower or any Subsidiary shall occur under and as defined in the Subordinated Debt
Documents, any Qualified Additional Subordinated Debt Documents, or any Approved Premium Financing
to which the Borrower or any Subsidiary is a party, provided, that a Change in Control
shall not be deemed to have occurred as a result of the Acquisition and other Acquisition
Transactions.



     “Change in Law” shall mean (a) the adoption of any law, rule or regulation after the
date of this Agreement, (b) any change in any law, rule or regulation or in the interpretation or
application thereof by any Governmental Authority after the date of this Agreement or (c)
compliance by any Lender or the Issuing Bank (or, for purposes of Section 2.14. , by any lending
office of such Lender or by such Lender’s or Issuing Bank’s holding company, if any) with any
request, guideline or directive (whether or not having the force of law) of any Governmental
Authority made or issued after the date of this Agreement.



     “Charges” shall have the meaning assigned to such term in Section 9.09.



     “Class”, when used in reference to any Loan or Borrowing, refers to whether such Loan,
or the Loans comprising such Borrowing, are Revolving Loans, Term Loans or Swingline Loans



6









 







and, when used in reference to any Commitment, refers to whether such Commitment is a Revolving Credit
Commitment, Term Loan Commitment or Swingline Commitment.



     “Closing Date” shall mean January 31, 2007.



     “Closing Date Material Adverse Effect” shall mean (i) a material adverse condition or
material adverse change in or materially affecting (a) the business, assets, liabilities,
operations, condition (financial or otherwise), operating results, Projections or prospects of the
Borrower and its Subsidiaries, taken as a whole (excluding USAgencies and its Subsidiaries), or (b)
the validity or enforceability of any of the Loan Documents or the rights and remedies of the
Administrative Agent, the Collateral Agent or the Secured Parties thereunder; provided,
however, that the following shall be excluded from a determination of whether such a
material adverse change has occurred: any change or effect relating to (A) the effects or
conditions or events that are generally applicable to (1) the industries in which the Borrower or
its subsidiaries operate, which do not have a materially disproportionate effect (relative to other
industry participants) on the Borrower and its subsidiaries, taken as a whole (excluding USAgencies
and its subsidiaries), or (2) the capital, financial, banking or currency markets; (B) changes in
applicable accounting regulations and principles resulting from changes in GAAP or SAP, which do
not have a materially disproportionate effect (relative to other industry participants) on the
Borrower and its subsidiaries, taken as a whole (excluding USAgencies and its subsidiaries); (C)
any change resulting from the announcement of the transactions described in the Commitment Letter
or the Transactions; (D) national or international political or social conditions, including the
engagement by the United States in hostilities, whether or not pursuant to the declaration of a
nation emergency or war, or the occurrence of any military or terrorist attack upon the United
States, or any of its territories, possessions, or diplomatic or consular offices or upon any
military installation, equipment or personnel of the United States, which do not have a materially
disproportionate effect (relative to other industry participants) on the Borrower and its
subsidiaries, taken as a whole (excluding USAgencies and its subsidiaries); or (E) any event that
has or is reasonably expected to have a negative impact of less than 15% on the earnings of the
Borrower and its subsidiaries, taken as a whole (excluding USAgencies and its subsidiaries) or (ii)
any effect, change, development, state of facts, or circumstance that individually or taken as a
whole with all other such effects, changes, developments, states of fact, or circumstances has or
is reasonably expected to have a material adverse effect on (a) the business, assets, liabilities,
financial condition or results of operations of USAgencies and its Subsidiaries taken as a whole or
(b) the ability of the Borrower to operate USAgencies and its Subsidiaries or conduct the Business
immediately after the closing of the Acquisition in substantially the same manner as such
operations were being conducted by USAgencies and its Subsidiaries prior to the closing of the
Acquisition (disregarding for purposes of this clause (a) any specific effect, change, development,
state of facts, or circumstance existing or occurring prior to the Closing Date that is solely
attributable to or solely impacts the Borrower or its affiliates and is not connected in any way to
the operation of USAgencies and its Subsidiaries or the conduct of the Business prior to the
Closing Date), which shall include, without limitation, any effect, change, development, state of
facts, or circumstance that has resulted in the Adjusted Book Value falling below the MAE Book
Value as of the applicable date for such MAE Book Value or is reasonably expected to result in a
10% reduction in the projected consolidated revenues of USAgencies and its
subsidiaries for fiscal year ended December 31, 2007 of $104,700,000; provided that
any such effect, change, development, state of facts or circumstances described above attributable
to or



7









 







resulting from any action or omission of USAgencies or any of its subsidiaries taken with the
express prior written consent of the Borrower shall not be considered for purposes of determining
whether a Closing Date Material Adverse Effect exists.



     “Collateral” shall mean all property and assets of the Loan Parties, now owned or
hereafter acquired, upon which a Lien is purported to be created by any Security Document, and
shall include the Mortgaged Properties.



     “Collateral Agent” shall have the meaning assigned to such term in the preamble.



     “Combined Ratio” means the (a) Loss Ratio plus the (b) Expense Ratio.



     “Combined Risk-Based Capital Ratio” shall mean the ratio (expressed as a percentage),
at any time, of (i) the sum, without duplication, of the Total Adjusted Capital of each Regulated
Insurance Subsidiary to (ii) the sum, without duplication, of the Authorized Control Level of each
Regulated Insurance Subsidiary.



     “Commitment” shall mean, with respect to any Lender, such Lender’s Revolving Credit
Commitment, Term Loan Commitment and Swingline Commitment.



     “Commitment Fee” shall have the meaning assigned to such term in Section 2.05. (a) .



     “Commitment Fee Rate” shall mean a rate per annum equal to 1/2 of 1%.



     “Commitment Letter” shall mean the Commitment Letter dated as of October 5, 2006,
among the Borrower, CS and CS Securities.



     “Confidential Information Memorandum” shall mean the Confidential Information
Memorandum of the Borrower dated November, 2006.



     “Consolidated EBITDA” shall mean, for any period, Consolidated Net Income for such
period plus (a) without duplication and to the extent deducted in determining such Consolidated Net
Income, the sum of (i) Consolidated Interest Expense for such period, (ii) consolidated income tax
expense for such period, (iii) all amounts attributable to depreciation and amortization for such
period, (iv) any non-cash charges, (other than the write-down of current assets, provided
that, the Borrower may include as a non-cash charge a write-down of uncollected accounts receivable
in an amount up to $7,200,000 that occurs during the fourth quarter of fiscal year 2006 or any
quarter of fiscal year 2007) (v) fees, costs and expenses related to the consummation of the
Acquisition of up to $2,000,000 in the aggregate incurred on or prior to June 30, 2007 and (vi)
unusual or non-recurring charges in an amount not to exceed $9,000,000 for periods ending in fiscal
years 2006 and 2007 and $5,000,000 for periods ending in any fiscal year thereafter
(provided that to the extent that all or any portion of the income of any person is
excluded from Consolidated Net Income pursuant to the definition thereof for all or any portion of
such period any amounts set forth in the preceding clauses (i) through (iv) that are attributable
to such person shall not be included for purposes of this definition for such period or portion
thereof), and minus (b) without duplication (i) all cash payments made during such
period on account of reserves, restructuring charges and other non-cash charges added to
Consolidated Net Income pursuant to clause (a)(iv) above in a previous period and (ii) to the



8









 







extent included in determining such Consolidated Net Income, any extraordinary gains and all
non-cash items of income for such period, all determined on a consolidated basis in accordance with
GAAP; provided that for purposes of calculating Consolidated EBITDA for any period (A) the
Consolidated EBITDA of USAgencies and of any other Acquired Entity acquired by the Borrower or any
Subsidiary (other than Premium Finance Co.) pursuant to a Permitted Acquisition during such period
shall be included on a pro forma basis for such period (assuming the consummation of such
acquisition and the incurrence or assumption of any Indebtedness in connection therewith occurred
as of the first day of such period) and (B) the Consolidated EBITDA of any person or line of
business sold or otherwise disposed of by the Borrower or any Subsidiary during such period for
shall be excluded for such period (assuming the consummation of such sale or other disposition and
the repayment of any Indebtedness in connection therewith occurred as of the first day of such
period).



     “Consolidated Interest Expense” shall mean, for any period, the sum of (a) the
interest expense (including imputed interest expense in respect of Capital Lease Obligations and
Synthetic Lease Obligations) of the Borrower and its Subsidiaries (other than Premium Finance Co.
and its Subsidiaries) for such period (including all commissions, discounts and other fees and
charges owed by the Borrower and the Subsidiaries (other than Premium Finance Co. and its
Subsidiaries) with respect to letters of credit and bankers’ acceptance financing), net of
interest income, in each case determined on a consolidated basis in accordance with GAAP, plus (b)
any interest accrued during such period in respect of Indebtedness of the Borrower or any
Subsidiary (other than Premium Finance Co. and its Subsidiaries) that is required to be capitalized
rather than included in consolidated interest expense for such period in accordance with GAAP,
provided that for purposes of calculating Consolidated Interest Expense for any period (A)
the Consolidated Interest Expense of USAgencies and of any other Acquired Entity acquired by the
Borrower or any Subsidiary (other than Premium Finance Co.) during such period shall be included on
a pro forma basis for such period (assuming the consummation of such acquisition and the incurrence
or assumption of any Indebtedness in connection therewith occurred as of the first day of such
period) and (B) the Consolidated Interest Expense of any person or line of business sold or
otherwise disposed of by the Borrower or any Subsidiary in accordance with the terms of this
Agreement during such period shall be excluded for such period (assuming the consummation of such
sale or other disposition and the repayment of any Indebtedness in connection therewith occurred as
of the first day of such period). For purposes of the foregoing, interest expense shall be
determined after giving effect to any net payments made or received by the Borrower or any
Subsidiary (other than Premium Finance Co. and its Subsidiaries) with respect to interest rate
Hedging Agreements.



     “Consolidated Net Income” shall mean, for any period, the net income or loss of the
Borrower and the Subsidiaries for such period determined on a consolidated basis in accordance with
GAAP; provided that there shall be excluded (a) the income of any Subsidiary to the extent
that the declaration or payment of dividends or similar distributions by the Subsidiary of that
income is not at the time permitted by operation of the terms of its charter or any agreement,
instrument, judgment, decree, statute, rule or governmental regulation applicable to such
Subsidiary, (b) the income or loss of any person accrued prior to the date it becomes a Subsidiary
or is merged into or consolidated with the Borrower or any Subsidiary or the date that such
person’s assets are acquired by the Borrower or any Subsidiary, (c) the income of any person
(other than a Subsidiary) in which any other person (other than the Borrower or a wholly owned



9









 







Subsidiary or any director holding qualifying shares in accordance with applicable law) has an
interest, except to the extent of the amount of dividends or other distributions actually paid to
the Borrower or a wholly owned Subsidiary by such person during such period, and (d) any gains
attributable to sales of assets out of the ordinary course of business; provided, that
there shall be excluded from Consolidated Net Income for any period the net income or loss of
Premium Finance Co. and its Subsidiaries for such period to the extent otherwise included in
Consolidated Net Income, except to the extent actually received in cash by Borrower or any of its
Subsidiaries (other than Premium Finance Co. or any Subsidiary thereof) during such period through
dividends or other distributions other than intercompany loans.



     “Consolidated Net Worth” shall mean the net worth of Borrower and its Subsidiaries
determined on a consolidated basis in accordance with GAAP after appropriate deduction for any
minority interests in Subsidiaries.



     “Continuing Directors” shall mean, at any time, any member of the board of directors
of Borrower who (a) was a member of such board of directors on the Closing Date, after giving
effect to the Acquisition, or (b) was nominated for election or elected to such board of directors
with the approval of a majority of the Continuing Directors who were members of such board of
directors at the time of such nomination or election.



     “Control” shall mean the possession, directly or indirectly, of the power to direct or
cause the direction of the management or policies of a person, whether through the ownership of
voting securities, by contract or otherwise, and the terms “Controlling” and
“Controlled” shall have meanings correlative thereto.



     “Credit Event” shall have the meaning assigned to such term in Section 4.01.



     “CS” shall mean Credit Suisse, Cayman Islands Branch.



     “CS Securities” shall mean Credit Suisse Securities (USA) LLC.



     “Default” shall mean any event or condition which constitutes an Event of Default or
which upon notice, lapse of time or both would constitute an Event of Default.



     “dollars” or “$” shall mean lawful money of the United States of America.



     “Domestic Subsidiaries” shall mean all Subsidiaries incorporated, formed or organized
under the laws of the United States of America, any State thereof or the District of Columbia.



     “Environmental Laws” shall mean all former, current and future Federal, state, local
and foreign laws (including common law), treaties, regulations, rules, ordinances, codes, decrees,
judgments, directives, orders (including consent orders), and agreements in each case, relating to
protection of the environment, natural resources, human health and safety or the presence, Release
of, threatened Release, or exposure to, Hazardous Materials, or the generation, manufacture,
processing, distribution, use, treatment, storage, transport, recycling or handling of, or the
arrangement for such activities with respect to, Hazardous Materials.



10









 





     “Environmental Liability” shall mean all liabilities, obligations, damages, losses,
claims, actions, suits, judgments, orders, fines, penalties, fees, expenses and costs (including
administrative oversight costs, natural resource damages and remediation costs), whether contingent
or otherwise, arising out of or relating to (a) compliance or noncompliance with any Environmental
Law, (b) the generation, use, handling, transportation, storage, treatment or disposal of any
Hazardous Materials, (c) exposure to any Hazardous Materials, (d) the Release or threatened
Release of any Hazardous Materials or (e) any contract, agreement or other consensual arrangement
pursuant to which liability is assumed or imposed with respect to any of the foregoing.



     “Environmental Permit” shall mean any Permit issued pursuant to any Environmental Law.



     “Equity Interests” shall mean shares of capital stock, partnership interests,
membership interests in a limited liability company, beneficial interests in a trust or other
equity interests in any person, or any obligations convertible into or exchangeable for, or giving
any person a right, option or warrant to acquire, such equity interests or such convertible or
exchangeable obligations.



     “Equity Issuance” shall mean any issuance or sale by the Borrower of any Equity
Interests of the Borrower, or the receipt by the Borrower of any capital contribution, as
applicable, except in each case for (a) any issuance of directors’ qualifying shares and (b) sales
or issuances of common stock of Borrower to management or employees of the Borrower or any
Subsidiary under any employee stock option or stock purchase plan or employee benefit plan in
existence from time to time in the ordinary course of business.



     “ERISA” shall mean the Employee Retirement Income Security Act of 1974, as amended
from time to time.



     “ERISA Affiliate” shall mean any trade or business (whether or not incorporated) that,
together with the Borrower, is treated as a single employer under Section 414(b) or (c) of the Tax
Code, or solely for purposes of Section 302 of ERISA and Section 412 of the Tax Code, is treated as
a single employer under Section 414 of the Tax Code.



     “ERISA Event” shall mean (a) any “reportable event”, as defined in Section 4043 of
ERISA or the regulations issued thereunder, with respect to a Benefit Plan (other than an event for
which the 30-day notice period is waived); (b) the existence with respect to any Benefit Plan of an
“accumulated funding deficiency” (as defined in Section 412 of the Tax Code or Section 302 of
ERISA), whether or not waived; (c) the filing pursuant to Section 412(d) of the Tax Code or Section
303(d) of ERISA of an application for a waiver of the minimum funding standard with respect to any
Benefit Plan; (d) the incurrence by the Borrower or any of its ERISA Affiliates of any liability
under Title IV of ERISA with respect to the termination of any Benefit Plan or the withdrawal or
partial withdrawal of the Borrower or any of its ERISA Affiliates from any Benefit Plan or
Multiemployer Plan; (e) the receipt by the Borrower or any of its ERISA Affiliates from the PBGC or
a plan administrator of any notice relating to the intention to terminate any Benefit Plan or Plans
or to appoint a trustee to administer any Benefit Plan; (f) the adoption of any amendment to a
Benefit Plan that would require the provision of



11









 







security pursuant to Section 401(a)(29) of the Tax Code or Section 307 of ERISA; (g) the receipt by the
Borrower or any of its ERISA Affiliates of any notice, or the receipt by any Multiemployer Plan
from the Borrower or any of its ERISA Affiliates of any notice, concerning the imposition of
Withdrawal Liability or a determination that a Multiemployer Plan is, or is expected to be,
insolvent or in reorganization, within the meaning of Title IV of ERISA; (h) the occurrence of a
“prohibited transaction” with respect to which the Borrower or any of the Subsidiaries is a
“disqualified person” (within the meaning of Section 4975 of the Tax Code) or with respect to which
the Borrower or any such Subsidiary could otherwise be liable; or (i) any other event or condition
with respect to a Benefit Plan or Multiemployer Plan that could result in liability of the Borrower
or any Subsidiary.



     “Eurodollar”, when used in reference to any Loan or Borrowing, refers to whether such
Loan, or the Loans comprising such Borrowing, are bearing interest at a rate determined by
reference to the Adjusted LIBO Rate.



     “Event of Default” shall have the meaning assigned to such term in Article VII.



     “Excess Cash Flow” shall mean, for any relevant twelve (12) month fiscal period,
without duplication, Cash Flow, less (i) the consolidated aggregate amount of all Capital
Expenditures for such period, including capital payments for business expenditures and investments,
such as capital lease payments, (ii) consolidated state and federal income taxes for such period,
(iii) Consolidated Interest Expense, (iv) consolidated minimum required principal amortization
repayments actually paid in accordance with Section 2.11(a) hereof, (v) ordinary corporate
dividends made in accordance with the terms hereof during such period, and (vi) cash consideration
utilized for Permitted Acquisitions during the relevant twelve (12) month fiscal period. The
preceding formula shall be adjusted on a pro rata basis for any relevant period that is not a
fiscal twelve (12) month period.



     “Excluded Foreign Subsidiaries” shall mean, at any time, any Foreign Subsidiary that
is (or is treated as) for United States federal income tax purposes either (a) a corporation or (b)
a pass-through entity owned directly or indirectly by another Foreign Subsidiary that is (or is
treated as) a corporation, or any subsidiary that is prohibited by applicable law from guaranteeing
the Obligations.



     “Excluded Taxes” shall mean, with respect to the Administrative Agent, any Lender, the
Issuing Bank or any other recipient of any payment to be made by or on account of any obligation of
the Borrower hereunder, (a) income or franchise taxes imposed on (or measured by) its net income as
a result of a present or former connection between such recipient and the jurisdiction imposing
such tax (or any political subdivision thereof), other than any such connection arising solely from
such recipient having executed, delivered or performed its obligations or received a payment under,
or enforced, this Agreement or any other Loan Document and (b) in the case of a Foreign Lender
(other than an assignee pursuant to a request by the Borrower under Section 2.21. (a) , any
United States withholding tax that is imposed on amounts payable to such Foreign Lender at the time
such Foreign Lender becomes a party to this Agreement (or designates a new lending office) or is
attributable to such Foreign Lender’s failure to comply with Section 2.20. (d) , except to the
extent that such Foreign Lender (or its assignor, if any) was entitled, at the time of designation
of a new lending office (or assignment), to receive



12









 







additional amounts from the Borrower with respect to such withholding tax pursuant to Section
2.20. (a) (it being understood and agreed, for the avoidance of doubt, that any withholding tax
imposed on a Foreign Lender as a result of a Change in Law or regulation or interpretation thereof
occurring after the time such Foreign Lender became a party to this Agreement shall not be an
Excluded Tax).



     “Existing Credit Facilities” shall mean, collectively, the Frost Credit Facility and
the Hibernia Credit Facility.



     “Existing TruPS Business Trusts” shall mean Affirmative Trust I and Affirmative Trust
II.



     “Expense Ratio” means the sum of operating expenses and depreciation and amortization
expenses less commission income and fees, divided by earned premiums.



     “Extraordinary Receipts” means any Net Cash Proceeds received by any Loan Party or any
of their respective Subsidiaries (other than Premium Finance Co.) not in the ordinary course of
business (and not consisting of proceeds described in Section 2.3(b), (c),
(d), (e) or (f) hereof), including, without limitation, (i) foreign,
federal, state or local tax refunds, (ii) pension plan reversions, (iii) proceeds of insurance to
the extent not constituting a Recovery Event, (iv) judgments, proceeds of settlements or other
consideration of any kind in connection with any cause of action or litigation, (v) condemnation
awards (and payments in lieu thereof) to the extent not constituting a Recovery Event, (vi)
indemnity payments in respect of the Acquisition Documentation or any other purchase and sale
agreement and related documentation in respect of any Permitted Acquisition and (vii) any purchase
price adjustment (or similar payments) received in connection with the Acquisition Documentation
any other purchase and sale agreement and related documentation in respect of any Permitted
Acquisition.



     “Facility” shall mean each of (a) the Term Loan Commitments and the Term Loans made
thereunder (the “Term Loan Facility”) and (b) the Revolving Credit Commitments and the
extensions of credit made thereunder (the “Revolving Credit Facility”).



     “Federal Funds Effective Rate” shall mean, for any day, the weighted average of the
rates on overnight Federal funds transactions with members of the Federal Reserve System arranged
by Federal funds brokers, as published on the next succeeding Business Day by the Federal Reserve
Bank of New York, or, if such rate is not so published for any day that is a Business Day, the
average of the quotations for the day for such transactions received by the Administrative Agent
from three federal funds brokers of recognized standing selected by it.



     “Fee Letter” shall mean the Fee Letter dated as of October 5, 2006, among the
Borrower, CS and CS Securities.



     “Fees” shall mean the Commitment Fees, the Administrative Agent Fees, the L/C
Participation Fees and the Issuing Bank Fees.



     “Financial Officer” of any person shall mean the chief financial officer, principal
accounting officer, treasurer or controller of such person.



13









 





     “Financial Reinsurance Agreement” shall mean a reinsurance agreement covering any
transaction in which any Regulated Insurance Subsidiary cedes business that does not meet the
conditions for reinsurance accounting as provided by the Financial Accounting Standards Board in
Statement of Financial Accounting Standards No. 113, as the same may be revised, replaced, or
supplemented from time to time.



     “Fixed Charge Coverage Ratio” shall mean the ratio (rounded to two decimal places)
determined as at the last day of the most recent fiscal year of Borrower of (a) Consolidated EBITDA
for the four fiscal quarter period ended on the last day of such fiscal year, to (b) Fixed Charges
determined as at the last day of such fiscal year.



     “Fixed Charges” means the sum of (a) Consolidated Interest Expense for the four fiscal
quarter period ended on the date of determination, plus (b) scheduled principal payments of
Indebtedness which would be classified as a current liability on a consolidated balance sheet of
Borrower and its consolidated Subsidiaries payable during the four fiscal quarter period beginning
on the day following the date of determination, plus (c) Cash Capital Expenditures (other than
Permitted IT Capital Expenditures) actually paid by Borrower and its consolidated Subsidiaries
during the four fiscal quarter period ended on the date of determination, plus (d) the aggregate
amount of Taxes actually paid by Borrower and its consolidated Subsidiaries during the four fiscal
quarter period ended on the date of determination, plus (e) cash Restricted Payments actually paid
by Borrower during the four fiscal quarter period ended on the date of determination.



     “Foreign Lender” shall mean any Lender that is organized under the laws of a
jurisdiction other than that in which the Borrower is located. For purposes of this definition,
the United States of America, each State thereof and the District of Columbia shall be deemed to
constitute a single jurisdiction.



     “Foreign Subsidiary” shall mean any Subsidiary that is not a Domestic Subsidiary.



     “Frost Credit Facility” shall mean the credit facility of the Borrower under the
credit agreement dated as of July 30, 2004, as amended, among the Borrower, Frost National Bank, as
a lender and as agent for all lenders, and the other lenders party thereto.



     “GAAP” shall mean generally accepted accounting principles in the United States.



     “Governmental Authority” shall mean the government of the United States of America or
any other nation, any political subdivision thereof, whether state or local, and any agency,
authority, instrumentality, regulatory body, court, central bank or other entity exercising
executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or
pertaining to government.



     “Granting Lender” shall have the meaning assigned to such term in Section 9.04. (i).



     “Guarantee” of or by any person (the “guarantor”) shall mean any obligation,
contingent or otherwise, of (a) the guarantor or (b) another person (including any bank under a
letter of credit) to induce the creation of which the guarantor has issued a reimbursement,
counterindemnity or similar obligation, in either case guaranteeing or having the economic effect



14









 







of guaranteeing any Indebtedness or other obligation of any other person (the “primary
obligor”) in any manner, whether directly or indirectly, and including any obligation,
contingent or otherwise, of the guarantor, direct or indirect, (i) to purchase or pay (or advance
or supply funds for the purchase or payment of) such Indebtedness or other obligation or to
purchase (or to advance or supply funds for the purchase of) any security for the payment of such
Indebtedness or other obligation, (ii) to purchase or lease property, securities or services for
the purpose of assuring the owner of such Indebtedness or other obligation of the payment of such
Indebtedness or other obligation, (iii) to maintain working capital, equity capital or any other
financial statement condition or liquidity of the primary obligor so as to enable the primary
obligor to pay such Indebtedness or other obligation, (iv) to act as an account party in respect of
any letter of credit or letter of guaranty issued to support such Indebtedness or obligation or (v)
to otherwise assure or hold harmless the owner of such Indebtedness or other obligation against
loss in respect thereof; provided, however, that the term “Guarantee” shall not
include (x) endorsements for collection or deposit in the ordinary course of business or (y)
obligations of Regulated Insurance Subsidiaries under Insurance Contracts, Reinsurance Agreements
or Retrocession Agreements.



     “Guarantee and Collateral Agreement” shall mean the Guarantee and Collateral Agreement
in the form of Exhibit E, to be executed and delivered by the Borrower and each Subsidiary
Guarantor.



     “Hazardous Materials” shall mean any petroleum (including crude oil or fraction
thereof) or petroleum products or byproducts, or any pollutant, contaminant, chemical, compound,
constituent, or hazardous, toxic or other substances, materials or wastes defined, or regulated as
such by, or pursuant to, any Environmental Law, or requires removal, remediation or reporting under
any Environmental Law, including asbestos, or asbestos containing material, radon or other
radioactive material, polychlorinated biphenyls and urea formaldehyde insulation.



     “Hedging Agreement” shall mean any agreement with respect to any swap, forward, future
or derivative transaction or option or similar agreement involving, or settled by reference to, one
or more rates, currencies, fuel or other commodities, equity or debt instruments or securities, or
economic, financial or pricing indices or measures of economic, financial or pricing risk or value
or any similar transaction or any combination of these transactions; provided,
however, that no phantom stock or similar plan providing for payments and on account of
services provided by current or former directors, officers, employees or consultants of the
Borrower or any Subsidiary shall be a Hedging Agreement.



     “Hibernia Credit Facility” shall mean the credit facility of under the Second Amended
and Restated Credit Agreement dated as of July 28, 2005, as amended as of the Closing Date, among
LIFCO, L.L.C., a Louisiana limited liability company, USAgencies, Hibernia National Bank, as a
lender and as agent for all lenders, and the other parties thereto.



     “Increased Amount Date” shall have the meaning assigned to such term in Section 2.24.



     “Increase Loan Notice” shall have the meaning assigned to such term in Section 2.24.



     “Indebtedness” of any person shall mean, without duplication, (a) all obligations of
such person for borrowed money or with respect to deposits or advances of any kind, (b) all



15









 







obligations of such person evidenced by bonds, debentures, notes or similar instruments, (c)
all obligations of such person under conditional sale or other title retention agreements relating
to property or assets acquired by such person, (d) all obligations of such person in respect of the
deferred purchase price of property or services (other than current trade accounts payable incurred
in the ordinary course of business, which for the avoidance of doubt, shall mean trade payables
that are no more than ninety (90) days outstanding after the earlier of (i) the typical payment
date or (ii) the required payment date), (e) all obligations of such person, contingent or
otherwise, to purchase, redeem, retire or otherwise acquire for value any Equity Interests in such
person, (f) all Indebtedness of others secured by (or for which the holder of such Indebtedness has
an existing right, contingent or otherwise, to be secured by) any Lien on property owned or
acquired by such person, whether or not the Indebtedness secured thereby has been assumed; provided
that if such Indebtedness has expressly not been assumed, the amount of such Indebtedness for
purposes of this Agreement shall be the lesser of (1) the amount of such Indebtedness and (2) the
fair market value of the collateral subject to such Lien, (g) all obligations of such person under
Financial Reinsurance Agreements, (h) all Guarantees by such person of Indebtedness of others, (i)
all Capital Lease Obligations or Synthetic Lease Obligations of such person, (j) all obligations,
contingent or otherwise, of such person as an account party in respect of letters of credit and
letters of guaranty and (k) all obligations, contingent or otherwise, of such person in respect of
bankers’ acceptances. The Indebtedness of any person shall include the Indebtedness of any other
person (including any partnership in which such person is a general partner) to the extent such
person is liable therefor as a result of such person’s ownership interest in, or other relationship
with, such other person, except to the extent the terms of such Indebtedness provide that such
person is not liable therefor. For the avoidance of doubt, Indebtedness shall not include
obligations to employees undertaken in the ordinary course and consistent with past practice under
health or disability employee benefit programs not constituting obligations for borrowed money.



     “Indemnified Taxes” shall mean Taxes other than Excluded Taxes and Other Taxes.



     “Indemnitee” shall have the meaning assigned to such term in Section 9.05. (b) .



     “Information” shall have the meaning assigned to such term in Section 9.16.



     “Installment Agreement” shall mean an agreement or arrangement (however evidenced)
pursuant to which a policyholder agrees to pay a Regulated Insurance Subsidiary the premium cost on
an insurance policy at a future date in one or more installments, together with a service charge.



     “Insurance Business” shall mean one or more aspects of the business of (a) selling,
issuing or underwriting nonstandard personal auto insurance and (b) selling or issuing reinsurance
substantially related to the foregoing.



     “Insurance Contract” shall mean any insurance contract or policy issued by a Regulated
Insurance Subsidiary (but shall not include any Reinsurance Agreement or Retrocession Agreement).



16









 





     “Insurance Regulators” shall mean, with respect to any Regulated Insurance Subsidiary,
the Governmental Authority, insurance department or similar administrative authority or agency
located in (a) each state in which such Regulated Insurance Subsidiary is domiciled or (b) to the
extent asserting regulatory jurisdiction over such Regulated Insurance Subsidiary, the Governmental
Authority, insurance department, authority or agency in each state in which such Regulated
Insurance Subsidiary is licensed, shall include any federal insurance regulatory department,
authority or agency that may be created and that asserts regulatory jurisdiction over such
Regulated Insurance Subsidiary.



     “Intellectual Property Collateral” shall have the meaning assigned to such term in the
Guarantee and Collateral Agreement.



     “Intellectual Property Security Agreement” shall mean all Intellectual Property
Security Agreements to be executed and delivered by the Loan Parties, each substantially in the
applicable form required by the Guarantee and Collateral Agreement.



     “Interest Coverage Ratio” shall mean, on any date, the ratio of (a) Cash Flow for the
Borrower and its Subsidiaries (other than Premium Finance Co. and its Subsidiaries) for the period
of four consecutive fiscal quarters most recently ended on or prior to such date, taken as one
accounting period, to (b) Consolidated Interest Expense for the Borrower its Subsidiaries (other
than Premium Finance Co. and its Subsidiaries) for the period of four consecutive fiscal quarters
ended on or prior to such date, taken as one accounting period.



     “Interest Payment Date” shall mean (a) with respect to any ABR Loan, the last Business
Day of each March, June, September and December commencing March 30, 2007, (b) with respect to any
Eurodollar Loan, the last day of the Interest Period applicable to the Borrowing of which such Loan
is a part and, in the case of a Eurodollar Borrowing with an Interest Period of more than three
months’ duration, each day that would have been an Interest Payment Date had successive Interest
Periods of three months’ duration been applicable to such Borrowing.



     “Interest Period” shall mean, with respect to any Eurodollar Borrowing, the period
commencing on the date of such Borrowing and ending on the numerically corresponding day in the
calendar month that is 1, 2, 3 or 6 months thereafter, as the Borrower may elect; provided,
however, that (a) if any Interest Period would end on a day other than a Business Day, such
Interest Period shall be extended to the next succeeding Business Day unless such next succeeding
Business Day would fall in the next calendar month, in which case such Interest Period shall end on
the next preceding Business Day and (b) any Interest Period that commences on the last Business Day
of a calendar month (or on a day for which there is no numerically corresponding day in the last
calendar month of such Interest Period) shall end on the last Business Day of the last calendar
month of such Interest Period. Interest shall accrue from and including the first day of an
Interest Period to but excluding the last day of such Interest Period. For purposes hereof, the
date of a Borrowing initially shall be the date on which such Borrowing is made and thereafter
shall be the effective date of the most recent conversion or continuation of such Borrowing.



     “Investments” shall have the meaning assigned to such term in Section 6.04.



17









 





     “Issuing Bank” shall mean, as the context may require, (a) CS, in its capacity as the
issuer of Letters of Credit hereunder, and (b) any other Lender that may become an Issuing Bank
pursuant to Section 2.23. (i) or Section 2.23. (k) , with respect to Letters of Credit issued
by such Lender. The Issuing Bank may, in its discretion, arrange for one or more Letters of Credit
to be issued by Affiliates of the Issuing Bank, in which case the term “Issuing Bank” shall include
any such Affiliate with respect to Letters of Credit issued by such Affiliate.



     “Issuing Bank Fees” shall have the meaning assigned to such term in Section 2.05. (c).



     “Joinder Agreement” means the joinder agreement, if any, by and among Borrower, each
New Revolving Loan Lender and Administrative Agent, executed in accordance with Section 2.24, which
shall set forth the terms and conditions for the making of the New Revolving Loans by the New
Revolving Loan Lenders.



     “L/C Commitment” shall mean the commitment of the Issuing Bank to issue Letters of
Credit pursuant to Section 2.23..



     “L/C Disbursement” shall mean a payment or disbursement made by the Issuing Bank
pursuant to a Letter of Credit.



     “L/C Exposure” shall mean, at any time, the sum of (a) the aggregate undrawn amount of
all Letters of Credit at such time and (b) the aggregate amount of all L/C Disbursements that have
not been reimbursed at such time. The L/C Exposure of any Revolving Credit Lender at any time
shall equal its Pro Rata Percentage of the aggregate L/C Exposure at such time.



     “L/C Fee Payment Date” shall have the meaning assigned to such term in Section 2.05.
(c).



     “L/C Participation Fee” shall have the meaning assigned to such term in Section 2.05.
(c).



     “Lender Addendum” shall mean, with respect to any initial Lender, a Lender Addendum in
the form of Exhibit F, or such other form as may be supplied by the Administrative Agent, to be
executed and delivered by such Lender on the Closing Date.



     “Lenders” shall mean (a) the persons that deliver a Lender Addendum (other than any
such person that has ceased to be a party hereto pursuant to an Assignment and Acceptance) and (b)
any person that has become a party hereto pursuant to an Assignment and Acceptance. Unless the
context otherwise requires, the term “Lenders” shall include the Swingline Lender.



     “Letter of Credit” shall mean any letter of credit issued pursuant to Section 2.23.



     “Leverage Ratio” shall mean, on any date, the ratio of (a) Total Debt on such date to
(b) Cash Flow for the period of four consecutive fiscal quarters most recently ended on or prior to
such date, taken as one accounting period.



     “LIBO Rate” shall mean, with respect to any Eurodollar Borrowing for any Interest
Period, the rate per annum determined by the Administrative Agent at approximately 11:00 a.m.,



18









 







London time, on the date that is two Business Days prior to the commencement of such Interest
Period by reference to the British Bankers’ Association Interest Settlement Rates for deposits in
dollars (as set forth by the Bloomberg Information Service or any successor thereto or any other
service selected by the Administrative Agent which has been nominated by the British Bankers’
Association as an authorized information vendor for the purpose of displaying such rates) for a
period equal to such Interest Period; provided that, to the extent that an interest rate is
not ascertainable pursuant to the foregoing provisions of this definition, the “LIBO Rate” shall be
the interest rate per annum determined by the Administrative Agent to be the average of the rates
per annum at which deposits in dollars are offered for such relevant Interest Period to major banks
in the London interbank market in London, England by the Administrative Agent at approximately
11:00 a.m. (London time) on the date that is two Business Days prior to the beginning of such
Interest Period.



     “Lien” shall mean, with respect to any asset, (a) any mortgage, deed of trust, lien
(statutory or otherwise), pledge, hypothecation, encumbrance, collateral assignment, charge or
security interest in, on or of such asset, (b) the interest of a vendor or a lessor under any
conditional sale agreement, capital lease or title retention agreement (or any financing lease
having substantially the same economic effect as any of the foregoing) relating to such asset and
(c) in the case of securities, any purchase option, call or similar right of a third party with
respect to such securities.



     “LIFCO” shall mean LIFCO, L.L.C., a Louisiana limited liability company.



     “Loan Documents” shall mean this Agreement and the Security Documents.



     “Loan Parties” shall mean the Borrower and each Subsidiary that is or becomes a party
to a Loan Document.



     “Loans” shall mean the Revolving Loans, the Term Loans and the Swingline Loans.



     “Loss Ratio” means the ratio of loss and loss adjustment expense to earned premiums.



     “MAE Book Value” shall mean (a) $88,800,000 as of October 31, 2006, (b) $90,100,000 as
of November 30, 2006, (c) $91,500,000 as of December 31, 2006, (d) $92,900,000 as of January 31,
2007, and (e) $94,300,000 as of February 28, 2007.



     “Majority Facility Lenders” shall mean, with respect to any Facility, the holders of a
majority of the aggregate unpaid principal amount of the Term Loans or the Aggregate Revolving
Credit Exposure, as the case may be, outstanding under such Facility (or, in the case of the
Revolving Credit Facility, prior to the termination of the Revolving Credit Commitments, the
holders of a majority of the Total Revolving Credit Commitment).



     “Margin Stock” shall have the meaning assigned to such term in Regulation U.



     “Material Adverse Effect” shall mean shall mean a material adverse condition or
material adverse change in or materially affecting (a) the business, assets, liabilities,
operations or condition (financial or otherwise) of the Borrower and the Subsidiaries, taken as a
whole, or (b) the validity or enforceability of any of the Loan Documents or the rights and
remedies of the



19









 







Arranger, the Administrative Agent, the Collateral Agent or the Secured Parties thereunder;
provided that solely for purposes of the representations and warranties given on and as of the
Closing Date, “Material Adverse Effect” shall mean a Closing Date Material Adverse Effect.



     “Material Real Property” shall mean (i) all Real Property owned in fee by any Loan
Party that, together with any improvements thereon, individually has a fair market value of at
least $5,000,000, and (ii) all leased Real Property of any Loan Party which lease individually has
a fair market value of at least $5,000,000.



     “Material Indebtedness” shall mean Indebtedness (other than the Loans and Letters of
Credit), or obligations in respect of one or more Hedging Agreements, of any one or more of the
Borrower or the Subsidiaries in an aggregate principal amount exceeding $2,500,000. For purposes
of determining Material Indebtedness, the “principal amount” of the obligations of the Borrower or
any Subsidiary in respect of any Hedging Agreement at any time shall be the maximum aggregate
amount (giving effect to any netting agreements) that the Borrower or such Subsidiary would be
required to pay if such Hedging Agreement were terminated at such time.



     “Maximum Rate” shall have the meaning assigned to such term in Section 9.09.



     “Moody’s” shall mean Moody’s Investors Service, Inc.



     “Mortgaged Properties” shall mean, initially, each parcel of real property and the
improvements thereto owned or leased by a Loan Party and specified on Schedule 1.01(a), and shall
include each other parcel of real property and improvements thereto with respect to which a
Mortgage is granted pursuant to Section 5.09 or 5.10.



     “Mortgages” shall mean the fee or leasehold mortgages or deeds of trust, assignments
of leases and rents and other security documents granting a Lien on any Mortgaged Property to
secure the Obligations, in the form of Exhibit G, with such changes as shall be advisable under the
law of the jurisdiction in which such Mortgage is to be recorded and as are reasonably satisfactory
to the Collateral Agent, as the same may be amended, supplemented, replaced or otherwise modified
from time to time in accordance with this Agreement.



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



     “NAIC” shall mean the National Association of Insurance Commissioners or any successor
organization thereto.



     “Net Cash Proceeds” shall mean (a) with respect to any Asset Sale, Recovery Event or
Extraordinary Receipts, the proceeds thereof in the form of cash and Permitted Investments
(including any such proceeds subsequently received (as and when received) in respect of noncash
consideration initially received), net of (i) in respect of Asset Sales or Recovery Events, selling
expenses (including reasonable and customary broker’s fees or commissions, legal fees, transfer and
similar taxes incurred by the Borrower and the Subsidiaries in connection therewith and the
Borrower’s good faith estimate of income taxes paid or payable in connection with such sale, after
taking into account any available tax credits or deductions and any tax sharing arrangements), (ii)
in respect of Asset Sales, amounts provided as a reserve, in accordance with



20









 







GAAP, against any liabilities under any indemnification obligations or purchase price
adjustment associated with such Asset Sale (provided that, to the extent and at the time
any such amounts are released from such reserve, such amounts shall constitute Net Cash Proceeds)
and (iii) in respect of Asset Sales or Recovery Events, the principal amount, premium or penalty,
if any, interest and other amounts on any Indebtedness for borrowed money which is secured by the
asset sold in such Asset Sale and which is required to be repaid with such proceeds (other than any
such Indebtedness assumed by the purchaser of such asset); provided, however, that,
in respect of Asset Sales and Recovery Events, if (x) the Borrower shall deliver a certificate of a
Financial Officer of the Borrower to the Administrative Agent at the time of receipt thereof
setting forth the Borrower’s intent to reinvest such proceeds in productive assets of a kind then
used or usable in the business of the Borrower and the Subsidiaries within 180 days of receipt of
such proceeds and (y) no Default or Event of Default shall have occurred and shall be continuing at
the time of such certificate or at the proposed time of the application of such proceeds, such
proceeds shall not constitute Net Cash Proceeds except to the extent not so used at the end of such
180day period, at which time such proceeds shall be deemed to be Net Cash Proceeds; and (b) with
respect to any issuance or disposition of Indebtedness or any Equity Issuance, the cash proceeds
thereof, net of all taxes and reasonable and customary fees, commissions, costs and other expenses
incurred by the Borrower and the Subsidiaries in connection therewith.



     “New Revolving Loan Commitment” shall have the meaning assigned to such term in
Section 2.24.



     “New Revolving Loan Lender” shall have the meaning assigned to such term in Section
2.24.



     “New Revolving Loan” shall have the meaning assigned to such term in Section 2.24.



     “Obligations” shall mean all obligations defined as “Obligations” in the Guarantee and
Collateral Agreement and the other Security Documents.



     “Other Taxes” shall mean any and all present or future stamp or documentary taxes or
any other excise or property taxes, charges or similar levies (including interest, fines, penalties
and additions to tax) arising from any payment made under any Loan Document or from the execution,
delivery or enforcement of, or otherwise with respect to, any Loan Document.



     “Paying Agent” shall have the meaning assigned to such term in Article VIII.



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



     “Perfection Certificate” shall mean the Pre-Closing UCC Diligence Certificate
substantially in the form of Exhibit H or any other form approved by the Collateral Agent.



     “Permits” shall mean any and all franchises, licenses, leases, permits, approvals,
notifications, certifications, registrations, authorizations, exemptions, qualifications,
easements, rights of way, Liens and other rights, privileges and approvals required under any
Requirement of Law.



21









 





     “Permitted Acquisition” shall mean (i) the acquisition by Borrower of USAgencies and
its Subsidiaries pursuant to the Purchase Agreement and the transactions contemplated thereby, and
(ii) the acquisition by the Borrower or any Subsidiary of all or substantially all the assets of a
person or line of business of such person, or all of the Equity Interests of a person (referred to
herein as the “Acquired Entity”); provided that (w) the Acquired Entity shall be a
going concern and shall be in a similar line of business as that of the Borrower and the
Subsidiaries as conducted during the current and most recently concluded calendar year; (x) at the
time of such transaction (A) both before and after giving effect thereto, no Event of Default or
Default shall have occurred and be continuing; and (B) the Borrower would be in compliance with the
covenants set forth in Sections 6.11 through 6.16, in each case as of the most recently completed
period ending prior to such transaction for which the financial statements and certificates
required by Section 5.04(a) or 5.04(b) were required to be delivered or for which comparable
financial statements have been filed with the Securities and Exchange Commission, after giving
pro forma effect to such transaction and to any other event occurring after such period as
to which pro forma recalculation is appropriate (including any other transaction described
in this definition occurring after such period) as if such transaction (and the occurrence or
assumption of any Indebtedness in connection therewith) had occurred as of the first day of such
period; and (C) after giving effect to such acquisition, there must be at least $3,000,000 of
unused and available Revolving Credit Commitments; (y) the Borrower and the Subsidiaries shall not
incur or assume any Indebtedness in connection with such acquisition, except as permitted by
Section 6.01; and (iv) the Borrower shall comply, and shall cause the Acquired Entity to comply,
with the applicable provisions of Sections 5.09 and 5.10 and the Security Documents.



     “Permitted Holders” shall mean JC Flowers I L.P., JC Flowers II L.P., JC Flowers II-A
L.P., JC Flowers II-B L.P., JC Flowers & Co., LLC and any other affiliated investment funds which
are managed or controlled thereby or an Affiliate thereof in the ordinary course of business and
pursuant to written agreements (including, without limitation, pursuant to the organizational
documents of such persons).



     “Permitted Investments” shall mean:




     (a) direct obligations of, or obligations the principal of and interest on which are
unconditionally guaranteed by, the United States of America (or by any agency thereof to the
extent such obligations are backed by the full faith and credit of the United States of
America), in each case maturing within one year from the date of acquisition thereof;




     (b) investments in commercial paper maturing within 270 days from the date of
acquisition thereof and having, at such date of acquisition, the highest credit rating
obtainable from S&P or from Moody’s;




     (c) investments in certificates of deposit, banker’s acceptances and time deposits
maturing within 180 days from the date of acquisition thereof issued or guaranteed by or
placed with, and money market deposit accounts issued or offered by, the Administrative
Agent or any domestic office of any commercial bank organized under the laws of the United
States of America or any State thereof that has a combined capital and surplus and undivided
profits of not less than $500,000,000;



22









 






     (d) fully collateralized repurchase agreements with a term of not more than 30 days for
securities described in clause (a) above and entered into with a financial institution
satisfying the criteria of clause (c) above;




     (e) investments in “money market funds” within the meaning of Rule 2a-7 of the
Investment Company Act of 1940, as amended, substantially all of whose assets are invested
in investments of the type described in clauses (a) through (d) above; and




     (f) other shortterm investments utilized by Foreign Subsidiaries in accordance with
normal investment practices for cash management in investments of a type analogous to the
foregoing.



     “Permitted IT Capital Expenditures” shall have the meaning assigned to such term in
Section 6.10.



     “Permitted Refinancing Indebtedness” shall mean Indebtedness issued or incurred
(including by means of the extension or renewal of existing Indebtedness) to refinance, refund,
extend, renew or replace existing Indebtedness (“Refinanced Indebtedness”);
provided that (a) the principal amount of such refinancing, refunding, extending, renewing
or replacing Indebtedness is not greater than the principal amount of such Refinanced Indebtedness
plus the amount of any premiums or penalties and accrued and unpaid interest paid thereon and
reasonable fees and expenses, in each case associated with such refinancing, refunding, extension,
renewal or replacement, (b) such refinancing, refunding, extending, renewing or replacing
Indebtedness has a final maturity that is no sooner than, and a weighted average life to maturity
that is no shorter than, such Refinanced Indebtedness, (c) if such Refinanced Indebtedness or any
Guarantees thereof are subordinated to the Obligations, such refinancing, refunding, extending,
renewing or replacing Indebtedness and any Guarantees thereof remain so subordinated on terms no
less favorable to the Lenders, (d) the obligors in respect of such Refinanced Indebtedness
immediately prior to such refinancing, refunding, extending, renewing or replacing are the only
obligors on such refinancing, refunding extending, renewing or replacing Indebtedness and (e) such
refinancing, refunding, extending, renewing or replacing Indebtedness contains covenants and events
of default and is benefited by Guarantees, if any, which, taken as a whole, are determined in good
faith by a Financial Officer of the Borrower to be no less favorable to the Borrower or the
applicable Subsidiary and the Lenders in any material respect than the covenants and events of
default or Guarantees, if any, in respect of such Refinanced Indebtedness.



     “person” shall mean any natural person, corporation, trust, business trust, joint
venture, joint stock company, association, company, limited liability company, partnership,
Governmental Authority or other entity.



     “Pledged Collateral” shall have the meaning assigned to such term in the Guarantee and
Collateral Agreement.



     “Premium Finance Agreement” shall mean an agreement (however evidenced) by which a
policyholder agrees to pay LIFCO or a Premium Finance Co. the premium cost on an insurance policy
at a future date in one or more installments, together with a finance charge and any related



23









 







fees, as the same may be amended, supplemented or otherwise modified from time to time in
accordance with this Agreement.



     “Premium Finance Co.” shall mean a wholly owned bankruptcy remote single purpose
subsidiary of the Borrower organized to provide premium financing to customers of the Borrower, its
Subsidiaries and other third parties engaged in the Insurance Business (excluding USAgencies and
its Subsidiaries, or any person that USAgencies or any of its Subsidiaries are or may be merged
with or into) to which such persons have provided non-standard automobile insurance policies, which
was formed pursuant to organizational documents acceptable in form and content to the
Administrative Agent, which has entered into an Approved Premium Finance Facility, and which does
not compete in the state of Louisiana with USAgencies or any of its Subsidiaries with respect to
the provision of premium financing to customers of USAgencies, its Subsidiaries or any other
Subsidiary of the Borrower operating under the brand or trade name “USAgencies” or any other brand
or trade name used by the Borrower or its Subsidiaries.



     “Primary New Revolving Loan Commitment” shall have the meaning assigned to such term
in Section 2.24.



     “Prime Rate” shall mean the rate of interest per annum announced from time to time by
CS as its prime rate in effect at its principal office in New York City; each change in the Prime
Rate shall be effective as of the opening of business on the date such change is announced as being
effective. The Prime Rate is a reference rate and does not necessarily represent the lowest or
best rate actually available.



     “Pro Forma Cash Flow” shall have the meaning assigned to such term in Section 4.02.
(j) .



     “Pro Rata Percentage” of any Revolving Credit Lender, at any time, shall mean the
percentage of the Total Revolving Credit Commitment represented by such Lender’s Revolving Credit
Commitment. In the event the Revolving Credit Commitments shall have expired or been terminated,
the Pro Rata Percentages of any Revolving Credit Lender shall be determined on the basis of the
Revolving Credit Commitments most recently in effect prior thereto.



     “Projections” shall have the meaning assigned such term in Section 4.02(k).



     “Purchase Agreement” shall mean the purchase and sale agreement dated as of October 3,
2006, among the Sellers and the Borrower, as the same may be amended, supplemented or otherwise
modified from time to time in accordance with this Agreement.



     “Qualified Additional Subordinated Debt” shall mean any Indebtedness of the Borrower
incurred pursuant to the issuance of any TruPS and any related TruPS instrument, which (i) shall
not be secured by any Equity Interests or assets of the Borrower, any Subsidiary thereof or any
other person; (ii) shall not be guaranteed by any person other than the Borrower; (iii) shall not
mature, and shall not be subject to any mandatory repurchase, redemption or amortization, in each
case, prior to the date that is six months after the latest of the Revolving Credit Maturity Date
and the Term Loan Maturity Date, as either of the foregoing may be extended in accordance with the
terms of this Agreement; (iv) may be optionally or voluntarily redeemable, at the Borrower’s
option, subject to the restrictions set forth in Section 6.09(b) hereof; (v) shall



24









 







not contain any financial maintenance covenants; (vi) shall not contain any other covenants,
events of default (including cross defaults) or remedies, more restrictive or less advantageous to
the Borrower, its Subsidiaries and the Lenders than those set forth in the Subordinated Debt; (vii)
shall not be exchangeable or convertible into Indebtedness of Borrower or any of its Subsidiaries
(other than additional Qualified Additional Subordinated Debt) or any preferred stock or other
Equity Interests; (viii) after giving effect to the incurrence of such Indebtedness, (A) Borrower
and its Subsidiaries must be in pro forma compliance with the financial covenants set forth in
Sections 6.12 and 6.16 and (B) no Default or Event of Default shall exist or would result from such
incurrence; (ix) shall be contractually subordinated in right of payment and otherwise to the
Obligations pursuant to provisions substantially similar to those set forth in the Subordinated
Debt, such terms of subordination to be subject to the consent of the Administrative Agent, which
consent shall not be unreasonably conditioned withheld or delayed (it being understood that
provisions substantially similar to those set forth in the Subordinated Debt shall be deemed to be
so satisfactory); and (x) shall otherwise contain provisions substantially similar to those set
forth in the Subordinated Debt.



     “Qualified Additional Subordinated Debt Documents” shall mean the TruPS, TruPS
Instruments, indentures and all other instruments, agreements and other documents evidencing or
governing the Qualified Additional Subordinated Debt or providing any Guarantee or other right in
respect thereof, executed by the Borrower and/or any TruPS Business Trust established in connection
with the issuance of such Qualified Additional Subordinated Debt for the benefit of the lenders,
noteholders or other securities holders thereunder, as the same may be amended, supplemented,
replaced or otherwise modified from time to time in accordance with this Agreement.



     “Qualified Insurance Holding Company” means each Subsidiary of the Borrower that (x)
is an entity which has as its only assets (a) the direct ownership of the Equity Interests of one
or more Regulated Insurance Subsidiaries, (b) any de minimis assets related to such Regulated
Insurance Subsidiaries and (c) any cash or other distributions from any such Regulated Insurance
Subsidiary prior to prompt further distribution of such cash or distribution, subject to the
Requirements of Law, if any, to the Qualified Insurance Holding Company’s parent, and (y) is
subject to a Requirement of Law which, in the reasonable judgment of the Borrower and upon advice
of counsel, prohibits, restricts or otherwise places limitations upon the ability of the Collateral
Agent, for the benefit of the Secured Parties, being granted a perfected first priority security
interest in the Equity Interests in such Subsidiary as if such Subsidiary were a Regulated
Insurance Subsidiary, in each case, if, only to the extent and only for so long as such Requirement
of Law remains in effect; provided that the Collateral Agent, for the benefit of the
Secured Parties, shall have been granted a perfected first priority security interest in the Equity
Interests in a wholly-owned Subsidiary of the Borrower (i) that at all times owns and controls 100%
of the Equity Interests in each such Qualified Insurance Holding Company, (ii) is not itself a
Qualified Insurance Holding Company, (iii) is and remains a Guarantor hereunder and (iv) has
otherwise complied with its obligations under Section 5.09.



     “Real Property” shall mean all Mortgaged Property and all other real property owned or
leased from time to time by the Borrower and the Subsidiaries.



25









 






     “Recovery Event” shall mean any settlement of or payment in respect of any property or
casualty insurance claim or any taking under power of eminent domain or by condemnation or similar
proceeding of or relating to any property or asset of the Borrower or any Subsidiary.



     “Register” shall have the meaning assigned to such term in Section Section 9.04. (d)
        .



     “Regulated Insurance Subsidiaries” shall mean collectively, Affirmative
Insurance Company, an Illinois corporation, Affirmative Insurance Company of Michigan, a Michigan
corporation, Insura Property and Casualty Insurance Company, an Illinois corporation, USDirect and
USCasualty and any Subsidiary of the Borrower, formed or acquired after the Closing Date, which is
authorized or admitted to carry on or transact Insurance Business in any jurisdiction, is regulated
by an Insurance Regulator, and is required by any Insurance Regulator to file an annual statement
in the form prescribed by NAIC for an insurance company.



     “Regulation T” shall mean Regulation T of the Board as from time to time in effect and
all official rulings and interpretations thereunder or thereof.



     “Regulation U” shall mean Regulation U of the Board as from time to time in effect and
all official rulings and interpretations thereunder or thereof.



     “Regulation X” shall mean Regulation X of the Board as from time to time in effect and
all official rulings and interpretations thereunder or thereof.



     “Reinsurance Agreement” shall mean any agreement, contract, treaty or other
arrangement whereby one or more insurers, as reinsurers, assume liabilities under insurance
policies or agreements issued by another insurance or reinsurance company or companies.



     “Related Fund” shall mean, with respect to any Lender that is a fund that invests in
bank loans, any other fund that invests in bank loans and is advised or managed by the same
investment advisor as such Lender or by an Affiliate of such investment advisor.



     “Related Parties” shall mean, with respect to any specified person, such person’s
Affiliates and the respective directors, officers, trustees, employees, agents and advisors of such
person and such person’s Affiliates.



     “Release” shall mean any release, spill, seepage, emission, leaking, pumping,
injection, pouring, emptying, deposit, disposal, discharge, dispersal, dumping, escaping, leaching,
or migration into, onto or through the environment or within or upon any building, structure or
facility.



     “Repayment Date” shall have the meaning given such term in Section 2.11. (d) .



     “Required Lenders” shall mean, at any time, Lenders having Loans (excluding Swingline
Loans), L/C Exposure, Swingline Exposure and unused Revolving Credit Commitments and Term Loan
Commitments representing at least a majority of the sum of all Loans outstanding (excluding
Swingline Loans), L/C Exposure, Swingline Exposure and unused Revolving Credit Commitments and Term
Loan Commitments at such time.



26









 





     “Required Minimum Percentage” shall mean 30%; provided that the Required
Minimum Percentage shall decrease to a revised Required Minimum Percentage of no lower than 15% if,
and for so long (and only for so long as) the Permitted Holders continue to appoint and control the
greater of three (3) or a majority of the seats (other than vacant seats) on the board of directors
of the Borrower; provided further that such decrease shall be limited to the percentage of
the Permitted Holders’ ownership dilution caused solely by the issuance of Equity Interests of the
Borrower and not, for the avoidance of doubt, by the sale, transfer or other assignment of any
Equity Interests of the Borrower by Permitted Holders to persons that are not Permitted Holders.



     “Required Prepayment Percentage” shall mean (a) in the case of any Asset Sale or
Recovery Event, 100%; (b) in the case of any Equity Issuance, 50%; (c) in the case of any issuance
or other incurrence of Indebtedness, 100%; (d) in the case of any Excess Cash Flow, 75%, or, if on
the date of the applicable prepayment, the Leverage Ratio is less than 3.00 to 1.00 but greater
than 2.50 to 1.00, 50% or if on the date of the applicable prepayment, the Leverage Ratio is less
than or equal to 2.50 to 1.00, 25%; and (e) in the case of Extraordinary Receipts, 100%.



     “Required Revolving Credit Lenders” shall mean, at any time, Revolving Credit Lenders
having Revolving Loans (excluding Swingline Loans), L/C Exposure, Swingline Exposure and unused
Revolving Credit Commitments representing at least a majority of the sum of all Revolving Loans
outstanding (excluding Swingline Loans), L/C Exposure, Swingline Exposure and unused Revolving
Credit Commitments at such time.



     “Requirement of Law” shall mean as to any person, the governing documents of such
person, and any law, treaty, rule or regulation or determination of an arbitrator or a court or
other Governmental Authority, in each case applicable to or binding upon such person or any of its
Real Property or personal property or to which such person or any of its property of any nature is
subject.



     “Responsible Officer” of any person shall mean any executive officer or Financial
Officer of such person and any other officer or similar official thereof responsible for the
administration of the obligations of such person in respect of this Agreement.



     “Restricted Indebtedness” shall mean Indebtedness of any Loan Party, the payment,
prepayment, repurchase or defeasance of which is restricted under Section 6.09. (b) .



     “Restricted Payment” shall mean any dividend or other distribution (whether in cash,
securities or other property) with respect to any Equity Interests in the Borrower or any
Subsidiary, or any payment (whether in cash, securities or other property), including any sinking
fund or similar deposit, on account of the purchase, redemption, defeasance, retirement,
acquisition, cancellation or termination of any Equity Interests in Borrower or any Subsidiary or
any option, warrant or other right to acquire any such Equity Interests in Borrower or any
Subsidiary.



     “Retrocession Agreement” shall mean any agreement, contract, treaty or other
arrangement whereby one or more insurers or reinsurers, as retrocessionaires, assume liabilities



27









 







of reinsurers under a Reinsurance Agreement or other retrocessionaires under another
Retrocession Agreement.



     “Revolving Credit Borrowing” shall mean a Borrowing comprised of Revolving Loans.



     “Revolving Credit Commitment” shall mean, with respect to each Lender, the commitment,
if any, of such Lender to make Revolving Loans (and to acquire participations in Letters of Credit
and Swingline Loans) hereunder as set forth on the Lender Addendum delivered by such Lender, or in
the Assignment and Acceptance pursuant to which such Lender assumed its Revolving Credit
Commitment, as applicable, as the same may be (a) increased from time to time pursuant to Section
2.24, (b) reduced from time to time pursuant to Section 2.09. or Section 2.25 and (c) reduced or
increased from time to time pursuant to assignments by or to such Lender pursuant to Section 9.04.
        .



     “Revolving Credit Exposure” shall mean, with respect to any Lenders, at any time, the
aggregate principal amount at such time of all outstanding Revolving Loans of such Lender, plus the
aggregate amount at such time of such Lender’s L/C Exposure, plus the aggregate amount at such time
of such Lender’s Swingline Exposure.



     “Revolving Credit Lender” shall mean a Lender with a Revolving Credit Commitment or an
outstanding Revolving Loan.



     “Revolving Credit Maturity Date” shall mean the third anniversary of the Closing Date.



     “Revolving Loan Facility” shall have the meaning assigned to such term in the
definition of “Facility”.



     “Revolving Loans” shall mean the revolving loans made by the Lenders to the Borrower
pursuant to clause (b) of Section 2.01.



     “Risk-Based Capital Ratio” shall mean, for any Regulated Insurance Subsidiary, the
ratio (expressed as a percentage), at any time, of the Total Adjusted Capital of such Regulated
Insurance Subsidiary to the Authorized Control Level of such Regulated Insurance Subsidiary.



     “S&P” shall mean Standard & Poor’s Ratings Group, Inc.



     “SAP” shall mean the statutory accounting and reporting practices prescribed or
permitted by the insurance laws or Insurance Regulator (or other similar Governmental Authority)
with respect to each Regulated Insurance Subsidiary.



     “Secondary New Revolving Loan Commitment” shall have the meaning assigned to
such term in Section 2.24.



     “Secured Parties” shall have the meaning assigned to such term in the Guarantee and
Collateral Agreement.



     “Security Documents” shall mean the Guarantee and Collateral Agreement, the Mortgages,
the Intellectual Property Security Agreements and each of the other security



28









 







agreements, pledges, mortgages, consents and other instruments and documents executed and
delivered pursuant to any of the foregoing or pursuant to Section 5.09 or 5.10.



     “Sellers” shall mean persons identified on Exhibit A of the Purchase Agreement
that are signatories thereto.



     “SPC” shall have the meaning assigned to such term in Section 9.04(i).



     “Statutory Reserves” shall mean a fraction (expressed as a decimal), the numerator of
which is the number one and the denominator of which is the number one minus the aggregate of the
maximum reserve percentages (including any marginal, special, emergency or supplemental reserves)
expressed as a decimal established by the Board and any other banking authority, domestic or
foreign, to which the Administrative Agent or any Lender (including any branch, Affiliate or other
fronting office making or holding a Loan) is subject for eurocurrency funding (currently referred
to as “Eurocurrency Liabilities” in Regulation D of the Board). Eurodollar Loans shall be deemed
to constitute eurocurrency funding and to be subject to such reserve requirements without benefit
of or credit for proration, exemptions or offsets that may be available from time to time to any
Lender under such Regulation D or any comparable regulation. Statutory Reserves shall be adjusted
automatically on and as of the effective date of any change in any reserve percentage.



     “Subordinated Debt” shall mean all Indebtedness outstanding under the Subordinated
Debt Documents.



     “Subordinated Debt Documents” shall mean the USAgencies Trust Preferred Note Documents
and the Borrower Trust Preferred Note Documents.



     “subsidiary” shall mean, with respect to any person (herein referred to as the
“parent”), any corporation, partnership, limited liability company, association or other
entity (a) of which securities or other ownership interests representing more than 50% of the
equity or more than 50% of the ordinary voting power or more than 50% of the general partnership
interests are, at the time any determination is being made, owned, controlled or held, or (b) that
is, at the time any determination is made, otherwise Controlled, by the parent or one or more
subsidiaries of the parent or by the parent and one or more subsidiaries of the parent.



     “Subsidiary” shall mean any subsidiary of any Loan Party.



     “Subsidiary Guarantor” shall mean, initially, each Subsidiary specified on Schedule
1.01(b) and, at any time thereafter, shall include each other Subsidiary that is not an Excluded
Foreign Subsidiary, a Regulated Insurance Subsidiary or a Premium Finance Co.



     “Survey” shall have the meaning assigned to such term in Section 4.02(q).



     “Swingline Commitment” shall mean the commitment of the Swingline Lender to make loans
pursuant to Section 2.22, as the same may be reduced from time to time pursuant to Section 2.09.



29









 





     “Swingline Exposure” shall mean, at any time, the aggregate principal amount at such
time of all outstanding Swingline Loans. The Swingline Exposure of any Revolving Credit Lender at
any time shall equal its Pro Rata Percentage of the aggregate Swingline Exposure at such time.



     “Swingline Lender” shall mean Credit Suisse acting in its capacity as lender of
Swingline Loans hereunder.



     “Swingline Loan” shall mean any loan made by the Swingline Lender pursuant to Section
2.22.



     “Synthetic Lease Obligations” shall mean all monetary obligations 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 any property (whether real, personal or mixed) creating obligations which do not
appear on the balance sheet of such person, but which, upon the insolvency or bankruptcy of such
person, would be characterized as Indebtedness of such person (without regard to accounting
treatment).



     “Synthetic Purchase Agreement” shall mean any swap, derivative or other agreement or
combination of agreements pursuant to which the Borrower or any Subsidiary is or may become
obligated to make (a) any payment in connection with a purchase by any third party from a person
other than the Borrower or any Subsidiary of any Equity Interest or Restricted Indebtedness or (b)
any payment (other than on account of a permitted purchase by it of any Equity Interest or
Restricted Indebtedness) the amount of which is determined by reference to the price or value at
any time of any Equity Interest or Restricted Indebtedness; provided that no phantom stock
or similar plan providing for payments only to current or former directors, officers or employees
of the Borrower or the Subsidiaries (or to their heirs or estates) shall be deemed to be a
Synthetic Purchase Agreement.



     “Tax Code” shall mean the Internal Revenue Code of 1986, as amended from time to time.



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



     “Term Borrowing” shall mean a Borrowing comprised of Term Loans.



     “Term Lender” shall mean a Lender with a Term Loan Commitment or an outstanding Term
Loan.



     “Term Loan Commitment” shall mean, with respect to each Lender, the commitment, if
any, of such Lender to make Term Loans hereunder as set forth on the Lender Addendum delivered by
such Lender, or in the Assignment and Acceptance pursuant to which such Lender assumed its Term
Loan Commitment, as applicable, as the same may be (a) reduced from time to time pursuant to
Section 2.09 and (b) reduced or increased from time to time pursuant to assignments by or to such
Lender pursuant to Section 9.04. The initial aggregate amount of the Term Loan Commitments is
$200,000,000.



30









 





     “Term Loan Facility” shall have the meaning assigned to such term in the definition of
“Facility.”



     “Term Loan Maturity Date” shall mean the seventh anniversary of the Closing Date.



     “Term Loans” shall mean the term loans made by the Lenders to the Borrower pursuant to
Section 2.01.



     “Title Insurance Company” shall have the meaning assigned to such term in Section
4.02(o).



     “Total Adjusted Capital” shall mean “Total Adjusted Capital” as defined by the NAIC as
of December 31, 1994, as such definition has been amended from time to time, and as applied in the
context of the Risk-Based Capital Guidelines promulgated by the NAIC.



     “Total Debt” shall mean, at any time, the aggregate amount of Indebtedness of the
Borrower and the Subsidiaries (other than Premium Finance Co. and its Subsidiaries) outstanding at
such time, in the amount that would be reflected on a balance sheet prepared at such time on a
consolidated basis in accordance with GAAP.



     “Total Revolving Credit Commitment” shall mean, at any time, the aggregate amount of
the Revolving Credit Commitments, as in effect at such time. The initial Total Revolving Credit
Commitment is $0.00.



     “Transactions” shall mean, collectively, (a) the execution, delivery and performance
by the Loan Parties of the Loan Documents to which they are a party, (b) the borrowings hereunder,
the issuance of Letters of Credit and the use of proceeds of each of the foregoing, (c) the
granting of Liens pursuant to the Security Documents, (d) the Acquisition and the other Acquisition
Transactions and (e) any other transactions related to or entered into in connection with any of
the foregoing.



     “TruPS” shall mean trust preferred securities issued to investors by a wholly-owned
subsidiary of the Borrower formed as a business trust (each a “TruPS Business Trust”)
pursuant to organizational and charter documents substantially similar to those of the Existing
TruPS Business Trusts, in exchange for an investment of funds by such investors, which funds in
turn are loaned by such TruPS Business Trust to the Borrower in exchange for the issuance by the
Borrower of Indebtedness in the form of a debenture or similar instrument to such TruPS Business
Trust (each a “TruPS Instrument”) and which otherwise contains provisions substantially
similar to those set forth in the Subordinated Debt outstanding.



     “TruPS Business Trust” has the meaning given such term in the definition of TruPS.



     “TruPS Instrument” has the meaning given such term in the definition of TruPS.



     “Type”, when used in respect of any Loan or Borrowing, shall refer to the Rate by
reference to which interest on such Loan or on the Loans comprising such Borrowing is determined.
For purposes hereof, the term “Rate” shall include the Adjusted LIBO Rate and the Alternate
Base Rate.



31









 





     “UCC” shall mean the Uniform Commercial Code.



     “Uniform Customs” shall have the meaning assigned to such term in Section 9.07.



     “USAgencies” shall mean USAgencies L.L.C., a Louisiana limited liability company and
its Subsidiaries.



     “USAgencies Indenture” shall mean the Indenture, dated as of March 29, 2005, by and
among USAgencies and JPMorgan Chase Bank, National Association, as trustee, as the same may be
amended, supplemented or otherwise modified from time to time in accordance with this Agreement.



     “USAgencies Intercompany Tax Agreement” shall have the meaning assigned to such term
in Section 5.13.



     “USAgencies Subordinated Notes” shall mean USAgencies’s Floating Rate Subordinate
Notes due 2035 in the aggregate amount of $20,000,000 issued pursuant to the USAgencies Indenture.



     “USAgencies Trust Preferred Note Documents” shall mean the USAgencies Indenture and
all other instruments, agreements and other documents evidencing or governing the USAgencies
Subordinated Notes or providing any Guarantee or other right in respect thereof, as the same may be
amended, supplemented or otherwise modified from time to time in accordance with this Agreement.



     “USCasualty” shall mean USAgencies Casualty Insurance Company, Inc., a Louisiana
corporation.



     “USDirect” shall mean USAgencies Direct Insurance Company, Inc., a New York
corporation.



     “wholly owned subsidiary” of any person shall mean a subsidiary of such person of
which securities (except for directors’ qualifying shares) or other ownership interests
representing 100% of the Equity Interests are, at the time any determination is being made, owned,
controlled or held by such person or one or more wholly owned subsidiaries of such person or by
such person and one or more wholly owned subsidiaries of such person; a “wholly owned
Subsidiary” shall mean any wholly owned subsidiary of the Borrower.



     “Withdrawal Liability” shall mean liability to a Multiemployer Plan as a result of a
complete or partial withdrawal from such Multiemployer Plan, as such terms are defined in Part I of
Subtitle E of Title IV of ERISA.



     SECTION 1.02. Terms Generally. The definitions in Section 1.01 shall apply equally to both the singular and plural forms
of the terms defined. Whenever the context may require, any pronoun shall include the
corresponding masculine, feminine and neuter forms. The words “include”, “includes” and
“including”, and words of similar import, shall not be limiting and shall be deemed to be
followed by the phrase “without limitation”. The word “will” shall be construed to have the
same meaning and effect as the word “shall”. The words “asset” and



32









 







“property” shall be construed as having the same meaning and effect and to refer to any and all rights and interests in tangible
and intangible assets and properties of any kind whatsoever, whether real, personal or mixed,
including cash, securities, Equity Interests, accounts and contract rights. The words “herein”,
“hereof” and “hereunder”, and words of similar import, shall be construed to refer to this
Agreement in its entirety and not to any particular provision of this Agreement unless the context
shall otherwise require. All references herein to Articles, Sections, Exhibits and Schedules shall
be deemed references to Articles and Sections of, and Exhibits and Schedules to, this Agreement
unless the context shall otherwise require. Except as otherwise expressly provided herein, (a) any
definition of, or reference to, any Loan Document or any other agreement, instrument or document in
this Agreement shall mean such Loan Document or other agreement, instrument or document as amended,
restated, supplemented or otherwise modified from time to time (subject to any restrictions on such
amendments, restatements, supplements or modifications set forth herein) and (b) all terms of an
accounting or financial nature shall be construed in accordance with GAAP, as in effect from time
to time; provided, however, that if the Borrower notifies the Administrative Agent
that the Borrower wishes to amend any covenant in Article VI or any related definition to eliminate
the effect of any change in GAAP occurring after the date of this Agreement on the operation of
such covenant (or if the Administrative Agent notifies the Borrower that the Required Lenders wish
to amend Article VI or any related definition for such purpose), then the Borrower’s compliance
with such covenant shall be determined on the basis of GAAP in effect immediately before the
relevant change in GAAP became effective, until either such notice is withdrawn or such covenant is
amended in a manner satisfactory to the Borrower and the Required Lenders.



     SECTION 1.03. Classification of Loans and Borrowings. For purposes of this Agreement, Loans may be classified and referred to by Class (e.g., a
“Revolving Loan”) or by Type (e.g., a “Eurodollar Loan”) or by Class and Type (e.g., a “Eurodollar
Revolving Loan”). Borrowings also may be classified and referred to by Class (e.g., a “Revolving
Borrowing”) or by Type (e.g., a “Eurodollar Borrowing”) or by Class and Type (e.g., a “Eurodollar
Revolving Borrowing”).



     SECTION 1.04. Pro Forma Calculations. All pro forma calculations permitted or required to be made by the Borrower
or any Subsidiary pursuant to this Agreement shall include only those adjustments that would be
permitted or required by Regulation S-X under the Securities Act of 1933, as amended, together with
those adjustments that (a) have been certified by a Financial Officer of the Borrower as having
been prepared in good faith based upon reasonable assumptions and (b) are based on reasonably
detailed written assumptions reasonably acceptable to the Administrative Agent.



ARTICLE II.




The Credits




     SECTION 2.01. Commitments. Subject to the terms and conditions hereof and relying upon the representations and
warranties set forth herein, (a) each Term Lender agrees, severally and not jointly, to make a Term
Loan to the Borrower on the Closing Date in a principal amount not to exceed its Term Loan
Commitment and (b) each Revolving Credit Lender agrees, severally and not jointly, to make
Revolving Loans to the Borrower, at any time



33









 







and from time to time on or after the date that is sixty (60) days following Closing Date (or such earlier date as the Borrower and the Revolving
Credit Lenders as of such date may agree) and until the earlier of the Revolving Credit Maturity
Date and the termination of the Revolving Credit Commitment of such Revolving Credit Lender in
accordance with the terms hereof, in an aggregate principal amount at any time outstanding that
will not result in such Revolving Credit Lender’s Revolving Credit Exposure exceeding such
Revolving Credit Lender’s Revolving Credit Commitment. Within the limits set forth in clause (b)
of the preceding sentence and subject to the terms, conditions and limitations set forth herein,
the Borrower may borrow, pay or prepay and reborrow Revolving Loans. Amounts paid or prepaid in
respect of Term Loans may not be reborrowed.



     SECTION 2.02. Loans. (a) Each Loan (other than Swingline Loans) shall be made as part of a Borrowing
consisting of Loans of the same Class and Type made by the Lenders ratably in accordance with their
respective Commitments of the applicable Class; provided, however, that the failure
of any Lender to make any Loan required to be made by it shall not in itself relieve any other
Lender of its obligation to lend hereunder (it being understood, however, that no Lender shall be
responsible for the failure of any other Lender to make any Loan required to be made by such other
Lender). Except for Loans deemed made pursuant to Section 2.02(f) and subject to Section 2.22
relating to Swingline Loans, the Loans comprising any Borrowing shall be in an aggregate principal
amount that is (i) an integral multiple of $500,000 and not less than $1,000,000 or (ii) equal to
the remaining available balance of the applicable Commitments.



     (b) Subject to Sections 2.08 and 2.15, each Borrowing shall be comprised entirely of ABR Loans
or Eurodollar Loans as the Borrower may request pursuant to Section 2.03; provided that no
Borrowings may be converted into or continued as a Eurodollar Borrowing having an Interest Period
in excess of one month prior to the date which is 60 days after the Closing Date. Each Lender may
at its option make any Eurodollar Loan by causing any domestic or foreign branch or Affiliate of
such Lender to make such Loan; provided that any exercise of such option shall not affect
the obligation of the Borrower to repay such Loan in accordance with the terms of this Agreement.
Borrowings of more than one Type may be outstanding at the same time; provided,
however, that the Borrower shall not be entitled to request any Borrowing that, if made,
would result in more than ten Eurodollar Borrowings outstanding hereunder at any time. For
purposes of the foregoing, Borrowings having different Interest Periods, regardless of whether they
commence on the same date, shall be considered separate Borrowings.



     (c) Except with respect to Loans made pursuant to Section 2.02(f) and subject to Section 2.22
relating to Swingline Loans, each Lender shall make each Loan to be made by it hereunder on the
proposed date thereof by wire transfer of immediately available funds to such account in New York
City as the Administrative Agent may designate not later than 1:30 p.m., New York City time, and
the Administrative Agent shall promptly credit the amounts so received to an account in the name of
the Borrower, and designated by the Borrower in the
applicable Borrowing Request or, if a Borrowing shall not occur on such date because any
condition precedent herein specified shall not have been met, return the amounts so received to the
respective Lenders.



34









 





     (d) Unless the Administrative Agent shall have received notice from a Lender prior to the date
of any Borrowing that such Lender will not make available to the Administrative Agent such Lender’s
portion of such Borrowing, the Administrative Agent may assume that such Lender has made such
portion available to the Administrative Agent on the date of such Borrowing in accordance with
paragraph (c) of this Section and the Administrative Agent may, in reliance upon such assumption,
make available to the Borrower on such date a corresponding amount. If the Administrative Agent
shall have so made funds available then, to the extent that such Lender shall not have made such
portion available to the Administrative Agent, such Lender and the Borrower severally agree to
repay to the Administrative Agent forthwith on demand such corresponding amount together with
interest thereon, for each day from the date such amount is made available to the Borrower to but
excluding the date such amount is repaid to the Administrative Agent at (i) in the case of the
Borrower, the interest rate applicable at the time to the Loans comprising such Borrowing or (ii)
in the case of such Lender, a rate determined by the Administrative Agent to represent its cost of
overnight or shortterm funds (which determination shall be conclusive absent manifest error). If
such Lender shall repay to the Administrative Agent such corresponding amount, such amount shall
constitute such Lender’s Loan as part of such Borrowing for purposes of this Agreement.



     (e) Notwithstanding any other provision of this Agreement, the Borrower shall not be entitled
to request any Revolving Credit Borrowing if the Interest Period requested with respect thereto
would end after the Revolving Credit Maturity Date.



     (f) If the Issuing Bank shall not have received from the Borrower the payment required to be
made by Section 2.23(e) with respect to a Letter of Credit within the time specified in such
Section, the Issuing Bank will promptly notify the Administrative Agent of the L/C Disbursement and
the Administrative Agent will promptly notify each Revolving Credit Lender of such L/C Disbursement
and its Pro Rata Percentage thereof. Each Revolving Credit Lender shall pay by wire transfer of
immediately available funds to the Administrative Agent not later than 2:00 p.m. Noon, New York
City time, on such date (or, if such Revolving Credit Lender shall have received such notice later
than 12:00 (noon), New York City time, on any day, not later than 10:00 a.m., New York City time,
on the immediately following Business Day), an amount equal to such Lender’s Pro Rata Percentage of
such L/C Disbursement (it being understood that such amount shall be deemed to constitute an ABR
Revolving Loan of such Lender and such payment shall be deemed to have reduced the L/C Exposure),
and the Administrative Agent will promptly pay to the Issuing Bank amounts so received by it from
the Revolving Credit Lenders. The Administrative Agent will promptly pay to the Issuing Bank any
amounts received by it from the Borrower pursuant to Section 2.23(e) prior to the time that any
Revolving Credit Lender makes any payment pursuant to this paragraph; any such amounts received by
the Administrative Agent thereafter will be promptly remitted by the Administrative Agent to the
Revolving Credit Lenders that shall have made such payments and to the Issuing Bank, as their
interests may appear. If any Revolving Credit Lender shall not have made its Pro Rata Percentage
of such L/C Disbursement available to the Administrative Agent as provided above, such Lender and
the Borrower severally agree to pay interest on such amount, for each day from and including the date such amount is required to be paid in accordance with this
paragraph to but excluding the date such amount is paid, to the Administrative Agent for the
account of the Issuing Bank at (i) in the case of the Borrower, a rate per annum equal to the
interest rate applicable to Revolving Loans pursuant to Section 2.06(a), and (ii) in the case of



35









 








such Lender, for the first such day, the Federal Funds Effective Rate, and for each day thereafter,
the Alternate Base Rate.



     SECTION 2.03. Borrowing Procedure. In order to request a Borrowing (other than a Swingline Loan or a deemed Borrowing pursuant
to Section 2.02(f), as to which this Section 2.03 shall not apply), the Borrower shall hand deliver
or fax (or request telephonically with prompt hand delivery or fax made thereafter) to the
Administrative Agent a duly completed Borrowing Request (a) in the case of a Eurodollar Borrowing,
not later than 12:00 Noon, New York City time, three Business Days before a proposed Borrowing and
(b) in the case of an ABR Borrowing, not later than 12:00 Noon, New York City time, one Business
Day before a proposed Borrowing. Each Borrowing Request shall be irrevocable, shall be signed by
or on behalf of the Borrower and shall specify the following information: (i) whether the Borrowing
then being requested is to be a Term Borrowing or a Revolving Credit Borrowing, and whether such
Borrowing is to be a Eurodollar Borrowing or an ABR Borrowing; (ii) the date of such Borrowing
(which shall be a Business Day); (iii) the number and location of the account to which funds are to
be disbursed (which shall be an account that complies with the requirements of Section 2.02(c));
(iv) the amount of such Borrowing; and (v) if such Borrowing is to be a Eurodollar Borrowing, the
initial Interest Period with respect thereto; provided, however, that,
notwithstanding any contrary specification in any Borrowing Request, each requested Borrowing shall
comply with the requirements set forth in Section 2.02. If no election as to the Type of Borrowing
is specified in any such notice, then the requested Borrowing shall be an ABR Borrowing. If no
Interest Period with respect to any Eurodollar Borrowing is specified in any such notice, then the
Borrower shall be deemed to have selected an Interest Period of one month’s duration. The
Administrative Agent shall promptly advise the applicable Lenders of any notice given in accordance
with this Section 2.03 (and the contents thereof), and of each Lender’s portion of the requested
Borrowing.



     SECTION 2.04. Repayment of Loans; Evidence of Debt. (a) The Borrower hereby unconditionally promises to pay to the Administrative Agent
for the account of each Lender (i) the principal amount of each Term Loan of such Lender made to
the Borrower as provided in Section 2.11 and (ii) the then unpaid principal amount of each
Revolving Loan (including any Swingline Loan) of such Lender made to the Borrower on the Revolving
Credit Maturity Date. The Borrower hereby unconditionally promises to pay to the Swingline Lender
the then unpaid principal amount of each Swingline Loan made to the Borrower on the earlier of the
Revolving Credit Maturity Date and the first date after such Swingline Loan is made that is the
15th day or the last day of a calendar month and is at least three Business Days after such
Swingline Loan is made.



     (b) Each Lender shall maintain in accordance with its usual practice an account or accounts
evidencing the indebtedness of the Borrower to such Lender resulting from each Loan
made by such Lender to the Borrower from time to time, including the amounts of principal and
interest payable and paid to such Lender from time to time under this Agreement.



     (c) The Administrative Agent shall maintain accounts in which it will record (i) the amount of
each Loan made hereunder, the Type thereof and the Interest Period applicable thereto, (ii) the
amount of any principal or interest due and payable or to become due and payable from the Borrower
to each Lender hereunder and (iii) the amount of the sum received by



36









 







the Administrative Agent hereunder from the Borrower or any Guarantor and each Lender’s share thereof.



     (d) The entries made in the accounts maintained pursuant to paragraphs (b) and (c) of this
Section shall be conclusive evidence (absent manifest error) of the existence and amounts of the
obligations therein recorded; provided, however, that the failure of any Lender or
the Administrative Agent to maintain such accounts or any error therein shall not in any manner
affect the obligations of the Borrower to repay the Loans made to the Borrower in accordance with
the terms of this Agreement.



     (e) Any Lender may request that Loans made by it hereunder be evidenced by a promissory note.
In such event, the Borrower shall execute and deliver to such Lender a promissory note payable to
such Lender and its registered assigns and in a form and substance reasonably acceptable to the
Administrative Agent. Notwithstanding any other provision of this Agreement, in the event any
Lender shall request and receive such a promissory note, the interests represented by such note
shall at all times (including after any assignment of all or part of such interests pursuant to
Section 9.04) be represented by one or more promissory notes payable to the payee named therein or
its registered assigns.



     SECTION 2.05. Fees. (a) The Borrower agrees to pay to each Lender, through the Administrative Agent, on
the last Business Day of March, June, September and December (commencing March 30, 2007) in each
year and on each date on which any Commitment of such Lender shall expire or be terminated as
provided herein, a commitment fee (a “Commitment Fee”) equal to the Commitment Fee Rate on
the average daily unused amount of the Commitments of such Lender (other than the Swingline
Commitment) during the preceding quarter (or other period commencing with the date hereof or ending
with the Revolving Credit Maturity Date or the date on which the Commitments of such Lender shall
expire or be terminated). All Commitment Fees shall be computed on the basis of the actual number
of days elapsed in a year of 360 days. The Commitment Fee due to each Lender shall commence to
accrue on the date hereof and shall cease to accrue on the date on which the Commitment of such
Lender shall expire or be terminated as provided herein. For purposes of calculating Commitment
Fees with respect to Revolving Credit Commitments only, no portion of the Revolving Credit
Commitments shall be deemed utilized under Section 2.22 as a result of outstanding Swingline Loans.



     (b) The Borrower agrees to pay to the Administrative Agent, for its own account, the fees in
the amounts and at the times from time to time agreed to in writing by the Borrower (or any
Affiliate) and the Administrative Agent, including pursuant to the Fee Letter (the
“Administrative Agent Fees”).



     (c) The Borrower agrees to pay (i) to each Revolving Credit Lender, through the Administrative
Agent, on the last Business Day of March, June, September and December (commencing March 30, 2007)
of each year and on the date on which the Revolving Credit Commitment of such Lender shall be
terminated as provided herein (each, an “L/C Fee Payment Date”) a fee (an “L/C
Participation Fee”) calculated on such Lender’s Pro Rata Percentage of the daily aggregate L/C
Exposure (excluding the portion thereof attributable to unreimbursed L/C Disbursements which are
earning interim interest pursuant to Section 2.23(h)) during the



37









 








preceding quarter (or shorter
period commencing with the date hereof or ending with the Revolving Credit Maturity Date or the
date on which all Letters of Credit have been canceled or have expired and the Revolving Credit
Commitments of all Lenders shall have been terminated) at a rate per annum equal to the Applicable
Margin used to determine the interest rate on Revolving Credit Borrowings comprised of Eurodollar
Loans pursuant to Section 2.06, and (ii) to the Issuing Bank with respect to each outstanding
Letter of Credit issued for the account of (or at the request of) the Borrower a fronting fee,
which shall accrue at the rate of 1/4 of 1% per annum or such other rate as shall be separately
agreed upon between the Borrower and the Issuing Bank, on the drawable amount of such Letter of
Credit, payable quarterly in arrears on each L/C Fee Payment Date after the issuance date of such
Letter of Credit, as well as the Issuing Bank’s standard fees with respect to the issuance,
amendment, renewal or extension of any Letter of Credit issued for the account of (or at the
request of) the Borrower or processing of drawings thereunder (the fees in this clause (ii),
collectively, the “Issuing Bank Fees”). All L/C Participation Fees and Issuing Bank Fees
shall be computed on the basis of the actual number of days elapsed in a year of 360 days.



     (d) All Fees shall be paid on the dates due, in immediately available funds, to the
Administrative Agent for distribution, if and as appropriate, among the Lenders, except that the
Issuing Bank Fees shall be paid directly to the Issuing Bank. Once paid, none of the Fees shall be
refundable under any circumstances, other than in connection with the over-payment of any such Fees
as a result of any erroneous calculation by the Agent or the Issuing Bank, as the case may be.



     SECTION 2.06. Interest on Loans. (a) Subject to the provisions of Section 2.07, the Loans comprising each ABR
Borrowing, including each Swingline Loan, shall bear interest (computed on the basis of the actual
number of days elapsed over a year of 365 or 366 days, as the case may be, when the Alternate Base
Rate is determined by reference to the Prime Rate and over a year of 360 days at all other times)
at a rate per annum equal to the Alternate Base Rate plus the Applicable Margin in effect from time
to time.



     (b) Subject to the provisions of Section 2.07, the Loans comprising each Eurodollar Borrowing
shall bear interest (computed on the basis of the actual number of days elapsed over a year of 360
days) at a rate per annum equal to the Adjusted LIBO Rate for the Interest Period in effect for
such Borrowing plus the Applicable Margin in effect from time to time.



     (c) Interest on each Loan shall be payable on the Interest Payment Dates applicable to such
Loan except as otherwise provided in this Agreement. The applicable Alternate Base Rate or
Adjusted LIBO Rate for each Interest Period or day within an Interest Period, as the case may
be, shall be determined by the Administrative Agent, and such determination shall be
conclusive absent manifest error.



     SECTION 2.07. Default Interest. If the Borrower shall default in the payment of the principal of or interest on any Loan or
any other amount becoming due hereunder or under any other Loan Document, by acceleration or
otherwise, the Borrower shall on demand from time to time pay interest, to the extent permitted by
law, on such defaulted amount to but excluding the date of actual payment (after as well as before
judgment) (a) in the case of overdue principal, at the rate otherwise applicable to such Loan
pursuant to Section 2.06 plus 2.00% per



38









 







annum and (b) in all other cases, at a rate per annum
(computed on the basis of the actual number of days elapsed over a year of 365 or 366 days, as the
case may be, when determined by reference to the Prime Rate and over a year of 360 days at all
other times) equal to the rate that would be applicable to an ABR Revolving Loan plus 2.00%.



     SECTION 2.08. Alternate Rate of Interest. In the event, and on each occasion, that prior to the commencement of any Interest Period
for a Eurodollar Borrowing (a) the Administrative Agent shall have determined that adequate and
reasonable means do not exist for determining the Adjusted LIBO Rate for such Interest Period or
(b) the Administrative Agent is advised by the Majority Facility Lenders in respect of the relevant
Facility that the Adjusted LIBO Rate for such Interest Period will not adequately and fairly
reflect the cost to such Lenders of making or maintaining their Loans included in such Borrowing
for such Interest Period, the Administrative Agent shall, as soon as practicable thereafter, give
written or fax notice of such determination to the Borrower and the Lenders. In the event of any
such determination, until the Administrative Agent shall have advised the Borrower and the Lenders
that the circumstances giving rise to such notice no longer exist, (i) any request by the Borrower
for a Eurodollar Borrowing pursuant to Section 2.03 or 2.10 shall be deemed to be a request for an
ABR Borrowing and (ii) any Interest Period election that requests the conversion of any Borrowing
to, or continuation of any Borrowing as, a Eurodollar Borrowing shall be ineffective. Each
determination by the Administrative Agent under this Section 2.08 shall be conclusive absent
manifest error.



     SECTION 2.09. Termination and Reduction of Commitments. (a) Unless previously terminated in accordance with the terms hereof, (i) the Term
Loan Commitments shall automatically terminate at 5:00 p.m., New York City time, on the Closing
Date and (ii) the Revolving Credit Commitments, the Swingline Commitment and the L/C Commitment
shall automatically terminate on the Revolving Credit Maturity Date. Notwithstanding the
foregoing, all the Commitments shall automatically terminate at 5:00 p.m., New York City time, on
January 31, 2007, if the initial Credit Event shall not have occurred by such time.



     (b) Upon at least three Business Days’ prior irrevocable written or fax notice to the
Administrative Agent, the Borrower may at any time in whole permanently terminate, or from time to
time in part permanently reduce, the Term Loan Commitments, the Revolving Credit
Commitments or the Swingline Commitment; provided, however, that (i) each
partial reduction of the Term Loan Commitments, the Revolving Credit Commitments or the Swingline
Commitment shall be in an integral multiple of $1,000,000 and in a minimum amount of $1,000,000 and
(ii) the Total Revolving Credit Commitment shall not be reduced to an amount that is less than the
Aggregate Revolving Credit Exposure then in effect.



     (c) Each reduction in the Term Loan Commitments, Revolving Credit Commitments or Swingline
Commitment hereunder shall be made ratably among the applicable Lenders in accordance with their
Pro Rata Percentages. The Borrower shall pay to the Administrative Agent for the account of the
applicable Lenders, on the date of each termination or reduction, the Commitment Fees on the amount
of the Commitments so terminated or reduced accrued to but excluding the date of such termination
or reduction.



39









 





     SECTION 2.10. Conversion and Continuation of Borrowings. (a) The Borrower shall have the right at any time upon prior irrevocable notice to the
Administrative Agent (x) not later than 12:00 (noon), New York City time, one Business Day prior to
conversion, to convert any Eurodollar Borrowing of the Borrower into an ABR Borrowing, (y) not
later than 10:00 a.m., New York City time, three Business Days prior to conversion or continuation,
to convert any ABR Borrowing of the Borrower into a Eurodollar Borrowing or to continue any
Eurodollar Borrowing of the Borrower as a Eurodollar Borrowing for an additional Interest Period
and (z) not later than 12:00 (noon) New York City time, three Business Days prior to conversion, to
convert the Interest Period with respect to any Eurodollar Borrowing of the Borrower to another
permissible Interest Period, subject in each case to the following:




     (i) each conversion or continuation shall be made pro rata among the Lenders in
accordance with the respective principal amounts of the Loans comprising the converted or
continued Borrowing;




     (ii) if less than all the outstanding principal amount of any Borrowing shall be
converted or continued, then each resulting Borrowing shall satisfy the limitations
specified in Sections 2.02(a) and 2.02(b) regarding the principal amount and maximum number
of Borrowings of the relevant Type;




     (iii) each conversion shall be effected by each Lender and the Administrative Agent by
recording for the account of such Lender the new Loan of such Lender resulting from such
conversion and reducing the Loan (or portion thereof) of such Lender being converted by an
equivalent principal amount; accrued interest on any Eurodollar Loan (or portion thereof)
being converted shall be paid by the Borrower at the time of conversion;




     (iv) if any Eurodollar Borrowing is converted at a time other than the end of the
Interest Period applicable thereto, the Borrower shall pay, upon demand, any amounts due to
the Lenders pursuant to Section 2.16;




     (v) any portion of a Borrowing maturing or required to be repaid in less than one month
may not be converted into or continued as a Eurodollar Borrowing;




     (vi) any portion of a Eurodollar Borrowing that cannot be converted into or continued
as a Eurodollar Borrowing by reason of the immediately preceding clause shall be
automatically converted at the end of the Interest Period in effect for such Borrowing into
an ABR Borrowing;




     (vii) no Interest Period may be selected for any Eurodollar Term Borrowing that would
end later than a Repayment Date occurring on or after the first day of such Interest Period
if, after giving effect to such selection, the aggregate outstanding amount of (A) the
Eurodollar Term Borrowings with Interest Periods ending on or prior to such Repayment Date
and (B) the ABR Term Borrowings would not be at least equal to the principal amount of Term
Borrowings to be paid on such Repayment Date; and




     (viii) after the occurrence and during the continuance of a Default or Event of
Default, no outstanding Loan may be converted into, or continued as, a Eurodollar Loan.



40









 





     (b) Each notice pursuant to this Section 2.10 shall be irrevocable and shall refer to this
Agreement and specify (i) the identity and amount of the Borrowing that the Borrower requests be
converted or continued, (ii) whether such Borrowing is to be converted to or continued as a
Eurodollar Borrowing or an ABR Borrowing, (iii) if such notice requests a conversion, the date of
such conversion (which shall be a Business Day) and (iv) if such Borrowing is to be converted to or
continued as a Eurodollar Borrowing, the Interest Period with respect thereto. If no Interest
Period is specified in any such notice with respect to any conversion to or continuation as a
Eurodollar Borrowing, the Borrower shall be deemed to have selected an Interest Period of one
month’s duration. The Administrative Agent shall advise the Lenders of any notice given pursuant
to this Section 2.10 and of each Lender’s portion of any converted or continued Borrowing. If the
Borrower shall not have given notice in accordance with this Section 2.10 to continue any Borrowing
into a subsequent Interest Period (and shall not otherwise have given notice in accordance with
this Section 2.10 to convert such Borrowing), such Borrowing shall, at the end of the Interest
Period applicable thereto (unless repaid pursuant to the terms hereof), automatically be converted
or continued into an ABR Borrowing.



     SECTION 2.11. Repayment of Term Borrowings. (a) On the dates set forth below, or if any such date is not a Business Day, on the
next preceding Business Day (each such date being called a “Repayment Date”), the Borrower
shall pay to the Administrative Agent, for the account of the Term Lenders, a principal amount of
the Term Loans (as adjusted from time to time pursuant to Sections 2.11(b), 2.12 and 2.13(f)) equal
to the amount set forth below for such date, together in each case with accrued and unpaid interest
and Fees on the amount to be paid to but excluding the date of such payment:



	 	 	 	 	 
	Repayment Date	 	Amount
	March 31, 2007
	 	$	500,000	 
	June 30, 2007
	 	$	500,000	 
	September 30, 2007
	 	$	500,000	 
	December 31, 2007
	 	$	500,000	 
	March 31, 2008
	 	$	500,000	 
	June 30, 2008
	 	$	500,000	 
	September 30, 2008
	 	$	500,000	 
	December 31, 2008
	 	$	500,000	 
	March 31, 2009
	 	$	500,000	 
	June 30, 2009
	 	$	500,000	 
	September 30, 2009
	 	$	500,000	 
	December 31, 2009
	 	$	500,000	 
	March 31, 2010
	 	$	500,000	 
	June 30, 2010
	 	$	500,000	 
	September 30, 2010
	 	$	500,000	 
	December 31, 2010
	 	$	500,000	 
	March 31, 2011
	 	$	500,000	 
	June 30, 2011
	 	$	500,000	 
	September 30, 2011
	 	$	500,000	 
	December 31, 2011
	 	$	500,000	 
	March 31, 2012
	 	$	500,000	 
	June 30, 2012
	 	$	500,000	 






41









 






	 	 	 	 	 
	Repayment Date	 	Amount
	September 30, 2012
	 	$	500,000	 
	December 31, 2012
	 	$	500,000	 
	March 31, 2013
	 	$	500,000	 
	June 30, 2013
	 	$	500,000	 
	September 30, 2013
	 	$	500,000	 
	December 31, 2013
	 	$	500,000	 
	March 31, 2014
	 	$	500,000	 
	June 30, 2014
	 	$	500,000	 
	September 30, 2014
	 	$	500,000	 
	Term Loan Maturity Date
	 	$	184,500,000	 






     (b) In the event and on each occasion that any Term Loan Commitments shall be reduced or shall
expire or terminate other than as a result of the making of a Term Loan, the installments payable
on each Repayment Date shall be reduced pro rata by an aggregate amount equal to the amount of such
reduction, expiration or termination.



     (c) To the extent not previously paid, all Term Loans shall be due and payable on the Term
Loan Maturity Date, together with accrued and unpaid interest on the principal amount to be paid to
but excluding the date of payment.



     (d) All repayments pursuant to this Section 2.11 shall be subject to Section 2.16, but shall
otherwise be without premium or penalty.



     SECTION 2.12. Prepayment. (a) The Borrower shall have the right at any time and from time to time to prepay any
Borrowing, in whole or in part, upon at least three Business Days’ prior written (including
electronic mail) or fax notice (or telephone notice promptly confirmed by written or fax notice) in
the case of Eurodollar Loans, or written or fax notice (or telephone notice promptly confirmed by
written or fax notice) at least one Business Day prior to the date of prepayment in
the case of ABR Loans, to the Administrative Agent before 12:00 (noon), New York City time;
provided, however, that each partial prepayment shall be in an amount that is an
integral multiple of $500,000 and not less than $1,000,000.



     (b) Optional prepayments of Term Loans shall be applied pro rata against the remaining
scheduled installments of principal due in respect of the Term Loans.



     (c) Each notice of prepayment shall specify the prepayment date and the principal amount of
each Borrowing (or portion thereof) to be prepaid, shall be irrevocable and shall commit the
Borrower to prepay such Borrowing by the amount stated therein on the date stated therein. All
prepayments under this Section 2.12 shall be subject to Section 2.16, but otherwise without premium
or penalty, except as provided in Section 2.12(d) below. All prepayments under this Section 2.12
shall be accompanied by accrued and unpaid interest on the principal amount to be prepaid to but
excluding the date of payment (other than any accrued and unpaid interest on any ABR Loan, which
shall be payable on the earlier of next Interest Payment Date or the Term Loan Maturity Date or the
Revolving Credit Maturity Date).



42









 





     (d) In the event that the Term Loans are prepaid or repaid in whole or in part pursuant to
Section 2.12 prior to the first anniversary of the Closing Date, the Borrower shall pay to Lenders
having Term Loans a prepayment premium on the amount so prepaid or repaid in an amount equal to
1.0% of the amount so prepaid or repaid.



     SECTION 2.13. Mandatory Prepayments. (a) In the event of any termination of all the Revolving Credit Commitments, the
Borrower shall, on the date of such termination, repay or prepay all its outstanding Revolving
Credit Borrowings and all its outstanding Swingline Loans and replace all its outstanding Letters
of Credit and/or deposit an amount equal to the L/C Exposure in cash in a cash collateral account
established with the Collateral Agent for the benefit of the Secured Parties. If as a result of
any partial reduction of the Revolving Credit Commitments the Aggregate Revolving Credit Exposure
would exceed the Total Revolving Credit Commitment after giving effect thereto, then the Borrower
shall, on the date of such reduction, repay or prepay Revolving Credit Borrowings or Swingline
Loans (or a combination thereof) and/or cash collateralize Letters of Credit in an amount
sufficient to eliminate such excess.



     (b) Not later than the fifth Business Day following the completion of any Asset Sale or the
occurrence of any Recovery Event, in each case by the Borrower or any Subsidiary thereof (other
than any Premium Finance Co. and its Subsidiaries), the Borrower shall apply the Required
Prepayment Percentage of the Net Cash Proceeds received with respect thereto to prepay outstanding
Term Loans in accordance with Section 2.13(g).



     (c) In the event and on each occasion that an Equity Issuance occurs, the Borrower shall,
substantially simultaneously with (and in any event not later than the fifth Business Day next
following) the occurrence of such Equity Issuance, apply the Required Prepayment Percentage of the
Net Cash Proceeds therefrom to prepay outstanding Term Loans in accordance with Section 2.13(g).



     (d) In the event that any Loan Party or any subsidiary of a Loan Party shall receive Net Cash
Proceeds from the issuance or other incurrence of Indebtedness of any Loan Party or any subsidiary
of a Loan Party (other than Indebtedness permitted pursuant to Section 6.01) (other than pursuant
to Section 6.01(g)), the Borrower shall, substantially simultaneously with (and in any event not
later than the third Business Day next following) the receipt of such Net Cash Proceeds by such
Loan Party or such subsidiary, apply an amount equal to the Required Prepayment Percentage of such
Net Cash Proceeds to prepay outstanding Term Loans in accordance with Section 2.13(g). For the
avoidance of doubt, this paragraph (d) in no event or circumstances shall be interpreted to permit
the Borrower to incur any Indebtedness that is not permitted under Section 6.01.



     (e) No later than the earlier of (i) 90 days after the end of each fiscal year of the
Borrower, commencing with the fiscal year ending on December 31, 2007, and (ii) the date on which
the financial statements with respect to such period are delivered pursuant to Section 5.04(a), the
Borrower shall prepay outstanding Term Loans in accordance with Section 2.13(g), in an aggregate
principal amount equal to the Required Prepayment Percentage of Excess Cash Flow for the fiscal
year then ended.



43









 





     (f) Immediately upon receipt by the Borrower or any Subsidiary (other than Premium Finance Co.
or its Subsidiaries) of any Extraordinary Receipts (other than Extraordinary Receipts received by
any Regulated Insurance Subsidiary, in each case, of less than $500,000), the Borrower shall apply
the Required Prepayment Percentage of the Net Cash Proceeds received with respect thereto to prepay
outstanding Term Loans in accordance with Section 2.13(g), provided that, with respect to
the receipt of any Extraordinary Receipt in excess of $500,000 by any Regulated Insurance
Subsidiary, any prepayment pursuant to this Section 2.13(f) shall be subject to Requirements of Law
and the receipt of any required Governmental Authority approval, if any, which the Borrower shall
use commercially reasonable efforts to obtain so long as there is a reasonable expectation of
obtaining such approval.



     (g) Mandatory prepayments of outstanding Loans pursuant to clauses (b) through (f) above shall
be applied, first pro rata against the remaining scheduled installments due in respect of
the Term Loans under Section 2.11, second, to prepay outstanding Swingline Loans to the
full extent thereof, third, to prepay Revolving Loans to the full extent thereof and
fourth, to prepay outstanding reimbursement obligations with respect to Letters of Credit.
Any Lender may elect, by notice to the Administrative Agent by facsimile at least two Business Days
of receiving notice of such prepayment, as set forth in Section 2.13(h), to decline its portion of
any prepayment of its Loans pursuant to clauses (b) through (f) above, in which case the aggregate
amount of the prepayment that would have been applied to prepay such Loans but was so declined
shall be re-offered to those Lenders under this Agreement who have initially accepted such
prepayment (such re-offer to be made to each such Lender based on the percentage which such
Lender’s Loans represents of the aggregate Loans of all such Lenders who have initially accepted
such prepayment). In the event of such a re-offer, each of the relevant Lenders may elect, by
notice to the Administrative Agent by telephone by facsimile within two Business Days of receiving
notification of such re-offer, to decline its portion of the amount of such prepayment that is
re-offered to them and, to the extent so declined by such Lenders, with any remaining amounts being
retained by the Borrower to be used for any other purpose not prohibited by this Agreement.



     (h) The Borrower shall deliver to the Administrative Agent, at the time of each prepayment
required under this Section 2.13, (i) a certificate signed by a Financial Officer of the Borrower
setting forth in reasonable detail the calculation of the amount of such prepayment and (ii) to the
extent practicable, at least three days prior written notice of such prepayment. Each notice of
prepayment shall specify the prepayment date and the principal amount to be prepaid. If all
Lenders accept the prepayment offer, the prepayment amount will be applied first to ABR Loans
outstanding then Eurodollar Loans (in inverse order of maturity). If any Lender refuses the
prepayment offer, the prepayment amount will be applied to the then outstanding Loans on a pro rata
basis, regardless of Type. All prepayments of Borrowings pursuant to this Section 2.13 shall be
subject to Section 2.16, but shall otherwise be without premium or penalty.



     (i) Notwithstanding anything to the contrary contained above in this Section 2.13, to the
extent that (i) funds for any prepayment otherwise required to be made pursuant to the terms of
Section 2.13(b) are only available to the Borrower through dividend payments to the Borrower from
one or more Regulated Insurance Subsidiaries, (ii) such dividend payments cannot be made at such
time within the ordinary dividend-paying capacity of such Regulated Insurance Subsidiary or
Subsidiaries and, accordingly, require specific affirmative regulatory approval for



44









 







the payment of extraordinary dividends and (iii) after due written application or request, such approval for the
payment of extraordinary dividends is not obtained by such Regulated Insurance Subsidiary, upon
certification by the Borrower to the Administrative Agent to such effect (together with, in the
case of an application or request for regulatory approval, copies of all documents submitted, and
all written responses received, in connection therewith), the Borrower shall not, to such extent,
be required to make such prepayment for so long as (but only for so long as) such dividend payments
may not, for such reasons, be made, provided that, promptly upon any such restrictions no
longer being applicable, any such accrued prepayments that would be delinquent but for the
foregoing provisions shall be made with the proceeds of any dividends or other distributions no
longer subject to such restrictions.



SECTION 2.14. Reserve Requirements; Change in Circumstances. (a) Notwithstanding any other provision of this Agreement, if any Change in Law shall:





     (i) impose, modify or deem applicable any reserve, special deposit or similar
requirement against assets of, deposits with or for the account of, or credit extended by,
any Lender, the Administrative Agent or the Issuing Bank (except any such reserve
requirement which is reflected in the Adjusted LIBO Rate) or




     (ii) impose on any Lender, the Administrative Agent or the Issuing Bank or the London
interbank market any other condition affecting this Agreement or Eurodollar Loans made by
such Lender or any Letter of Credit or participation therein,


and the result of any of the foregoing shall be to increase the cost to such Lender or the Issuing
Bank of making or maintaining any Eurodollar Loan (or of maintaining its obligation to make any
such Loan) or to increase the cost to any Lender, the Administrative Agent or the Issuing Bank of
issuing or maintaining any Letter of Credit or purchasing or maintaining a participation therein or
to reduce the amount of any sum received or receivable by such Lender or the Issuing
Bank hereunder (whether of principal, interest or otherwise but excluding Excluded Taxes) by an
amount deemed in good faith by such Lender, the Administrative Agent or the Issuing Bank to be
material, then the Borrower will pay to such Lender, the Administrative Agent or the Issuing Bank,
as the case may be, upon demand such additional amount or amounts as will compensate such Lender or
the Issuing Bank, as the case may be, for such additional costs incurred or reduction suffered.




     (b) If any Lender, the Administrative Agent or the Issuing Bank shall have determined that any
Change in Law regarding capital adequacy has or would have the effect of reducing the rate of
return on such Lender’s, the Administrative Agent’s or the Issuing Bank’s capital or on the capital
of such Lender’s, the Administrative Agent’s or the Issuing Bank’s holding company, if any, as a
consequence of this Agreement or the Loans made by, or participations in Letters of Credit
purchased by, such Lender or the Letters of Credit issued by the Issuing Bank to a level below that
which such Lender, the Administrative Agent or the Issuing Bank or such Lender’s, the
Administrative Agent’s or the Issuing Bank’s holding company could have achieved but for such
Change in Law (taking into consideration such Lender’s, the Administrative Agent’s or the Issuing
Bank’s policies and the policies of such Lender’s, the Administrative Agent’s or the Issuing Bank’s
holding company with respect to capital adequacy) by an amount deemed in good faith by such Lender,
the Administrative Agent



45









 







or the Issuing Bank to be material, then from time to time the Borrower
shall pay to such Lender, the Administrative Agent or the Issuing Bank, as the case may be, such
additional amount or amounts as will compensate such Lender, the Administrative Agent or the
Issuing Bank or such Lender’s, the Administrative Agent’s or the Issuing Bank’s holding company for
any such reduction suffered.



     (c) A certificate in reasonable detail of a Lender, the Administrative Agent or the Issuing
Bank setting forth the amount or amounts necessary to compensate such Lender, the Administrative
Agent or the Issuing Bank or its holding company, as applicable, as specified in paragraph (a) or
(b) of this Section shall be delivered to the Borrower and shall be conclusive absent manifest
error. The Borrower shall pay such Lender, the Administrative Agent or the Issuing Bank, as the
case may be, the amount or amounts shown as due on any such certificate delivered by it within 10
days after its receipt of the same.



     (d) Failure or delay on the part of any Lender, the Administrative Agent or the Issuing Bank
to demand compensation pursuant to this Section shall not constitute a waiver of such Lender’s, the
Administrative Agent’s or the Issuing Bank’s right to demand such compensation; provided
that the Borrower shall not be under any obligation to compensate any Lender, the Administrative
Agent or the Issuing Bank under paragraph (a) or (b) above for increased costs or reductions with
respect to any period prior to the date that is 180 days prior to such request if such Lender, the
Administrative Agent or the Issuing Bank knew or could reasonably have been expected to know of the
circumstances giving rise to such increased costs or reductions and of the fact that such
circumstances would result in a claim for increased compensation by reason of such increased costs
or reductions; provided further that the foregoing limitation shall not apply to
any increased costs or reductions arising out of the retroactive application of any Change in Law
within such 180-day period. The protection of this Section shall be available to each Lender, the
Administrative Agent and the Issuing Bank
regardless of any possible contention of the invalidity or inapplicability of the Change in
Law that shall have occurred or been imposed.



     SECTION 2.15. Change in Legality. (a) Notwithstanding any other provision of this Agreement, if any Change in Law shall
make it unlawful for any Lender to make or maintain any Eurodollar Loan or to give effect to its
obligations as contemplated hereby with respect to any Eurodollar Loan, then, by written notice to
the Borrower and to the Administrative Agent:




     (i) such Lender may declare that Eurodollar Loans will not thereafter (for the duration
of such unlawfulness) be made by such Lender hereunder (or be continued for additional
Interest Periods and ABR Loans will not thereafter (for such duration) be converted into
Eurodollar Loans), whereupon any request for a Eurodollar Borrowing (or to convert an ABR
Borrowing to a Eurodollar Borrowing or to continue a Eurodollar Borrowing for an additional
Interest Period) shall, as to such Lender only, be deemed a request for an ABR Loan (or a
request to continue an ABR Loan as such for an additional Interest Period or to convert a
Eurodollar Loan into an ABR Loan, as the case may be), unless such declaration shall be
subsequently withdrawn; and




     (ii) such Lender may require that all outstanding Eurodollar Loans made by it be
converted to ABR Loans, in which event all such Eurodollar Loans shall be



46









 







automatically
converted to ABR Loans as of the effective date of such notice as provided in paragraph (b)
below.


In the event any Lender shall exercise its rights under (i) or (ii) above, all payments and
prepayments of principal that would otherwise have been applied to repay the Eurodollar Loans that
would have been made by such Lender or the converted Eurodollar Loans of such Lender shall instead
be applied to repay the ABR Loans made by such Lender in lieu of, or resulting from the conversion
of, such Eurodollar Loans. Any such conversion of a Eurodollar Loan under (i) above shall be
subject to Section 2.16.




     (b) For purposes of this Section 2.15, a notice to the Borrower by any Lender shall be
effective as to each Eurodollar Loan made by such Lender, if lawful, on the last day of the
Interest Period then applicable to such Eurodollar Loan; in all other cases such notice shall be
effective on the date of receipt by the Borrower.



     SECTION 2.16. Indemnity. The Borrower shall indemnify each Lender against any loss or expense that such Lender may
sustain or incur as a consequence of (a) any event, other than a default by such Lender in the
performance of its obligations hereunder, which results in (i) such Lender receiving or being
deemed to receive any amount on account of the principal of any Eurodollar Loan prior to the end of
the Interest Period in effect therefor, (ii) except as set forth in Section 2.15 the conversion of
any Eurodollar Loan to an ABR Loan, or the conversion of the Interest Period with respect to any
Eurodollar Loan, in each case other than on the last day of the Interest Period in effect therefor
or (iii) any Eurodollar Loan to be made by such Lender (including any Eurodollar Loan to be made
pursuant to a conversion or continuation under Section 2.10) not
being made after notice of such Loan shall have been given by the Borrower hereunder (any of
the events referred to in this clause (a) being called a “Breakage Event”) or (b) any
default in the making of any payment or prepayment required to be made hereunder. In the case of
any Breakage Event, such loss shall include an amount equal to the excess, as reasonably determined
by such Lender, of (i) its cost of obtaining funds for the Eurodollar Loan that is the subject of
such Breakage Event for the period from the date of such Breakage Event to the last day of the
Interest Period in effect (or that would have been in effect) for such Loan over (ii) the amount of
interest likely to be realized by such Lender in redeploying the funds released or not utilized by
reason of such Breakage Event for such period. A certificate of any Lender setting forth any
amount or amounts which such Lender is entitled to receive pursuant to this Section 2.16 shall be
delivered to the Borrower and shall be conclusive absent manifest error.



     SECTION 2.17. Pro Rata Treatment. Except as provided below in this Section 2.17 with respect to Swingline Loans and as
required under Sections 2.13 and 2.15, each Borrowing, each payment or prepayment of principal of
any Borrowing, each payment of interest on the Loans, each payment of the Commitment Fees, each
reduction of the Term Loan Commitments or the Revolving Credit Commitments and each conversion of
any Borrowing to or continuation of any Borrowing as a Borrowing of any Type shall be allocated pro
rata among the Lenders in accordance with their respective applicable Commitments (or, if such
Commitments shall have expired or been terminated, in accordance with the respective principal
amounts of their outstanding Loans). For purposes of determining the available Revolving Credit
Commitments of the Lenders at any time, each outstanding Swingline Loan shall be deemed to have
utilized the Revolving Credit Commitments of the Lenders (including those Lenders which shall not
have



47









 







made Swingline Loans) pro rata in accordance with such respective Revolving Credit
Commitments. Each Lender agrees that in computing such Lender’s portion of any Borrowing to be
made hereunder, the Administrative Agent may, in its discretion, round each Lender’s percentage of
such Borrowing to the next higher or lower whole dollar amount.



     SECTION 2.18. Sharing of Setoffs. Each Lender agrees that if it shall, through the exercise of a right of banker’s lien,
setoff or counterclaim against the Borrower or any other Loan Party, or pursuant to a secured claim
under Section 506 of Title 11 of the United States Code or other security or interest arising from,
or in lieu of, such secured claim, received by such Lender under any applicable bankruptcy,
insolvency or other similar law or otherwise, or by any other means, obtain payment (voluntary or
involuntary) in respect of any Loan or Loans or L/C Disbursement as a result of which the unpaid
principal portion of its Loans and participations in L/C Disbursements shall be proportionately
less than the unpaid principal portion of the Loans and participations in L/C Disbursements of any
other Lender, it shall be deemed simultaneously to have purchased from such other Lender at face
value, and shall promptly pay to such other Lender the purchase price for, a participation in the
Loans and L/C Exposure of such other Lender, so that the aggregate unpaid principal amount of the
Loans and L/C Exposure and participations in Loans and L/C Exposure held by each Lender shall be in
the same proportion to the aggregate unpaid principal amount of all Loans and L/C Exposure then
outstanding as the principal amount of its Loans and L/C Exposure prior to such exercise of
banker’s lien, setoff or counterclaim or other event was to
the principal amount of all Loans and L/C Exposure outstanding prior to such exercise of
banker’s lien, setoff or counterclaim or other event; provided, however, that if
any such purchase or purchases or adjustments shall be made pursuant to this Section 2.18 and the
payment giving rise thereto shall thereafter be recovered, such purchase or purchases or
adjustments shall be rescinded to the extent of such recovery and the purchase price or prices or
adjustment restored without interest. The Borrower expressly consents to the foregoing
arrangements and agrees that any Lender holding a participation in a Loan or L/C Disbursement
deemed to have been so purchased may exercise any and all rights of banker’s lien, setoff or
counterclaim with respect to any and all moneys owing by the Borrower to such Lender by reason
thereof as fully as if such Lender had made a Loan directly to the Borrower in the amount of such
participation.



SECTION 2.19. Payments. (a) The Borrower shall make each payment (including principal of or interest on any
Borrowing or any L/C Disbursement or any Fees or other amounts) hereunder and under any other Loan
Document not later than 12:00 (noon), New York City time, on the date when due in immediately
available dollars, without setoff, defense or counterclaim. Each such payment (other than (i)
Issuing Bank Fees, which shall be paid directly to the Issuing Bank, and (ii) principal of and
interest on Swingline Loans, which shall be paid directly to the Swingline Lender except as
otherwise provided in Section 2.21(e)) shall be made to an account designated by the Administrative
Agent. All payments hereunder and under each other Loan Document shall be made in dollars.




     (b) Except as otherwise expressly provided herein, whenever any payment (including principal
of or interest on any Borrowing or any Fees or other amounts) hereunder or under any other Loan
Document shall become due, or otherwise would occur, on a day that is not a Business Day, such
payment may be made on the next succeeding Business Day, and such



48









 







extension of time shall in such
case be included in the computation of interest or Fees, if applicable.



     SECTION 2.20. Taxes. (a) Any and all payments by or on account of any obligation of the Borrower or any
other Loan Party hereunder or under any other Loan Document shall be made free and clear of and
without deduction for any Indemnified Taxes or Other Taxes; provided that if any
Indemnified Taxes or Other Taxes are required to be withheld or deducted from such payments, then
(i) the sum payable by the Borrower shall be increased as necessary so that after all required
deductions or withholding (including deductions or withholdings applicable to additional sums
payable under this Section) the Administrative Agent or such Lender (as the case may be) receives
an amount equal to the sum it would have received had no such deductions been made, (ii) the
Borrower or such other Loan Party shall make (or cause to be made) such deductions and (iii) the
Borrower or such other Loan Party shall pay (or cause to be paid) the full amount deducted to the
relevant Governmental Authority in accordance with applicable law. In addition, the Borrower or
any other Loan Party hereunder shall pay (or cause to be paid) any Other Taxes to the relevant
Governmental Authority in accordance with applicable law.



     (b) The Borrower shall jointly and severally indemnify the Administrative Agent and each
Lender, within 10 days after written demand therefor, for the full amount of any Indemnified Taxes
or Other Taxes paid by the Administrative Agent or such Lender, as the case may be, or any of their
respective Affiliates, on or with respect to any payment by or on account of any obligation of the
Borrower or any Loan Party hereunder or under any other Loan Document (including Indemnified Taxes
or Other Taxes imposed or asserted on or attributable to amounts payable under this Section) and
any penalties, interest and expenses arising therefrom or with respect thereto, whether or not such
Indemnified Taxes or Other Taxes were correctly or legally imposed or asserted by the relevant
Governmental Authority. A certificate in reasonable detail as to the amount of such payment or
liability delivered to the Borrower by a Lender, or by the Administrative Agent on its behalf or on
behalf of a Lender, shall be conclusive absent manifest error.



     (c) As soon as practicable after any payment of Indemnified Taxes or Other Taxes pursuant to
Section 2.20(a), and in any event within 30 days of any such payment being due, the Borrower shall
deliver (or cause to be delivered) to the Administrative Agent the original or a certified copy of
a receipt issued by such Governmental Authority evidencing such payment, a copy of the return
reporting such payment or other evidence of such payment reasonably satisfactory to the
Administrative Agent.



     (d) Any Foreign Lender that is entitled to an exemption from or reduction of withholding tax
under the law of the jurisdiction in which the Borrower is located, or any treaty to which such
jurisdiction is a party, with respect to payments under this Agreement shall deliver to the
Borrower (with a copy to the Administrative Agent), at the reasonable written request of the
Borrower, such properly completed and executed documentation prescribed by applicable law as will
permit such payments to be made without withholding or at a reduced rate; provided that
such Lender is legally entitled to complete, execute and deliver such documentation and in such
Lender’s judgment such completion, execution or delivery would not materially prejudice the legal
position of such Lender. In addition, each Foreign Lender shall (i) furnish on or before



49









 







it becomes a party to the Agreement either (a) two accurate and complete originally executed U.S. Internal
Revenue Service Form W-8BEN (or successor form) or (b) an accurate and complete U.S. Internal
Revenue Service Form W-8ECI (or successor form), certifying, in either case, to such Foreign
Lender’s legal entitlement to an exemption or reduction from U.S. federal withholding tax with
respect to all interest payments hereunder, and (ii) provide a new Form W-8BEN (or successor form)
or Form W-8ECI (or successor form) upon the expiration or obsolescence of any previously delivered
form to reconfirm any complete exemption from, or any entitlement to a reduction in, U.S. federal
withholding tax with respect to any interest payment hereunder; provided that any Foreign
Lender that is not a “bank” within the meaning of Section 881(c)(3)(A) of the Code and is relying
on the so-called “portfolio interest exemption” shall also furnish a “Non-Bank Certificate” in the
form of Exhibit I together with a Form W-8BEN. Notwithstanding any other provision of this
paragraph, a Foreign Lender shall not be required to deliver any form pursuant to this paragraph
that such Foreign Lender is not legally able to deliver.



     (e) Any Lender that is a United States person, as defined in Section 7701(a)(30) of the
Internal Revenue Code, and is not an exempt recipient within the meaning of Treasury Regulations
Section 1.6049-4(c) shall deliver to the Borrower (with a copy to the Administrative
Agent) two accurate and complete original signed copies of Internal Revenue Service Form W-9,
or any successor form that such person is entitled to provide at such time in order to comply with
United States back-up withholding requirements.



     (f) Without prejudice to the survival of any other agreement of the Borrower hereunder, the
agreements and obligations of the Borrower contained in this Section 2.20 shall survive the payment
in full of all amounts due hereunder.


SECTION 2.21. Assignment of Commitments Under Certain Circumstances; Duty to Mitigate. (a) In the event (i) any Lender or the Issuing Bank delivers a certificate requesting
compensation pursuant to Section 2.14, (ii) any Lender or the Issuing Bank delivers a notice
described in Section 2.15, (iii) the Borrower is required to pay any additional amount to any
Lender or the Issuing Bank or any Governmental Authority on account of any Lender or the Issuing
Bank pursuant to Section 2.20, (iv) any Lender is in default of its obligations under this
Agreement, (v) any Lender does not consent to a proposed amendment, modification or waiver of this
Agreement requested by the Borrower which requires the consent of all of the Lenders or all of the
Lenders under any Facility to become effective (and which is approved by at least the Required
Lenders), (vi) any Revolving Credit Lender does not consent to a proposed extension of the
Revolving Credit Facility requested by the Borrower in accordance with Section 2.25 (and which is
approved by Revolving Credit Lenders holding at least the minimum aggregate principal amount set
forth in Section 2.25(a) (iv)) or (vii) any Revolving Credit Lender does not consent to a proposed
amendment, modification or waiver of Section 6.15 or 6.16 of this Agreement requested by the
Borrower which requires the consent of the Required Revolving Credit Lenders to become effective
(and which is approved by all other Required Revolving Credit Lenders other than such
non-consenting Revolving Credit Lender), the Borrower may, at its sole expense and effort
(including with respect to the processing and recordation fee referred to in Section 9.04(b)), upon
notice to such Lender or the Issuing Bank and the Administrative Agent, require such Lender or the
Issuing Bank to transfer and assign, without recourse (in accordance with and subject to the

restrictions contained in Section 9.04), all of its interests,


50









 








rights and obligations under this
Agreement to an assignee that shall assume such assigned obligations (which assignee may be another
Lender, if a Lender accepts such assignment); provided that (x) such assignment shall not
conflict with any law, rule or regulation or order of any court or other Governmental Authority
having jurisdiction, (y) solely with respect to replacements of Lenders pursuant to clauses (i),
(ii) or (iii) of this Section, the Borrower shall have received the prior written consent of the
Administrative Agent (and, if a Revolving Credit Commitment is being assigned, of the Issuing Bank
and the Swingline Lender), which consent shall not unreasonably be withheld, and (z) the Borrower
or such assignee shall have paid to the affected Lender or the Issuing Bank in immediately
available funds an amount equal to the sum of the principal of and interest accrued to the date of
such payment on the outstanding Loans or L/C Disbursements of such Lender or the Issuing Bank,
respectively, plus all Fees and other amounts accrued for the account of such Lender or the Issuing
Bank hereunder (including any amounts under Section 2.14 and with respect to a replacement pursuant
to clauses (i), (ii), (iii) and (v) of Section 2.16); provided further that, if prior to any such
transfer and assignment the circumstances or event that resulted in such Lender’s or the Issuing
Bank’s claim for compensation under Section 2.14 or notice under Section 2.15 or the amounts paid
pursuant to Section 2.20, as the case may be, cease to cause such Lender or the Issuing Bank to suffer
increased costs or reductions in amounts received or receivable or reduction in return on capital,
or cease to have the consequences specified in Section 2.15, or cease to result in amounts being
payable under Section 2.20, as the case may be (including as a result of any action taken by such
Lender or the Issuing Bank pursuant to paragraph (b) below), or if such Lender or the Issuing Bank
shall waive its right to claim further compensation under Section 2.14 in respect of such
circumstances or event or shall withdraw its notice under Section 2.15 or shall waive its right to
further payments under Section 2.20 in respect of such circumstances or event, as the case may be,
then such Lender or the Issuing Bank shall not thereafter be required to make any such transfer and
assignment hereunder. In connection with any such replacement, if the replaced Lender does not
execute and deliver to the Administrative Agent a duly completed Assignment and Acceptance
reflecting such replacement within five Business Days of the date on which the replacement Lender
executes and delivers such Assignment and Acceptance to the replaced Lender, then such replaced
Lender shall be deemed to have executed and delivered such Assignment and Acceptance;
provided, that in connection with any such replacement of a Revolving Credit Lender
following its determination not to consent to a proposed extension of the Revolving Credit Facility
requested by the Borrower in accordance with Section 2.25, such duly completed Assignment and
Acceptance Agreement shall have been delivered to the non-consenting Revolving Credit Lender at
least five Business Days prior to the then scheduled Revolving Credit Maturity Date (as in effect
prior to the applicable proposed extension) (and if such Assignment and Acceptance is not so
delivered, the provisions of Section 2.25 shall apply as if no such assignment had been made).




     (b) If (i) any Lender or the Issuing Bank shall request compensation under Section 2.14, (ii)
any Lender or the Issuing Bank delivers a notice described in Section 2.15 or (iii) the Borrower is
required to pay any additional amount to any Lender or the Issuing Bank or any Governmental
Authority on account of any Lender or the Issuing Bank, pursuant to Section 2.20, then such Lender
or the Issuing Bank shall use reasonable efforts (which shall not require such Lender or the
Issuing Bank to incur an unreimbursed loss or unreimbursed cost or expense or otherwise take any
action inconsistent with its internal policies or legal or regulatory restrictions or suffer any
disadvantage or burden deemed by it to be significant) (x) to file any



51









 







certificate or document reasonably requested in writing by the Borrower or (y) to assign its rights and delegate and
transfer its obligations hereunder to another of its offices, branches or affiliates, if such
filing or assignment would reduce its claims for compensation under Section 2.14 or enable it to
withdraw its notice pursuant to Section 2.15 or would reduce amounts payable pursuant to Section
2.20, as the case may be, in the future. The Borrower hereby agrees to pay all reasonable costs
and expenses incurred by any Lender or the Issuing Bank in connection with any such filing or
assignment, delegation and transfer.



     SECTION 2.22. Swingline Loans. (a) Swingline Commitment. Subject to the terms and conditions hereof and
relying upon the representations and warranties, set forth herein, the Swingline Lender agrees to
make loans to the Borrower, at any time and from time to time after the Closing Date, and until the
earlier of the Revolving Credit Maturity Date and the termination of the Revolving Credit
Commitments in accordance with the terms hereof, in an aggregate principal amount at any time
outstanding that will not result in (i) the aggregate principal amount of all Swingline Loans
exceeding $2,000,000 in the aggregate or (ii) the Aggregate Revolving Credit Exposure, after
giving effect to any Swingline Loan, exceeding the Total Revolving Credit Commitment. Each
Swingline Loan shall be in a principal amount that is an integral multiple of $100,000. The
Swingline Commitment may be terminated or reduced from time to time as provided herein. Within the
foregoing limits, the Borrower may borrow, pay or prepay and reborrow Swingline Loans hereunder,
subject to the terms, conditions and limitations set forth herein.



     (b) Swingline Loans. The Borrower shall notify the Administrative Agent by fax, or by
telephone (confirmed by fax), not later than 12:00 (noon), New York City time, on the day of a
proposed Swingline Loan to be made to it. Such notice shall be delivered on a Business Day, shall
be irrevocable and shall refer to this Agreement and shall specify the requested date (which shall
be a Business Day) and amount of such Swingline Loan. The Administrative Agent will promptly
advise the Swingline Lender of any notice received from the Borrower pursuant to this paragraph
(b). The Swingline Lender shall make each Swingline Loan available to the Borrower by means of a
credit to the general deposit account of the Borrower as specified in the Borrowing Request by 3:00
p.m. on the date such Swingline Loan is so requested.



     (c) Prepayment. The Borrower shall have the right at any time and from time to time
to prepay any Swingline Loan, in whole or in part, upon giving written or fax notice (or telephone
notice promptly confirmed by written or fax notice) to the Swingline Lender and to the
Administrative Agent before 12:00 (noon), New York City time, on the date of prepayment at the
Swingline Lender’s address for notices specified in the Lender Addendum delivered by the Swingline
Lender. All principal payments of Swingline Loans shall be accompanied by accrued interest on the
principal amount being repaid to the date of payment.



     (d) Interest. Each Swingline Loan shall be an ABR Loan and, subject to the provisions
of Section 2.07, shall bear interest as provided in Section 2.06(a).



     (e) Participations. The Swingline Lender may by written notice given to the
Administrative Agent not later than 10:00 a.m., New York City time, on any Business Day require the
Revolving Credit Lenders to acquire participations on such Business Day in all or a portion of the
Swingline Loans outstanding. Such notice shall specify the aggregate amount of



52









 







Swingline Loans in which Revolving Credit Lenders will participate. The Administrative Agent will, promptly upon
receipt of such notice, give notice to each Revolving Credit Lender, specifying in such notice such
Lender’s Pro Rata Percentage of such Swingline Loan or Loans. In furtherance of the foregoing,
each Revolving Credit Lender hereby absolutely and unconditionally agrees, upon receipt of notice
as provided above, to pay to the Administrative Agent, for the account of the Swingline Lender,
such Revolving Credit Lender’s Pro Rata Percentage of such Swingline Loan or Loans. Each Revolving
Credit Lender acknowledges and agrees that its obligation to acquire participations in Swingline
Loans pursuant to this paragraph is absolute and unconditional and shall not be affected by any
circumstance whatsoever, including the occurrence and continuance of a Default or an Event of
Default, and that each such payment shall be made without any offset, abatement, withholding or
reduction whatsoever. Each Revolving Credit Lender shall comply with its obligation under this
paragraph by wire transfer of immediately available funds, in the same manner as provided in
Section 2.02(c) with respect to Loans made by such Lender (and Section 2.02(c) shall apply,
mutatis mutandis, to the payment obligations of the Lenders under this Section) and the
Administrative Agent shall
promptly pay to the Swingline Lender the amounts so received by it from the Lenders. The
Administrative Agent shall notify the Borrower of any participations in any Swingline Loan acquired
pursuant to this paragraph and thereafter payments in respect of such Swingline Loan shall be made
to the Administrative Agent and not to the Swingline Lender. Any amounts received by the Swingline
Lender from the Borrower (or other party on behalf of the Borrower) in respect of a Swingline Loan
after receipt by the Swingline Lender of the proceeds of a sale of participations therein shall be
promptly remitted to the Administrative Agent; any such amounts received by the Administrative
Agent shall be promptly remitted by the Administrative Agent to the Lenders that shall have made
their payments pursuant to this paragraph and to the Swingline Lender, as their interests may
appear. The purchase of participations in a Swingline Loan pursuant to this paragraph shall not
relieve the Borrower (or other party liable for obligations of the Borrower) of any default in the
payment thereof.



     SECTION 2.23. Letters of Credit. (a) General. Subject to the terms and conditions hereof, the Borrower may
request the issuance of a Letter of Credit at any time and from time to time while the Revolving
Credit Commitments remain in effect for its own account or for the account of any of the Subsidiary
Guarantors (in which case the Borrower and such Subsidiary Guarantor shall be co-applicants with
respect to such Letter of Credit), but not later than thirty (30) days prior to the Revolving Loan
Maturity Date in a form reasonably acceptable to the Administrative Agent and the Issuing Bank.
This Section shall not be construed to impose an obligation upon the Issuing Bank to issue any
Letter of Credit that is inconsistent with the terms and conditions of this Agreement.



     (b) Notice of Issuance, Amendment, Renewal, Extension; Certain Conditions. In order
to request the issuance of a Letter of Credit (or to amend, renew or extend an existing Letter of
Credit), the Borrower shall hand deliver or fax to the Issuing Bank and the Administrative Agent
(no less than three Business Days (or such shorter period of time acceptable to the Issuing Bank)
in advance of the requested date of issuance, amendment, renewal or extension) a notice requesting
the issuance of a Letter of Credit, or identifying the Letter of Credit to be amended, renewed or
extended, the date of issuance, amendment, renewal or extension, the date on which such Letter of
Credit is to expire (which shall comply with paragraph (c) below), the amount of such Letter of
Credit, the name and address of the



53









 







beneficiary thereof and such other information as shall be
necessary to prepare such Letter of Credit. A Letter of Credit shall be issued, amended, renewed or
extended only if, and upon issuance, amendment, renewal or extension of each Letter of Credit the
Borrower shall be deemed to represent and warrant that, after giving effect to such issuance,
amendment, renewal or extension (i) the L/C Exposure shall not exceed $2,000,000 and (ii) the
Aggregate Revolving Credit Exposure shall not exceed the Total Revolving Credit Commitment.



     (c) Expiration Date. Each Letter of Credit shall expire at the close of business on
the earlier of (i) the date one year after the date of the issuance of such Letter of Credit and
(ii) the date that is five Business Days prior to the Revolving Credit Maturity Date, unless such
Letter of Credit expires by its terms on an earlier date; provided, however, that a
Letter of Credit may, upon the request of the Borrower, include a provision whereby such Letter of
Credit shall be renewed automatically for additional consecutive periods of 12 months or less (but
not beyond the date that is five Business Days prior to the Revolving Credit Maturity Date) unless the
Issuing Bank notifies the beneficiary thereof at least 45 days prior to the then-applicable
expiration date that such Letter of Credit will not be renewed.



     (d) Participations. By the issuance of a Letter of Credit and without any further
action on the part of the Issuing Bank or the Lenders, the Issuing Bank hereby grants to each
Revolving Credit Lender, and each such Lender hereby acquires from the Issuing Bank, a
participation in such Letter of Credit equal to such Lender’s Pro Rata Percentage of the aggregate
amount available to be drawn under such Letter of Credit, effective upon the issuance of such
Letter of Credit. In consideration and in furtherance of the foregoing, each Revolving Credit
Lender hereby absolutely and unconditionally agrees to pay to the Administrative Agent, for the
account of the Issuing Bank, such Lender’s Pro Rata Percentage of each L/C Disbursement made by the
Issuing Bank and not reimbursed by the Borrower (or, if applicable, another party pursuant to its
obligations under any other Loan Document) forthwith on the date due as provided in Section
2.02(f). Each Revolving Credit Lender acknowledges and agrees that its obligation to acquire
participations pursuant to this paragraph in respect of Letters of Credit is absolute and
unconditional and shall not be affected by any circumstance whatsoever, including the occurrence
and continuance of a Default or an Event of Default, and that each such payment shall be made
without any offset, abatement, withholding or reduction whatsoever.



     (e) Reimbursement. If the Issuing Bank shall make any L/C Disbursement in respect of
a Letter of Credit, the Borrower shall pay to the Administrative Agent an amount equal to such L/C
Disbursement not later than two hours after the Borrower shall have received notice from the
Issuing Bank that payment of such draft will be made if such notice is received on or before 10:00
am New York time, or, if the Borrower shall have received such notice later than 10:00 a.m., New
York City time, on any Business Day, not later than 10:00 a.m., New York City time, on the
immediately following Business Day. To the extent that the Borrower does not reimburse the Issuing
Bank on the same business day, the Lenders under the Revolving Facility shall be irrevocably
obligated to reimburse the Issuing Bank pro rata based upon their respective Revolving Credit
Commitment.



     (f) Obligations Absolute. The Borrower’s obligations to reimburse L/C Disbursements
as provided in paragraph (e) above shall be absolute, unconditional and



54









 







irrevocable, and shall be
performed strictly in accordance with the terms of this Agreement, under any and all circumstances
whatsoever, and irrespective of:




     (i) any lack of validity or enforceability of any Letter of Credit or any Loan
Document, or any term or provision therein;




     (ii) any amendment or waiver of, or any consent to departure from, all or any of the
provisions of any Letter of Credit or any Loan Document;




     (iii) the existence of any claim, setoff, defense or other right that the Borrower, any
other party guaranteeing, or otherwise obligated with, the Borrower, any subsidiary or other
Affiliate thereof or any other person may at any time have against the beneficiary under any
Letter of Credit, the Issuing Bank, the Administrative Agent or any Lender or
any other person, whether in connection with this Agreement, any other Loan Document or
any other related or unrelated agreement or transaction;




     (iv) any draft or other document presented under a Letter of Credit proving to be
forged, fraudulent, invalid or insufficient in any respect or any statement therein being
untrue or inaccurate in any respect;




     (v) payment by the Issuing Bank under a Letter of Credit against presentation of a
draft or other document that does not comply with the terms of such Letter of Credit; and




     (vi) any other act or omission to act or delay of any kind of the Issuing Bank, any
Lender, the Administrative Agent or any other person or any other event or circumstance
whatsoever, whether or not similar to any of the foregoing, that might, but for the
provisions of this Section, constitute a legal or equitable discharge of the Borrower’s
obligations hereunder.



     Without limiting the generality of the foregoing, it is expressly understood and agreed that
the absolute and unconditional obligation of the Borrower hereunder to reimburse L/C Disbursements
will not be excused by the gross negligence, bad faith or willful misconduct of the Issuing Bank.
However, the foregoing shall not be construed to excuse the Issuing Bank from liability to the
Borrower to the extent of any direct damages (as opposed to consequential damages, claims in
respect of which are hereby waived by the Borrower to the extent permitted by applicable law)
suffered by the Borrower that are caused by the Issuing Bank’s gross negligence, bad faith or
willful misconduct in determining whether drafts and other documents presented under a Letter of
Credit comply with the terms thereof; it is understood that the Issuing Bank may accept documents
that appear on their face to be in order, without responsibility for further investigation,
regardless of any notice or information to the contrary and, in making any payment under any Letter
of Credit (i) the Issuing Bank’s exclusive reliance on the documents presented to it under such
Letter of Credit as to any and all matters set forth therein, including reliance on the amount of
any draft presented under such Letter of Credit, whether or not the amount due to the beneficiary
thereunder equals the amount of such draft and whether or not any document presented pursuant to
such Letter of Credit proves to be insufficient in any respect, if such document on its face
appears to be in order, and whether or not any other statement or any



55









 







other document presented
pursuant to such Letter of Credit proves to be forged or invalid or any statement therein proves to
be inaccurate or untrue in any respect whatsoever and (ii) any noncompliance in any immaterial
respect of the documents presented under such Letter of Credit with the terms thereof shall, in
each case, be deemed not to constitute willful misconduct or gross negligence of the Issuing Bank.



     (g) Disbursement Procedures. The Issuing Bank shall, promptly following its receipt
thereof, examine all documents purporting to represent a demand for payment under a Letter of
Credit. The Issuing Bank shall as promptly as possible give telephonic notification, confirmed by
fax, to the Administrative Agent and the Borrower of such demand for payment and whether the
Issuing Bank has made or will make an L/C Disbursement thereunder; provided that any
failure to give or delay in giving such notice shall not relieve the Borrower of its obligation to
reimburse the Issuing Bank and the applicable Lenders with respect to any such L/C
Disbursement. The Administrative Agent shall promptly give each Revolving Credit Lender
notice thereof.



     (h) Interim Interest. If the Issuing Bank shall make any L/C Disbursement in respect
of a Letter of Credit, then, unless the Borrower shall reimburse such L/C Disbursement in full on
such date, the unpaid amount thereof shall bear interest for the account of the Issuing Bank, for
each day from and including the date of such L/C Disbursement to but excluding the earlier of the
date of payment by the Borrower or the date on which interest shall commence to accrue thereon as
provided in Section 2.02(f), at the rate per annum that would apply to such amount if such amount
were an ABR Revolving Loan.



     (i) Resignation or Removal of the Issuing Bank. The Issuing Bank may resign at any
time by giving 30 days’ prior written notice to the Administrative Agent, the Lenders and the
Borrower. Subject to the next succeeding paragraph, upon the acceptance of any appointment as the
Issuing Bank hereunder by a Lender that shall agree to serve as successor Issuing Bank, such
successor shall succeed to and become vested with all the interests, rights and obligations of the
retiring Issuing Bank and the retiring Issuing Bank shall be discharged from its obligations to
issue additional Letters of Credit hereunder. At the time such removal or resignation shall become
effective, the Borrower shall pay all accrued and unpaid fees pursuant to Section 2.05(c)(ii). The
acceptance of any appointment as the Issuing Bank hereunder by a successor Lender shall be
evidenced by an agreement entered into by such successor, in a form satisfactory to the Borrower
and the Administrative Agent, and, from and after the effective date of such agreement, (i) such
successor Lender shall have all the rights and obligations of the previous Issuing Bank under this
Agreement and the other Loan Documents and (ii) references herein and in the other Loan Documents
to the term “Issuing Bank” shall be deemed to refer to such successor or to any previous Issuing
Bank, or to such successor and all previous Issuing Banks, as the context shall require. After the
resignation or removal of the Issuing Bank hereunder, the retiring Issuing Bank shall remain a
party hereto and shall continue to have all the rights and obligations of an Issuing Bank under
this Agreement and the other Loan Documents with respect to Letters of Credit issued by it prior to
such resignation or removal, but shall not be required to issue additional Letters of Credit.



     (j) Cash Collateralization. If any Event of Default shall occur and be continuing,
the Borrower shall, on the Business Day it receives notice from the Administrative Agent or the



56









 







Required Lenders (or, if the maturity of the Loans has been accelerated, Revolving Credit Lenders
representing greater than 50% of the total L/C Exposure) thereof and of the amount to be deposited,
deposit in an account with the Collateral Agent, for the ratable benefit of the Revolving Credit
Lenders, an amount in cash equal to the L/C Exposure as of such date. Such deposit shall be held
by the Collateral Agent as collateral for the payment and performance of the obligations of the
Borrower under this Agreement. The Collateral Agent shall have exclusive dominion and control,
including the exclusive right of withdrawal, over such account. Other than any interest earned on
the investment of such deposits in Permitted Investments, which investments shall be made at the
option and sole discretion of the Collateral Agent, such deposits shall not bear interest.
Interest or profits, if any, on such investments shall accumulate in such account. Moneys in such
account shall (i) automatically be applied by the Administrative Agent to reimburse the Issuing
Bank for L/C Disbursements for which it has not been reimbursed, (ii) be held for the satisfaction
of the reimbursement obligations of the Borrower for the L/C
Exposure at such time and (iii) if the maturity of the Loans has been accelerated (but subject
to the consent of Revolving Credit Lenders representing greater than 50% of the total L/C
Exposure), be applied to satisfy the Obligations. If the Borrower is required to provide an amount
of cash collateral hereunder as a result of the occurrence of an Event of Default, such amount (to
the extent not applied as aforesaid) shall be returned to the Borrower within three Business Days
after all Events of Default have been cured or waived.



     (k) Additional Issuing Banks. The Borrower may, at any time and from time to time
with the consent of the Administrative Agent (which consent shall not be unreasonably withheld) and
such Lender, designate one or more additional Lenders to act as an issuing bank under the terms of
the Agreement. Any Lender designated as an issuing bank pursuant to this paragraph shall be deemed
to be an “Issuing Bank” (in addition to being a Lender) in respect of Letters of Credit issued or
to be issued by such Lender, and, with respect to such Letters of Credit, such term shall
thereafter apply to the other Issuing Bank and such Lender.



     SECTION 2.24. Incremental Facilities.




     (a) (i) Borrower may by written notice to the Administrative Agent (the “Increase
Loan Notice”) elect to request prior to the first anniversary of the Closing Date, an
increase to the existing Revolving Credit Commitment (any such increase, the “Primary
New Revolving Loan Commitments”) on any one or more occasions by an amount not in
excess of $20,000,000 in the aggregate. Any Primary New Revolving Loan Commitment shall be
in the minimum amount of $5,000,000 and integral multiples of $500,000 in excess thereof
(or, in the aggregate, if less, the entire remaining amount of an amount equal to
$20,000,000 less the amount of Revolving Loan Commitments outstanding as of the applicable
Increased Amount Date (as defined below)), and shall be subject to the voluntary
participation of Lenders in such Primary New Revolving Loan Commitment as otherwise
provided herein. Such notice shall specify (A) the date (the “Increased Amount
Date”) on which Borrower proposes that the Primary New Revolving Loan Commitments shall
be effective, which need not be the same date for all Primary New Revolving Loan
Commitments and shall be a date not less than 5 Business Days after the date on which such
notice is delivered to the Administrative Agent (or such shorter period as may be approved
by the Administrative Agent) and (B) the identity of each Lender or other Person that is an
Eligible Assignee (each, a “New



57









 







Revolving Loan Lender”) to whom Borrower proposes
any portion of such Primary New Revolving Loan Commitments be allocated and the amounts of
such proposed allocations.




          (ii) Borrower may by written Increase Loan Notice elect to request, prior to the
Revolving Credit Maturity Date, an increase to the existing Revolving Credit Commitment
(any such increase, the “Secondary New Revolving Loan Commitments” and, together
with the Primary New Revolving Loan Commitments, the “New Revolving Loan
Commitments”) on any one occasion by an amount not in excess of $20,000,000 in the
aggregate; provided that, notwithstanding the foregoing, no Secondary New Revolving Loan
Commitments may be requested until the date the Borrower shall have
fully activated all permitted Primary New Revolving Loan Commitments in accordance
with Section 2.24(a)(i) and (y) the Business Day immediately following the first
anniversary of the Closing Date. Any Secondary New Revolving Loan Commitment shall be in
the minimum amount of $5,000,000 and integral multiples of $500,000 in excess thereof, and
shall be subject to the voluntary participation of Lenders or Eligible Assignees in such
Secondary New Revolving Loan Commitment as otherwise provided herein. Such notice shall
specify (A) the Increased Amount Date, which shall be the same date for all Secondary New
Revolving Loan Commitments and shall be a date not less than 10 Business Days after the
date on which such notice is delivered to the Administrative Agent (or such shorter period
as may be approved by the Administrative Agent) and (B) the identity of each New Revolving
Loan Lender to whom Borrower proposes any portion of such New Revolving Loan Commitments be
allocated and the amounts of such proposed allocations.



     (b) The entering into of New Revolving Loan Commitments shall be subject to the satisfaction
of each of the following conditions precedent, as determined by Administrative Agent in its good
faith judgment:




          (i) any existing Lender may elect or decline, in its sole discretion, to provide a
New Revolving Loan Commitment; provided, however, that the election by any
such Lender to provide or not provide New Revolving Loan Commitments shall, in no way affect
its then existing obligations under the Loan Documents;




          (ii) no Default or Event of Default shall exist on the date the Increased Loan Notice
is delivered and no Default or Event of Default shall exist on the Increased Amount Date,
both before and after giving effect to such New Revolving Loan Commitments;




          (iii) in connection with the making of any Secondary New Revolving Loan Commitments
only, both before and after giving effect to the making of any New Revolving Loan
Commitments, Borrower and its Subsidiaries shall be in compliance, on a pro forma basis
(after giving effect to such New Revolving Loan Commitments and such other customary
adjustments reasonably acceptable to the Administrative Agent), with each of the covenants
set forth in Sections 6.11, 6.12, 6.13, 6.14, 6.15 and 6.16 as of the last day of the most
recently ended fiscal quarter after giving effect to such New Revolving Loan Commitments;



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          (iv) the New Revolving Loan Commitments shall be effected pursuant to one or more
Joinder Agreements executed and delivered by Borrower and Administrative Agent, and each of
which shall be recorded in the Register and shall be subject to the requirements set forth
in Section 2.20(d);




          (v) Borrower shall make any payments required pursuant to Section 2.16(c) in
connection with the New Revolving Loan Commitments;




          (vi) in connection with the making of any Secondary New Revolving Loan Commitments
only, Borrower shall deliver or cause to be delivered any legal
opinions or other documents reasonably requested by Administrative Agent in connection
with the New Revolving Loan Commitments;




          (vii) in connection with the making of any Secondary New Revolving Loan Commitments
only, and as requested by Administrative Agent, the Loan Parties shall have acknowledged and
ratified that their obligations under the applicable Loan Documents remain in full force and
effect, and continue to guaranty the Obligations under the Loan Documents, as modified by
the implementation of the New Revolving Loan Commitments; and




          (viii) in connection with the making of any New Revolving Loan Commitments, Borrower
shall have paid all reasonable out-of-pocket costs and expenses incurred by the
Administrative Agent in connection with the implementation of the New Revolving Loan
Commitments.



     (c) Each New Revolving Loan Commitment shall be deemed, for all purposes (and shall have
identical terms, including without limitation, pricing, as), the existing Revolving Loan
Commitments (including, without limitation, for purposes of calculating Revolving Facility
Exposure) and each Loan made thereunder (a “New Revolving Loan”) shall be deemed, for all
purposes (and shall have identical terms as), the existing Revolving Loans. In the event an
Eligible Assignee participates in the New Revolving Loan Commitments (in such capacity, a “New
Revolving Loan Lender”), such New Revolving Loan Lender shall be deemed, for all purposes, a
Lender and a Revolving Credit Lender hereunder.



     (d) On any Increased Amount Date on which New Revolving Loan Commitments are effected, subject
to the satisfaction of the foregoing terms and conditions, each of the Revolving Credit Lenders
shall assign to each of the New Revolving Loan Lenders, and each of the New Revolving Loan Lenders
shall purchase from each of the Revolving Credit Lenders, at the principal amount thereof (together
with accrued interest), such interests in the Revolving Loans outstanding on such Increased Amount
Date as shall be necessary in order that, after giving effect to all such assignments and
purchases, such Revolving Loans will be held by existing Revolving Loan Lenders and New Revolving
Loan Lenders ratably in accordance with their Revolving Loan Commitments after giving effect to the
addition of such New Revolving Loan Commitments to the Revolving Loan Commitments.



     (e) Administrative Agent shall notify Lenders promptly upon receipt of Borrower’s notice of
each Increased Amount Date and in respect thereof (y) the New Revolving Loan



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Commitments and the New Revolving Loan Lenders and (z) in the case of each notice to any Revolving Loan Lender, the
respective interests in such Revolving Loan Lender’s Revolving Loans, in each case subject to the
assignments contemplated by this Section.



     (f) Each Joinder Agreement may, without the consent of any other Lenders, effect such
amendments to this Agreement and the other Loan Documents as may be necessary or appropriate, in
the opinion of the Administrative Agent to give effect to the provisions of this Section 2.24.



     SECTION 2.25. Extension of Revolving Credit Maturity Date. (a) Borrower shall have the right to extend the Revolving Credit Maturity Date for three
(3) additional distinct consecutive periods, each of one year in duration (each an “Extension
Period”). To request an extension of the Revolving Credit Maturity Date, Borrower shall
deliver to Administrative Agent at least thirty (30) days’ prior written notice (an “Extension
Notice”; such 30th day after delivery of the Extension Notice being hereinafter
referred to as the “Extension Effectiveness Date”) containing Borrower’s election to extend
the term of the Revolving Credit Maturity Date, which Extension Notice shall be delivered not less
than one (1) month nor more than three (3) months prior to the then scheduled Revolving Credit
Maturity Date. As further provided below, on the applicable Extension Effectiveness Date, the
Revolving Credit Maturity Date shall be extended one year from the then scheduled Revolving Credit
Maturity Date, respectively, subject to the satisfaction of the following conditions precedent:




          (ix) no Event of Default exists on the date such Extension Notice is delivered and no
Default or Event of Default exists on the Extension Effectiveness Date;




          (x) Borrower shall have paid any reasonable out of pocket costs and expenses incurred
by Administrative Agent, in connection with the requested extension (including, without
limitation, reasonable attorneys’ fees and costs);




          (xi) both before and after giving effect to such extension, Borrower and its
Subsidiaries shall be in compliance, on a pro forma basis (after giving effect to such
extension and such other customary adjustments reasonably acceptable to the Administrative
Agent), with each of the covenants set forth in Sections 6.11, 6.12, 6.13, 6.14, 6.15 and
6.16 as of the last day of the most recently ended fiscal quarter after giving effect to
such extension; and




          (xii) Revolving Credit Lenders holding Revolving Credit Commitments, in aggregate, of
at least $2,000,000, shall have consented in writing to such extension at least five (5)
Business Days before the scheduled Extension Effectiveness Date.


For the avoidance of doubt, and notwithstanding anything herein to the contrary, (x) any Revolving
Credit Lender may elect or decline, in its sole discretion, to consent to a request for any
extension of the Revolving Credit Maturity Date and (y) the consent to any such extension of the
Revolving Credit Maturity Date by any Term Lender shall not be required.




     (b) Upon the satisfaction of the conditions set forth in clauses (i) through (iv) of Section
2.25(a), the Revolving Credit Maturity Date shall be deemed extended on the Extension Effectiveness
Date. If the Revolving Credit Maturity Date is extended, all the terms and



60









 







conditions of the Credit Documents shall continue to apply, except that (i) Borrower shall have no further option to
extend the Revolving Credit Maturity Date beyond the expiration of the third occurring Extension
Period, (ii) as of each Extension Effectiveness Date, the Revolving Credit Commitments shall be
deemed permanently reduced by an amount equal to the Revolving Credit Commitments of those
Revolving Credit Lenders that did not consent in writing to such extension at least five (5)
Business Days before the scheduled Extension Effectiveness Date and whose Revolving Credit
Commitments were not otherwise assigned to one or more replacement Revolving Credit Lenders in
accordance with Section 2.21(a), (iii) such reduction in the Revolving Credit Commitments shall be
made ratably among solely the applicable Revolving
Credit Lenders that did not so consent in accordance with their Pro Rata Percentages and whose
Revolving Credit Commitments were not otherwise assigned to one or more replacement Revolving
Credit Lenders in accordance with Section 2.21(a) (and not, for the avoidance of doubt, all
Revolving Credit Lenders) and (iv) notwithstanding anything in Section 2.13 or otherwise contained
herein to the contrary, Borrower shall pay to the Administrative Agent for the account of the
applicable Revolving Credit Lenders that did not so consent and whose Revolving Credit Commitments
were not otherwise assigned to one or more replacement Revolving Credit Lenders in accordance with
Section 2.21(a), on the Extension Effectiveness Date, (A) the amount of Revolving Loans outstanding
as of such date attributable to such Revolving Credit Lenders in accordance with their Pro Rata
Percentages and (B) the Commitment Fees on the amount of the Commitments so terminated or reduced
accrued to but excluding the date of such termination or reduction (it being understood and agreed
that Borrower shall be permitted to make additional borrowings of Revolving Loans from continuing
Revolving Credit Lenders to fund such payments, in accordance with and subject to the limitations
of this Section 2 and Section 4).



ARTICLE III.




Representations and Warranties




     The Borrower represents and warrants to the Administrative Agent, the Collateral Agent, the
Issuing Bank and each of the Lenders that:



     SECTION 3.01. Organization; Powers. The Borrower and each Subsidiary (a) is duly organized or formed, validly existing and in
good standing under the laws of the jurisdiction of its organization or formation, (b) has all
requisite corporate or limited liability company power and authority, and the legal right, to own
and operate its property and assets, to lease the property it operates as lessee and to carry on
its business as now conducted and as proposed to be conducted, (c) is qualified to do business in,
and is in good standing in, every jurisdiction where such qualification is required (except where
failure to do so could not reasonably be expected to have a Material Adverse Effect) and (d) has
the corporate or limited liability company power and authority, and the legal right, to execute,
deliver and perform its obligations under this Agreement, each of the other Loan Documents, the
Acquisition Documentation and each other agreement or instrument contemplated hereby or thereby to
which it is or will be a party, including, in the case of the Borrower, to borrow hereunder, in the
case of each Loan Party, to grant the Liens contemplated to be granted by it under the Security
Documents and, in the case



61









 







of each Subsidiary Guarantor, to Guarantee the Obligations as
contemplated by the Guarantee and Collateral Agreement.



     SECTION 3.02. Authorization; No Conflicts. The Transactions (a) have been duly authorized by all requisite corporate, partnership or
limited liability company and, if required, stockholder, partner or member action and (b) will not
(i) violate (A) any provision of law, statute, rule or regulation, or of the certificate or
articles of incorporation or other constitutive documents or by-laws of the Borrower or any
Subsidiary, (B) any order of any Governmental Authority or arbitrator or (C) any provision of any
indenture, agreement or other instrument to which the Borrower or any Subsidiary is a party or by
which any of them or any of their property is or may be bound (except where such violation could
not reasonably be expected to have a Material Adverse Effect), (ii) be in conflict with, result in
a breach of or constitute (alone or with notice or lapse of time or both) a default under, or give
rise to any right to accelerate or to require the prepayment, repurchase or redemption of any
obligation under any such indenture, agreement or other instrument or (iii) result in the creation
or imposition of any Lien upon or with respect to any property or assets now owned or hereafter
acquired by the Borrower or any Subsidiary (other than Liens created under the Security Documents
or as permitted by this Agreement).



     SECTION 3.03. Enforceability. This Agreement has been duly executed and delivered by the Borrower and constitutes, and
each other Loan Document when executed and delivered by each Loan Party party thereto will
constitute, a legal, valid and binding obligation of such Loan Party enforceable against such Loan
Party in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization,
moratorium or other laws affecting creditors’ rights generally and subject to general principles of
equity, regardless of whether considered in a proceeding in equity or at law.



     SECTION 3.04. Governmental Approvals. No action, consent or approval of, registration or filing with, Permit from, notice to, or
any other action by, any Governmental Authority is or will be required in connection with the
Transactions, except for (a) the filing of UCC financing statements and filings with the United
States Patent and Trademark Office and the United States Copyright Office, (b) recordation of the
Mortgages, (c) such as have been made or obtained and are in full force and effect, other than, in
the case of each of the foregoing, the failure of which to obtain or make could not reasonably be
expected to have a Material Adverse Effect or which are not material to the consummation of the
Transactions.



     SECTION 3.05. Financial Statements. (a) The Borrower has heretofore furnished to the Lenders the consolidated balance
sheets and related statements of income, stockholder’s equity and cash flows of each of the
Borrower and USAgencies as of and for the fiscal years ended December 31, 2005, December 31, 2004
and December 31, 2003 in each case audited by and accompanied by the opinion of (i) in the case of
the Borrower, PricewaterhouseCoopers LLP, and (ii) in the case of USAgencies, Postlethwaite &
Netterville, in both cases independent public accountants. Such financial statements present
fairly in all material respects the financial condition and results of operations and cash flows of
USAgencies, the Borrower and each of their consolidated Subsidiaries as of such dates and for such
periods. Such balance sheets and the notes thereto disclose all material liabilities, direct or
contingent, of USAgencies, the Borrower and each of their consolidated Subsidiaries as of the dates
thereof. Such financial statements were prepared in accordance with GAAP applied on a consistent
basis.



62









 





     (b) The Borrower has heretofore delivered to the Lenders its unaudited pro forma consolidated
balance sheet and related statements of income, stockholder’s equity and cash flows as of September
30, 2006, prepared giving effect to the Transactions as if they had occurred, with respect to such
balance sheet, on such date and, with respect to such other financial statements, on the first day
of the 12-month period ending on such date. Such pro forma financial statements (i) have been
prepared in good faith by the Borrower, based on the assumptions used to prepare the pro forma
financial information contained in the Confidential Information Memorandum (which assumptions are
believed by the Borrower on the date hereof and on the Closing Date to be reasonable), (ii) are
based on the best information available to the Borrower after due inquiry as of the date of
delivery thereof, (iii) accurately reflect all material adjustments required to be made to give
effect to the Transactions and (iv) present fairly in all material respects on a pro forma basis
the estimated consolidated financial position of the Borrower and its consolidated Subsidiaries as
of such date and for such period, assuming that the Transactions had actually occurred at such date
or at the beginning of such period, as the case may be.



     SECTION 3.06. No Material Adverse Change. No event, change or condition has occurred since December 31, 2005 that has caused, or
could reasonably be expected to cause, a Material Adverse Effect.



     SECTION 3.07. Title to Properties; Possession Under Leases. (a) Each of the Borrower and each Subsidiary has good and valid title to, or valid
leasehold interests in, all its material properties and assets (including, good and marketable
title to, or valid leasehold interests in all its material Real Property), except for minor defects
in title that, in the aggregate, are not substantial in amount and do not materially detract from
the value of the property subject thereto and do not interfere in any material respect with its
ability to conduct its business as currently conducted or to utilize such properties and assets for
their intended purposes. Each parcel of Real Property is free from material structural defects and
all building systems contained therein are in good working order and condition, ordinary wear and
tear excepted, suitable for the purposes for which they are currently being used. No portion of
the Real Property has suffered any material damage by fire or other casualty loss that has not
heretofore been completely repaired and restored to its original condition. Each parcel of Real
Property and the current use thereof complies with all applicable laws (including building and
zoning ordinances and codes) and with all insurance requirements; the Borrower is not a
non-conforming user of any Real Property.



     (b) Each of the Borrower and the Subsidiaries, and, to the knowledge of the Borrower, each
other party thereto, has complied with all obligations under all material leases to which it is a
party and all such leases are legal, valid, binding and in full force and effect and are
enforceable in accordance with their terms. Each of the Borrower and the Subsidiaries enjoys
peaceful and undisturbed possession under all such material leases. No landlord Lien has been
filed, and, to the knowledge of the Borrower, no claim is being asserted, with respect to any lease
payment under any material lease. None of the Real Property is subject to any lease, sublease,
license or other agreement granting to any person (other than the Borrower and their Affiliates)
any right to the use, occupancy, possession or enjoyment of the Real Property or any portion
thereof. The Borrower has delivered to the Administrative Agent true, complete and correct
copies of all leases (whether as landlord or tenant) of Real Property.



63









 





     (c) None of the Borrower or any of the Subsidiaries has received any notice of, nor has any
knowledge of, any pending or contemplated condemnation proceeding affecting the Real Properties or
any sale or disposition thereof in lieu of condemnation.



     (d) None of the Borrower or any of the Subsidiaries is obligated under any right of first
refusal, option or other contractual right to sell, assign or otherwise dispose of any Real
Property or any interest therein.



     (e) There are no pending or, to the knowledge of the Borrower, proposed special or other
assessments for public improvements or otherwise affecting any material portion of the owned Real
Property, nor are there any contemplated improvements to such owned Real Property that may result
in such special or other assessments. The Borrower has not suffered, permitted or initiated the
joint assessment of any owned Real Property with any other real property constituting a separate
tax lot. Each owned parcel of Real Property is comprised of one or more parcels, each of which
constitutes a separate tax lot and none of which constitutes a portion of any other tax lot.



     (f) The Borrower has obtained all permits, licenses, variances and certificates required by
applicable law to be obtained and necessary to the use and operation of each parcel of Real
Property, except where the failure to have such permit, license, certificate or variance would not
prohibit the use of such parcel of Real Property as it is currently being used. The use being made
of each parcel of Real Property conforms with the certificate of occupancy and/or such other
permits, licenses, variances and certificates for such Real Property and any other restrictions,
covenants or conditions affecting such Real Property, except for any such nonconformity that could
not reasonably be expected to be enjoined or to result in material fines.



     (g) (i) each parcel of Real Property has adequate rights of access to public ways to permit
the Real Property to be used for its intended purpose, and is served by installed, operating and
adequate water, electric, gas, telephone, sewer, sanitary sewer and storm drain facilities; (ii)
all public utilities necessary to the continued use and enjoyment of each parcel of Real Property
as used and enjoyed on the Closing Date are located in the public right-of-way abutting the
premises, and all such utilities are connected so as to serve such Real Property without passing
over other Property except for land of the utility company providing such utility service or, in
the case of leased Real Property, contiguous land owned by the lessor of such leased Real Property;
(iii) each parcel of Real Property, including each leased parcel, has adequate available parking to
meet legal and operating requirements; (iv) all roads necessary for the full utilization of each
parcel of Real Property for its current purpose have been completed and dedicated to public use and
accepted by all governmental authorities or are the subject of access easements for the benefit of
such Real Property; (v) no building or structure constituting Real Property or any appurtenance
thereto or equipment thereon, or the use, operation or maintenance thereof, violates any
restrictive covenant or encroaches on any easement or on any property owned by others, which
violation or encroachment interferes with the use or could materially adversely affect the value of
such building, structure or appurtenance or which encroachment is necessary for the operation of
the business at any Real Property; and (vi) all buildings, structures, appurtenances
and equipment necessary for the use of each parcel of Real Property for the purpose for which
it is currently being used are located on the real property encumbered by such Mortgage.



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     SECTION 3.08. Subsidiaries. (a) Schedule 3.08(a) sets forth as of the Closing Date a list of all Subsidiaries,
after giving effect to the Acquisition, including each Subsidiary’s exact legal name (as reflected
in such Subsidiary’s certificate or articles of incorporation or other constitutive documents) and
jurisdiction of incorporation or formation and the percentage ownership interest of the Borrower
(direct or indirect) therein, and identifies each Subsidiary that is Loan Party. The shares of
capital stock or other Equity Interests so indicated on Schedule 3.08(a) are fully paid and
non-assessable and are owned by the Borrower, directly or indirectly, free and clear of all Liens
(other than Liens created under the Security Documents).



     (b) As of the Closing Date, there are no restrictions on any Regulated Insurance Subsidiary
which prohibit or otherwise restrict the ability of any Regulated Insurance Subsidiary to (i) pay
dividends or make other distributions or pay any Indebtedness owed to the Borrower or any
Subsidiary, (ii) make loans or advances to the Borrower or any Subsidiary, (iii) transfer any of
its properties or assets to the Borrower or any Subsidiary, (iv) guarantee the Obligations, other
than prohibitions or restrictions existing under or by reason of (A) customary nonassignment
provisions entered into in the ordinary course of business and consistent with past practices and
(B) purchase money obligations for property acquired in the ordinary course of business, so long as
such obligations are permitted under this Agreement, (v) dividend or distribute to the Borrower or
any Subsidiary amounts equal to all state and federal income tax expenses incurred by the Regulated
Insurance Subsidiaries, or (vi) conduct business in the ordinary course in the jurisdictions in
which such Regulated Insurance Subsidiary conducts its Insurance Business, including, without
limitation, as set forth on Schedule 3.26, other than, in the case of each of clause (i) through
clause (vi), prohibitions or restrictions existing under or by reason of (A) this Agreement or the
other Loan Documents, (B) Requirements of Law or (C) as set forth on Schedule 3.08(b).



     SECTION 3.09. Litigation; Compliance with Laws. (a) There are no actions, investigations, suits or proceedings at law or in equity or
by or before any arbitrator or Governmental Authority now pending or, to the knowledge of the
Borrower, threatened against or affecting the Borrower or any Subsidiary or any business, property
or rights of any such person (i) that involve any Loan Document or the Transactions or (ii) except
as set forth on Schedule 3.09, as to which there is a reasonable possibility of an adverse
determination and that, if adversely determined, could reasonably be expected, individually or in
the aggregate, to result in a Material Adverse Effect.



     (b) None of the Borrower or any of the Subsidiaries or any of their respective material
properties or assets is in violation of, nor will the continued operation of their material
properties and assets as currently conducted violate, any law, rule or regulation (including any
zoning, building, Environmental Law, ordinance, code or approval or any building permits) or any
restrictions of record or agreements affecting the Mortgaged Property, or is in default with
respect to any judgment, writ, injunction, decree or order of any Governmental Authority, where
such violation or default, individually or in the aggregate, could reasonably be expected to
result in a Material Adverse Effect.



     (c) Certificates of occupancy, if any, and permits are in effect for each Mortgaged Property
as currently constructed, and true and complete copies of such certificates of



65









 







occupancy, if any, have been delivered to the Collateral Agent as mortgagee with respect to each Mortgaged Property.



     SECTION 3.10. Agreements. (a) None of the Borrower or any of the Subsidiaries is a party to any agreement or
instrument, or subject to any corporate restriction, that, individually or in the aggregate, has
resulted or could reasonably be expected to result in a Material Adverse Effect.



     (b) None of the Borrower or any of the Subsidiaries is in default in any manner under any
provision of any indenture or other agreement or instrument evidencing Indebtedness, or any other
material agreement or instrument to which it is a party or by which it or any of its properties or
assets are or may be bound where such default, individually or in the aggregate, could reasonably
be expected to result in a Material Adverse Effect. No Default has occurred and is continuing.



     SECTION 3.11. Federal Reserve Regulations. (a) None of the Borrower or any of the Subsidiaries is engaged principally, or as one
of its important activities, in the business of extending credit for the purpose of buying or
carrying Margin Stock.



     (b) No part of the proceeds of any Loan or any Letter of Credit will be used, whether directly
or indirectly, and whether immediately, incidentally or ultimately, for purchasing or carrying
Margin Stock or for the purpose of purchasing, carrying or trading in any securities under such
circumstances as to involve the Borrower in a violation of Regulation X or to involve any broker or
dealer in a violation of Regulation T. No Indebtedness being reduced or retired out of the
proceeds of any Loans or Letters of Credit was or will be incurred for the purpose of purchasing or
carrying any Margin Stock. Following the application of the proceeds of the Loans and the Letters
of Credit, Margin Stock will not constitute more than 25% of the value of the assets of the
Borrower and the Subsidiaries. None of the transactions contemplated by this Agreement will
violate or result in the violation of any of the provisions of the Regulations of the Board,
including Regulation T, U or X. If requested by any Lender or the Administrative Agent, the
Borrower will furnish to the Administrative Agent and each Lender a statement to the foregoing
effect in conformity with the requirements of FR Form G-3 or FR Form U-1 referred to in Regulation
U.



     SECTION 3.12. Investment Company Act. None of the Borrower or any of the Subsidiaries is an “investment company” as defined in,
or subject to regulation under, the Investment Company Act of 1940, as amended.



     SECTION 3.13. Use of Proceeds. The Borrower will use the proceeds of the Term Loans solely to pay the Acquisition
Consideration. The Borrower will use the proceeds of the Revolving Loans and the Swingline Loans
to pay fees and expenses related to the Transactions and, from time to time, for general corporate
purposes, including, without limitation payments in accordance with Section 6.06(a)(iii). The
Borrower will request the issuance of Letters of Credit solely to support payment obligations
incurred in the ordinary course of business by the Borrower and its Subsidiaries.



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     SECTION 3.14. Tax Returns. Each of the Borrower and each of the Subsidiaries has timely filed or timely caused to be
filed all federal, material state, material local and material foreign tax returns or materials
required to have been filed by it and all such tax returns are correct and complete in all material
respects. (a) Each of the Borrower and each of the Subsidiaries has timely paid or timely caused
to be paid all Taxes due and payable by it and all assessments received by it, except Taxes that
are being contested in good faith by appropriate proceedings and for which the Borrower or such
Subsidiary as applicable, shall have set aside on its books adequate reserves in accordance with
GAAP, (b) each of the Borrower and each of the Subsidiaries has made adequate provision in
accordance with GAAP for all Taxes not yet due and payable and (c) no Tax Lien has been filed, and
to the knowledge of the Borrower and each of the Subsidiaries, no claim is being asserted, with
respect to any Tax except, in the case clauses (a), (b) and (c) with respect to such taxes and
Liens that do not exceed $2,500,000 in the aggregate at any time outstanding. None of the Borrower
or any of the Subsidiaries (a) intends to treat the Loans or any of the transactions contemplated
by any Loan Document or the Acquisition as being a “reportable transaction” (within the meaning of
Treasury Regulation Section 1.6011-4) or (b) is aware of any facts or events that would result in
such treatment.



     SECTION 3.15. No Material Misstatements; Acquisition Documentation. (a) The Borrower has disclosed to the Arranger, the Administrative Agent and the
Lenders all agreements, instruments and corporate or other restrictions to which the Borrower or
any of the Subsidiaries is subject, and all other matters known to any of them, that, individually
or in the aggregate, could reasonably be expected to result in a Material Adverse Effect. None of
(i) the Confidential Information Memorandum or (ii) any other information, report, financial
statement, exhibit or schedule furnished by or on behalf of the Borrower or any Subsidiary to the
Arranger, the Administrative Agent or any Lender for use in connection with the transactions
contemplated by the Loan Documents or in connection with the negotiation of any Loan Document or
included therein or delivered pursuant thereto, when taken as a whole, contained, contains or will
contain any material misstatement of fact or omitted, omits or will omit to state any material fact
necessary to make the statements therein, in the light of the circumstances under which they were,
are or will be made, not misleading; provided that to the extent any such information,
report, financial statement, exhibit or schedule was based upon or constitutes a forecast or
projection, the Borrower represents only that it acted in good faith and utilized assumptions
believed by it to be reasonable at the time (it being understood that projections are subject to
significant uncertainty and contingencies many of which are beyond the control of the Borrower and
that no assurances can be given that such projections will be realized).



     (b) As of the Closing Date, the representations and warranties of the applicable Loan Parties
and their Affiliates set forth in the Acquisition Documentation are true and correct in all
material respects.



     SECTION 3.16. Employee Benefit Plans. Each of the Borrower and each of its ERISA Affiliates is in compliance in all material
respects with the applicable provisions of ERISA and the Tax Code and the regulations and published
interpretations thereunder. No ERISA Event has occurred or is reasonably expected to occur that,
when taken together with all other such ERISA Events, could reasonably be expected to result in
material liability of the Borrower or any of its ERISA Affiliates. The present value of all
benefit liabilities under each Benefit Plan (based on the assumptions used for purposes of
Statement of Financial Accounting



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Standards No. 87) did not, as of the last annual valuation date
applicable thereto, exceed by more than $1,000,000 the fair market value of the assets of such
Benefit Plan, and the present value of all benefit liabilities of all underfunded Benefit Plans
(based on the assumptions used for purposes of Statement of Financial Accounting Standards No. 87)
did not, as of the last annual valuation dates applicable thereto, exceed by more than $1,000,000
the fair market value of the assets of all such underfunded Benefit Plans.



     SECTION 3.17. Environmental Matters. (a) Except as set forth in Schedule 3.17 and except with respect to any other matters
that, individually or in the aggregate, could not reasonably be expected to result in a Material
Adverse Effect, none of the Borrower or any of the Subsidiaries:




     (i) has failed to comply with any Environmental Law or to take, in a timely manner, all
actions necessary to obtain, maintain, renew and comply with any Environmental Permit, and
all such Environmental Permits are in full force and effect and not subject to any
administrative or judicial appeal;




     (ii) has become a party to any governmental, administrative or judicial proceeding
commenced pursuant to any Environmental Law or possesses knowledge of any such proceeding
that has been threatened under Environmental Law;




     (iii) has received notice of, become subject to, or is aware of any facts or
circumstances that could form the basis for, any Environmental Liability other than those
which have been fully and finally resolved and for which no obligations remain outstanding;




     (iv) possesses knowledge that any Mortgaged Property (A) is subject to any Lien,
restriction on ownership, occupancy, use or transferability imposed pursuant to
Environmental Law or (B) contains or previously contained Hazardous Materials of a form or
type or in a quantity or location that could reasonably be expected to result in any
Environmental Liability;




     (v) possesses knowledge that there has been a Release or threat of Release of Hazardous
Materials at or from the Mortgaged Properties (or from any facilities or other properties
formerly owned, leased or operated by the Borrower or any of the
Subsidiaries) in violation of, or in amounts or in a manner that could give rise to
liability under, any Environmental Law;




     (vi) has generated, treated, stored, transported, or Released Hazardous Materials from
the Mortgaged Properties (or from any facilities or other properties formerly owned, leased
or operated by the Borrower or any of the Subsidiaries) in violation of, or in a manner or
to a location that could give rise to liability under, any Environmental Law;




     (vii) is aware of any facts, circumstances, conditions or occurrences in respect of any
of the facilities and properties owned, leased or operated that could (A) form the basis of
any action, suit, claim or other judicial or administrative proceeding relating to liability
under or noncompliance with Environmental Law on the part of the Borrower or



68









 







any of the Subsidiaries or (B) or interfere with or prevent continued compliance with Environmental
Laws by the Borrower or the Subsidiaries; or




     (viii) has pursuant to any order, decree, judgment or agreement by which it is bound or
has assumed the Environmental Liability for any Person.



     SECTION 3.18. Insurance. Schedule 3.18 sets forth a true, complete and correct description of all insurance
maintained by or on behalf of the Borrower and the Subsidiaries as of the Closing Date. As of the
Closing Date, such insurance is in full force and effect and all premiums have been duly paid. The
Borrower and the Subsidiaries are insured by financially sound and reputable insurers and such
insurance is in such amounts and covering such risks and liabilities (and with such deductibles,
retentions and exclusions) as are in accordance with normal and prudent industry practice.



     SECTION 3.19. Security Documents. (a) The Guarantee and Collateral Agreement is effective to create in favor of the
Collateral Agent, for the ratable benefit of the Secured Parties, a legal, valid, binding and
enforceable security interest in the Collateral described therein and proceeds thereof and (i) in
the case of the Pledged Collateral, upon the earlier of (A) when such Pledged Collateral is
delivered to the Collateral Agent and (B) when financing statements in appropriate form are filed
in the offices specified on Schedule 3.19(a) and (ii) in the case of all other Collateral described
therein (other than Intellectual Property Collateral), when financing statements in appropriate
form are filed in the offices specified on Schedule 3.19(a), the Guarantee and Collateral Agreement
shall constitute a fully perfected Lien on, and security interest in, all right, title and interest
of the Secured Parties in such Collateral and proceeds thereof, as security for the Obligations, in
each case prior and superior to the rights of any other person (except, in the case of all
Collateral other than Pledged Collateral, with respect to Liens expressly permitted by Section
6.02).



     (b) Each Intellectual Property Security Agreement is effective to create in favor of the
Collateral Agent, for the ratable benefit of the Secured Parties, a legal, valid, binding and
enforceable security interest in the Intellectual Property Collateral described therein and
proceeds thereof. When each Intellectual Property Security Agreement is filed in the United
States Patent and Trademark Office and the United States Copyright Office, respectively, together
with financing statements in appropriate form filed in the offices specified in Schedule 3.19(a),
such Intellectual Property Security Agreement shall constitute a fully perfected Lien on, and
security interest in, all right, title and interest of the grantors thereunder in the Intellectual
Property Collateral and proceeds thereof, as security for the Obligations, in each case prior and
superior in right to any other person (except with respect to Liens expressly permitted by Section
6.02) (it being understood that subsequent recordings in the United States Patent and Trademark
Office and the United States Copyright Office may be necessary to perfect a lien on registered
trademarks, trademark applications and copyrights acquired by the grantors after the date hereof).



     (c) Each of the Mortgages is effective to create in favor of the Collateral Agent, for the
ratable benefit of the Secured Parties, a legal, valid, binding and enforceable Lien on, and
security interest in, all of the Loan Parties’ right, title and interest in and to the Mortgaged
Property thereunder and proceeds thereof, and when the Mortgages are filed in the offices



69









 







specified on Schedule 3.19(c), each such Mortgage shall constitute a fully perfected Lien on, and security
interest in, all right, title and interest of the grantors thereof in such Mortgaged Property and
proceeds thereof, as security for the Obligations, in each case prior and superior in right to any
other person (except with respect to Liens expressly permitted by Section 6.02).



     SECTION 3.20. Location of Real Property. Schedule 3.20 lists completely and correctly as of the Closing Date all Real Property and
the addresses thereof, indicating for each parcel whether it is owned or leased, including in the
case of leased Real Property, the landlord name, lease date and lease expiration date. The
Borrower and the Subsidiaries own in fee or have valid leasehold interests in, as the case may be,
all the real property set forth on Schedule 3.20.



     SECTION 3.21. Labor Matters. As of the Closing Date, there are no strikes, lockouts or slowdowns against the Borrower or
any Subsidiary pending or, to the knowledge of the Borrower, threatened. Except to the extent any
of the following could not reasonably be expected to have a Material Adverse Effect, (a) the hours
worked by and payments made to employees of the Borrower and the Subsidiaries have not been in
violation of the Fair Labor Standards Act or any other applicable Federal, state, local or foreign
law dealing with such matters and (b) payments due from the Borrower or any Subsidiary, or for
which any claim may be made against the Borrower or any Subsidiary, on account of wages and
employee health and welfare insurance and other benefits, have been paid or accrued as a liability
on the books of the Borrower or such Subsidiary. The consummation of the Transactions will not
give rise to any right of termination or right of renegotiation on the part of any union under any
collective bargaining agreement to which the Borrower or any Subsidiary is bound.



     SECTION 3.22. Liens. There are no Liens of any nature whatsoever on any of the properties or assets of the
Borrower or any of the Subsidiaries (other than Liens expressly permitted by Section 6.02).



     SECTION 3.23. Intellectual Property. Each of the Borrower and each of the Subsidiaries owns, or is licensed to use, all
trademarks, tradenames, copyrights, patents and other intellectual property material to its
business, and the use thereof by the Borrower and the Subsidiaries does not infringe upon the
rights of any other person, except for any such infringements that, individually or in the
aggregate, could not reasonably be expected to result in a Material Adverse Effect.



     SECTION 3.24. Solvency. Immediately after the consummation of the Transactions to occur on the Closing Date and
immediately following the making of each Loan (or other extension of credit hereunder) and after
giving effect to the application of the proceeds of each Loan (or other extension of credit
hereunder), (a) the fair value of the assets of the Loan Parties, taken as a whole, will exceed its
debts and liabilities, subordinated, contingent or otherwise; (b) the present fair saleable value
of the property of the Loan Parties, taken as a whole, will be greater than the amount that will be
required to pay the probable liability of its debts and other liabilities, subordinated, contingent
or otherwise, as such debts and other liabilities become absolute and matured; (c) the Loan
Parties, taken as a whole, will be able to pay its debts and liabilities, subordinated, contingent
or otherwise, as such debts and liabilities become absolute and matured; and (d) the Loan Parties,
taken as a whole, will not have



70









 







unreasonably small capital with which to conduct the business in
which it is engaged as such business is now conducted and is proposed to be conducted following the
Closing Date.



     SECTION
3.25. Acquisition Documentation. The Acquisition Documentation listed on Schedule 3.25 constitutes all of the material
agreements, instruments and undertakings to which the Borrower or any of the Subsidiaries is bound
or by which any of their respective property or assets is bound or affected relating to, or arising
out of, the Acquisition. None of such material agreements, instruments or undertakings has been
amended, supplemented or otherwise modified in any manner materially adverse to the Agent or the
Lenders, and all such material agreements, instruments and undertakings are in full force and
effect. Neither of the Borrower or, to the best of the Borrower’s knowledge, USAgencies is in
default under any of the Acquisition Documentation as of the Closing Date and neither of the
Borrower or, to the best of the Borrower’s knowledge, USAgencies has the right to terminate any of
the Acquisition Documentation.



     SECTION 3.26. Permits. (a) Each Loan Party has obtained and holds all Permits required in respect of all Real
Property and for any other property otherwise operated by or on behalf of, or for the benefit of,
such person and for the operation of each of its businesses as presently conducted and as proposed
to be conducted, (b) all such Permits are in full force and effect, and each Loan Party has
performed and observed all requirements of such Permits, (c) no event has occurred that allows or
results in, or after notice or lapse of time would allow or result in, revocation or
termination by the issuer thereof or in any other impairment of the rights of the holder of
any such Permit, (d) no such Permits contain any restrictions, either individually or in the
aggregate, that are materially burdensome to any Loan Party, or to the operation of any of its
businesses or any property owned, leased or otherwise operated by such person and (e) the Borrower
has no knowledge or reason to believe that any Governmental Authority is considering limiting,
suspending, revoking or renewing on materially burdensome terms any such Permit. Schedule 3.26
lists, with respect to each Regulated Insurance Subsidiary, as of the Closing Date, all of the
jurisdictions in which such Regulated Insurance Subsidiary holds Permits (including, without
limitation Permits from Insurance Regulators and any other Permits necessary to transact Insurance
Business), and indicates (i) the line or lines of insurance in which each such Regulated Insurance
Subsidiary is permitted to be engaged with respect to each license therein listed. (ii) the
expiration of such license, and (iii) the status of any renewal thereof.



     SECTION 3.27. Reinsurance Agreements. There are no material liabilities outstanding as of the Closing Date under any Reinsurance
Agreement. Each Reinsurance Agreement is in full force and effect. No Regulated Insurance
Subsidiary or any other party is in breach of or default under any such Reinsurance Agreement,
except any such breach or default which could not reasonably be expected to have a Material Adverse
Effect. Borrower has no reason to believe that the financial condition of any other party to any
such Reinsurance Agreement is impaired such that a default thereunder by such party could
reasonable be anticipated and expected to have a Material Adverse Effect. Each Reinsurance
Agreement is qualified under all applicable Requirements of Law to receive the statutory credit
assigned to such Reinsurance Agreement in the relevant annual statement or quarterly statement at
the time prepared. Each person to whom any Regulated Insurance Subsidiary has ceded any material
liability pursuant to any Reinsurance Agreement on the Closing Date (other than any such person



71









 







that is the Borrower or a Subsidiary thereof in respect of which no such representation shall be
required) has a rating of “B++” or better by A.M. Best.



     SECTION 3.28. Premium Finance Agreements. The forms of Premium Finance Agreement furnished to Lender by LIFCO, copies of which are
attached hereto as Exhibits K-1, K-2 and K-3, are forms which are currently outstanding and/or
which are currently being used to evidence the financing of all current, new and renewal insurance
premiums produced by USCasualty in Louisiana and USDirect in Illinois and Alabama. Exhibit K1 is
the form currently being used by LIFCO on behalf of USCasualty in Louisiana, Exhibit K2 is the form
currently being used by LIFCO on behalf of USDirect in Illinois, and Exhibit K3 is the form
currently being used by LIFCO on behalf of USDirect in Alabama. No subsidiary of Borrower
(including any Premium Finance Co.) provides premium financing to policyholders of any Regulated
Insurance Subsidiary other than pursuant to a Premium Finance Agreement in the form of Exhibit K1,
K2 or K3. No Regulated Insurance Subsidiary has any Installment Agreements outstanding as of the
Closing Date. Borrower shall notify Lender in writing of any changes to the forms of Premium
Finance Agreements being used by Borrower or any of its Subsidiaries on behalf of its Regulated
Insurance Subsidiaries to the extent of any material changes to the forms.



     SECTION
3.29. Senior Indebtedness. All Obligations of the Borrower and each of its Subsidiaries constitute “Senior Indebtedness”
under the Subordinated Debt and “Senior Indebtedness” (or such similar term utilized to define or
describe any prior-ranking senior Indebtedness for purposes of the subordination provisions set
forth therein) under the Qualified Additional Subordinated Debt.



     SECTION
3.30. Closing Date Inactive Subsidiaries. As of the Closing Date, each of Instant Auto Insurance Agency of Arizona, Inc., Instant Auto
Insurance Agency of Colorado, Inc., Instant Auto Insurance Agency of Indiana, Inc., Instant Auto
Insurance Agency of New Mexico, Inc. and Affirmative Insurance Services of Pennsylvania, Inc.
conducts no operations and has no assets and no liabilities, in each case, individually or in the
aggregate, with a fair market value in excess of $500,000.



ARTICLE IV.




Conditions of Lending




     The obligations of the Lenders to make Loans hereunder and the obligations of the Issuing Bank
to issue Letters of Credit are subject to the satisfaction (or waiver in accordance with Section
9.08) of the following conditions:



     SECTION
4.01.  All Credit Events. On the date of each Borrowing, including each Borrowing of a Swingline Loan, and on the
date of each issuance, amendment, extension or renewal of a Letter of Credit (each such event being
called a “Credit Event”):




     (a) The Administrative Agent shall have received a notice of such Borrowing as required
by Section 2.03 (or such notice shall have been deemed given in accordance with Section
2.03) or, in the case of the issuance, amendment, extension or renewal of a Letter of
Credit, the Issuing Bank and the Administrative Agent shall have received a notice
requesting the issuance, amendment, extension or renewal of such Letter of Credit



72









 







as required by Section 2.23(b) or, in the case of the Borrowing of a Swingline Loan, the
Swingline Lender and the Administrative Agent shall have received a notice requesting such
Swingline Loan as required by Section 2.22(b).




     (b) In the case of each Credit Event (other than Credit Events occurring on the Closing
Date), the representations and warranties set forth in the Loan Documents shall be true and
correct in all material respects on and as of the date of such Credit Event, with the same
effect as though made on and as of such date, except to the extent such representations and
warranties expressly relate 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) At the time of and immediately after such Credit Event, no Event of Default or
Default shall have occurred and be continuing



     Each Credit Event shall be deemed to constitute a joint and several representation and
warranty by the Borrower on the date of such Credit Event as to the matters specified in paragraphs
(b) and (c) of this Section 4.01.



     SECTION 4.02. First Credit Event. On the Closing Date:




     (a) The Administrative Agent shall have received, on behalf of itself, the Lenders and
the Issuing Bank, a favorable written opinion of (i) McDermott Will & Emery LLP, counsel for
the Borrower and the Subsidiaries, substantially to the effect set forth in Exhibit J, and
(ii) each special and local counsel to the Borrower and the Subsidiaries as the
Administrative Agent may reasonably request, in each case (A) dated the Closing Date, (B)
addressed to the Administrative Agent, the Issuing Bank, the Arranger and the Lenders and
(C) covering such matters relating to the Loan Documents and the Transactions as the
Administrative Agent shall reasonably request and which are customary for transactions of
the type contemplated herein, and the Borrower and the Subsidiaries hereby request such
counsel to deliver such opinions.




     (b) The Administrative Agent shall have received (i) a copy of the certificate or
articles of incorporation or other formation documents, including all amendments thereto, of
each Loan Party, certified as of a recent date by the Secretary of State of the state of its
organization, and a certificate as to the good standing of each Loan Party as of a recent
date, from such Secretary of State; (ii) a certificate of the Secretary or Assistant
Secretary of each Loan Party dated the Closing Date and certifying (A) that attached thereto
is a true and complete copy of the by-laws, operating agreement or similar document of such
Loan Party as in effect on the Closing Date and at all times since a date prior to the date
of the resolutions described in clause (B) below, (B) that attached thereto is a true and
complete copy of resolutions duly adopted by the Board of Directors, managers or members, as
applicable, of such Loan Party authorizing the execution, delivery and performance of the
Loan Documents to which such person is a party, in the case of the Borrower, the borrowings
hereunder, in the case of each Loan Party, the granting of the Liens contemplated to be
granted by it under the Security Documents and, in the case of each Subsidiary Guarantor,
the Guaranteeing of the Obligations as



73









 







contemplated by the Guarantee and Collateral
Agreement, and that such resolutions have not been modified, rescinded or amended and are in
full force and effect, (C) that the certificate or articles of incorporation or other
formation documents of such Loan Party have not been amended since the date of the last
amendment provided to the Administrative Agent and (D) as to the incumbency and specimen
signature of each officer executing any Loan Document or any other document delivered in
connection herewith on behalf of such Loan Party; (iii) a certificate of another officer as
to the incumbency and specimen signature of the Secretary or Assistant Secretary executing
the certificate pursuant to (ii) above; and (iv) such other documents as the Administrative
Agent, the Issuing Bank or the Lenders may reasonably request.




     (c) The Administrative Agent shall have received a certificate, dated the Closing Date
and signed by a Financial Officer of the Borrower, confirming compliance with the conditions
precedent set forth in paragraphs (b) and (c) of Section 4.01.




     (d) The Administrative Agent shall have received (i) this Agreement, executed and
delivered by a duly authorized officer of each of the Borrower, (ii) the Guarantee and
Collateral Agreement, executed and delivered by a duly authorized officer of each of the
Borrower and each Subsidiary Guarantor, (iii) a Mortgage covering each of the Mortgaged
Properties, executed and delivered by a duly authorized officer of each Loan Party thereto,
(iv) the Intellectual Property Security Agreements, executed and delivered by a duly
authorized officer of each Loan Party thereto, (v) if requested by any Lender pursuant to
Section 2.04, a promissory note or notes conforming to the requirements of such Section and
executed and delivered by a duly authorized officer of the Borrower and (vi) a Lender
Addendum executed and delivered by each Lender and accepted by the Borrower.




     (e) The Collateral Agent, for the ratable benefit of the Secured Parties, shall have
been granted on the Closing Date first priority perfected Liens on the Collateral (subject,
in the case of all Collateral other than Pledged Collateral, only to Liens expressly
permitted by Section 6.02) and customary Guarantees from the Subsidiary Guarantors and shall
have received such other reports, documents and agreements as the Collateral Agent shall
reasonably request and which are customarily delivered in connection with security interests
in real property assets. The Pledged Collateral shall have been duly and validly pledged
under the Guarantee and Collateral Agreement to the Collateral Agent, for the ratable
benefit of the Secured Parties, and certificates representing such Pledged Collateral,
accompanied by instruments of transfer and stock powers endorsed in blank, shall be in the
actual possession of the Collateral Agent.




     (f) The Collateral Agent shall have received a duly executed Perfection Certificate
dated on or prior to the Closing Date. The Collateral Agent shall have received the results
of a recent Lien and judgment search in each relevant jurisdiction with respect to the
Borrower and those of the Subsidiaries that shall be Subsidiary Guarantors or shall
otherwise have assets that are included in the Collateral, and such search shall reveal no
Liens on any of the assets of the Borrower or any of such Subsidiaries except, in the case
of Collateral other than Pledged Collateral, for Liens expressly permitted by Section 6.02
and except for Liens to be discharged on or prior to



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the Closing Date pursuant to
documentation reasonably satisfactory to the Collateral Agent.




     (g) The Acquisition and the Acquisition Transactions shall be consummated
simultaneously with the closing of the Facility hereunder in accordance with applicable law
and on the terms described in the term sheets to the Commitment Letter; the Purchase
Agreement and all other related documentation shall be reasonably satisfactory to the
Administrative Agent; the Administrative Agent shall be reasonably satisfied with the
capitalization and structure of the Borrower after giving effect to the Transactions.




     (h) After giving effect to the Transactions and the other transactions contemplated
hereby, Borrower and its Subsidiaries shall have outstanding no Indebtedness or preferred
stock other than (i) the Loans and other extensions of credit hereunder, (ii) the
Subordinated Debt and (iii) other limited Indebtedness to be agreed upon by the Borrower and
the Administrative Agent. The Borrower shall have repaid all amounts outstanding under the
Existing Credit Facilities, if any. The Administrative Agent shall have received
satisfactory evidence that (i) the Existing Credit Facilities shall have been terminated,
all amounts then due and payable or to become due and payable (other than indemnification
obligations not yet having been requested) thereunder shall have been paid in full and all
commitments and reimbursement obligations thereunder shall have been terminated and (ii)
reasonably satisfactory arrangements shall have been made for the termination of all Liens
granted in connection therewith, in each case on terms and conditions satisfactory to the
Administrative Agent.




     (i) The Administrative Agent shall have received (i) the financial statements described
in Section 3.05 and (ii) U.S. GAAP unaudited consolidated balance sheets and related
statements of income, stockholders’ equity and cash flows of the Borrower for (A) each
subsequent fiscal quarter ended 30 days before the Closing Date and (B) each fiscal month
after the most recent 2006 fiscal quarter for which financial statements were received by
the Administrative Agent as described above and ended 30 days before the Closing Date.




     (j) The Agent shall be reasonably satisfied that (a) the Borrower’s consolidated pro
forma Cash Flow for the four-fiscal quarter period most recently ended prior to the Closing
Date (i) prepared in accordance with Regulation S-X under the Securities Act of 1933, as
amended, to give pro forma effect to the Transactions as if they had occurred at the
beginning of such four-fiscal quarter period and (ii) in the event that such four-fiscal
quarter period includes the quarter ended December 31, 2005, excluding for purposes of this
calculation (x) $5,400,000 of severance expense and IT system write-off expense incurred
during the fourth fiscal quarter of 2005 and (y) $4,300,000 of losses incurred at
USAgencies’s Regulated Insurance Subsidiaries related to Hurricane Katrina (such
consolidated pro forma Cash Flow, “Pro Forma Cash Flow”), shall not be less than
$60,200,000 and (b) the ratio of Total Debt of the Borrower and its consolidated
subsidiaries on the Closing Date to Pro Forma Cash Flow shall be no more than 4.60 to 1.0.



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     (k) The Administrative Agent shall have received projections of the Borrower and its
subsidiaries for the years 2006 through 2013 and for the quarters beginning with the fourth
fiscal quarter of 2006 and through the fourth fiscal quarter of 2008, in form and substance
reasonably satisfactory to the Administrative Agent (the “Projections”).




     (l) The Administrative Agent shall have received a certificate from the chief financial
officer of the Borrower certifying that the Borrower and each of the Subsidiary Guarantors,
after giving effect to the Transactions and the other transactions contemplated hereby, are
solvent.




     (m) All material governmental and third party consents and approvals with respect to
the Transactions and the other transactions contemplated hereby to the extent required shall
have been obtained, all applicable appeal periods shall have expired and there shall be no
litigation, governmental, administrative or judicial action, actual or threatened in
writing, that could reasonably be expected to restrain, prevent or impose materially
burdensome conditions on the Transactions or the other transactions contemplated hereby.




     (n) The Administrative Agent shall have received at least five days prior to the
Closing Date all documentation and other information required by bank regulatory authorities
under applicable “know your customer” and anti-money laundering rules and regulations,
including the U.S.A. Patriot Act.




     (o) The Administrative Agent shall have received in respect of each Mortgaged Property
a mortgagee’s title insurance policy (or policies) or marked up unconditional binder for
such insurance. Each such policy shall (i) be in an amount equal to the fair market value
of such property or, with respect to Mortgaged Property acquired after the Closing Date,
equal to 115% of the fair market value of the Mortgaged Property, (ii) be issued at ordinary
rates; (iii) insure that the Mortgage insured thereby creates a valid first Lien on, and
security interest in, such Mortgaged Property free and clear of all defects and
encumbrances, except as disclosed therein; (iv) name the Collateral Agent, for the benefit
of the Secured Parties, as the insured thereunder; (v) be in the form of ALTA Loan Policy -
1970 Form B (Amended 10/17/70 and 10/17/84) (or equivalent policies), if available; (vi)
contain such endorsements and affirmative coverage as the Administrative Agent may
reasonably request in form and substance acceptable to the Administrative Agent, including
(to the extent applicable with respect to such Mortgaged Property and available in the
jurisdiction in which such Mortgaged Property is located), the following endorsements:
variable rate; survey; comprehensive; zoning (ALTA 3.1 with parking added); first loss, last
dollar and tie-in; access; separate tax parcel; usury; doing business; subdivision;
environmental protection lien; CLTA 119.2 and CLTA 119.3 (for leased Mortgaged Property,
only); contiguity; and such other endorsements as the Administrative Agent shall reasonably
require in order to provide insurance against specific risks identified by the
Administrative Agent in connection with such Mortgaged Property; and (vii) be issued by
title companies satisfactory to the Administrative Agent (including any such title companies
acting as co-insurers or reinsurers, at the option of the Administrative Agent) (in each
such case, a “Title Insurance Company”). The Administrative Agent shall have
received evidence satisfactory to it that all premiums in



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respect of each such policy, all
charges for mortgage recording tax, and all related expenses, if any, have been paid. The
Administrative Agent shall have received a copy of all recorded documents referred to, or
listed as exceptions to title in, the title policy or policies referred to above and a copy
of all other material documents affecting the Mortgaged Property.




     (p) If requested by the Administrative Agent, the Administrative Agent shall have
received (i) a policy of flood insurance that (A) covers any parcel of improved Mortgaged
Property that is located in a flood zone, (B) is written in an amount not less than the
outstanding principal amount of the indebtedness secured by such Mortgage that
is reasonably allocable to such Mortgaged Property or the maximum limit of coverage
made available with respect to the particular type of property under the National Flood
Insurance Act of 1968, whichever is less, and (C) has a term ending not later than the Term
Loan Maturity Date and (ii) confirmation that the Borrower has received the notice required
pursuant to Section 208(e)(3) of Regulation H of the Board.




     (q) The Administrative Agent and the Title Insurance Company shall have received maps
or plans of an as-built survey (in each case, a “Survey”) of the sites of the owned
Mortgaged Property intended to be subject to a Mortgage hereunder certified to the
Administrative Agent and the Title Insurance Company in a manner satisfactory to them, dated
not more than 60 days prior to the Closing Date by an independent professional licensed land
surveyor satisfactory to the Administrative Agent and the Title Insurance Company, which
maps or plans and the surveys on which they are based shall be made in accordance with the
Minimum Standard Detail Requirements for Land Title Surveys jointly established and adopted
by the American Land Title Association and the American Congress on Surveying and Mapping in
1997 or 1999 and meeting the accuracy requirements as defined therein. Without limiting the
generality of the foregoing, each Survey shall (i) be a current “as-built” survey showing
the location of any adjoining streets (including their widths and any pavement or other
improvements), easements (including the recorded information with respect to all recorded
instruments), the mean high water base line or other legal boundary lines of any adjoining
bodies of water, fences, zoning or restriction setback lines, rights-of-way, utility lines
to the points of connection and any encroachments; (ii) locate all means of ingress and
egress, certifying the amount of acreage and square footage, indicate the address of the
Mortgaged Property, contain the legal description of the Mortgaged Property, and also
contain a location sketch of the Mortgaged Property; (iii) show the location of all
improvements as constructed on the Mortgaged Property, all of which shall be within the
boundary lines of the Mortgaged Property and conform to all applicable zoning ordinances,
set-back lines and restrictions; (iv) indicate the location of any improvements on the
Mortgaged Property with the dimensions in relations to the lot and building lines; (v) show
measured distances from the improvements to be set back and specified distances from street
or Mortgaged Property lines in the event that deed restrictions, recorded plats or zoning
ordinances require same; (vi) designate all courses and distances referred to in the legal
description, and indicate the names of all adjoining owners on all sides of the Mortgaged
Property, to the extent available; and (vii) indicate the flood zone designation, if any, in
which the Mortgaged Property is located. The legal description of the applicable Mortgaged
Property shall be shown on the face of each survey or affixed



77









 







thereto, and the same shall
conform to the legal description contained in the title policy described above.




     (r) The Administrative Agent shall have received estoppel certificates from the
landlord with respect to each leased Material Real Property, confirming the nonexistence of
any default thereunder and certain other information with respect to such lease, each of the
foregoing in form and substance reasonably satisfactory to the Administrative Agent and the
Collateral Agent. In the event that Administrative Agent has determined that a recorded
memorandum of lease or an amendment of lease is necessary or appropriate in order to make
any leased Material Real Property
mortgageable, or to grant the leasehold lender customary lender protections, then the
Administrative Agent shall have received evidence of such recordation or a copy of such
fully executed and binding lease amendment.




     (s) The Administrative Agent shall have received a copy of each Reinsurance Agreement
and Retrocession Agreement to which Borrower or any of its Subsidiaries is a party or it or
its property is subject.




     (t) The representations and warranties contained in Article 3 of the Purchase Agreement
shall be true and correct and the conditions in Article 7.1(a) of the Purchase Agreement
shall be satisfied (but, in each case, only with respect to representations and warranties
that are material to the interests of the Lenders), and the representations and warranties
made in Sections 3.01(b) and 3.01(d), 3.02(a), 3.03, 3.11 and 3.12 shall be true and
correct.




     (u) No event, change or condition shall have occurred since December 31, 2005, that has
caused, or could reasonably be expected to cause, a Closing Date Material Adverse Effect.



ARTICLE V.




Affirmative Covenants




     The Borrower covenants and agrees with each Lender that so long as this Agreement shall remain
in effect and until the Commitments have been terminated and the principal of and interest on each
Loan, all Fees and all other expenses or amounts payable under any Loan Document (other than
obligations for taxes, costs, indemnifications, reimbursements, damages and other contingent
liabilities in respect of which no claim or demand for payment has been made or, in the case of
indemnification, no notice has been given) shall have been paid in full and all Letters of Credit
have been canceled or have expired and all amounts drawn thereunder have been reimbursed in full,
the Borrower will, and will cause each of the Subsidiaries to:



     SECTION 5.01. Existence; Businesses and Properties. (a) Do or cause to be done all things necessary to preserve, renew and keep in full
force and effect its legal existence, except as otherwise expressly permitted under Section 6.05.



     (b) Do or cause to be done all things necessary to obtain, preserve, renew, extend and keep in
full force and effect the rights, licenses, permits, franchises, authorizations, patents,



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copyrights, trademarks and trade names material to the conduct of its business; maintain and
operate such business in substantially the manner in which it is presently conducted and operated;
comply in all material respects with all applicable laws, rules, regulations and decrees and orders
of any Governmental Authority, whether now in effect or hereafter enacted; comply with the terms
of, or enforce its rights under, each material lease of real property and each other material
agreement so as to not permit any material uncured default on its part to exist thereunder, and
except where the failure to do so could not have a material impact on the Borrower and its
Subsidiaries taken as a whole; and at all times maintain and preserve all
property material to the conduct of such business and keep such property in good repair,
working order and condition (except in respect of ordinary wear and tear and casualty) and from
time to time make, or cause to be made, all needful and proper repairs, renewals, additions,
improvements and replacements thereto necessary in order that the business carried on in connection
therewith may be properly conducted at all times.



     SECTION 5.02. Insurance. Keep its insurable properties adequately insured at all times by financially sound and
reputable insurers; maintain such other reasonably satisfactory insurance, to such extent and
against such risks (and with such deductibles, retentions and exclusions), including fire and other
risks insured against by extended coverage, as is prudent in the reasonable business judgment of
the Borrower, including public liability insurance against claims for personal injury or death or
property damage occurring upon, in, about or in connection with the use of any properties owned,
occupied or controlled by it and maintain such other insurance as may be required by law.



     SECTION 5.03. Obligations and Taxes. Pay its Indebtedness and other obligations promptly and in accordance with their terms and
pay and discharge promptly when due all taxes, assessments and governmental charges or levies
imposed upon it or upon its income or profits or in respect of its property, before the same shall
become delinquent or in default, as well as all lawful claims for labor, materials and supplies or
otherwise that, if unpaid, might give rise to a Lien (other than a Lien permitted by Section 6.02
of this Agreement) upon such properties or any part thereof; provided, however,
that such payment and discharge shall not be required with respect to any such tax, assessment,
charge, levy or claim so long as the validity or amount thereof shall be contested in good faith by
appropriate proceedings and the Borrower or the applicable Subsidiary shall have set aside on its
books adequate reserves with respect thereto in accordance with GAAP and such contest operates to
suspend collection of the contested obligation, tax, assessment or charge and enforcement of a Lien
and, in the case of a Mortgaged Property, there is no risk of forfeiture of such property.



     SECTION 5.04. Financial Statements, Reports, etc. In the case of the Borrower, furnish to the Administrative Agent who will deliver to each
Lender:




     (a) (i) within 90 days after the end of each fiscal year, its consolidated balance
sheet and related statements of income, stockholders’ equity and cash flows showing the
financial condition of the Borrower and its consolidated Subsidiaries as of the close of
such fiscal year and the results of its operations and the operations of such Subsidiaries
during such year, together with comparative figures for the immediately preceding fiscal
year, all audited by KPMG or other independent public accountants of recognized national
standing and accompanied by an opinion of such accountants (which shall not be



79









 







qualified in any material respect) to the effect that such consolidated financial statements fairly
present in all material respects the financial condition and results of operations of
the Borrower and its consolidated Subsidiaries on a consolidated basis in accordance
with GAAP consistently applied; and (ii) as soon as available and in any event within 60
days (or, in the case of any audited statements and risk-based capital reports required to
be delivered pursuant to this clause (ii), 180 days) after the close of each fiscal year of
each Regulated Insurance Subsidiary, the annual statement of such Regulated Insurance
Subsidiary (prepared in accordance with SAP) for such fiscal year and as filed with the
Insurance Regulators of the state in which such Regulated Insurance Subsidiary is domiciled
(together with any certifications or statements of such Regulated Insurance Subsidiary
relating to such annual statement and any audited statements and risk-based capital reports,
in each case which are required by such Insurance Regulators);




     (b) (i) within 45 days after the end of each of the first three fiscal quarters of each
fiscal year, its consolidated balance sheet and related statements of income, stockholders’
equity and cash flows showing the financial condition of the Borrower and its consolidated
Subsidiaries as of the close of such fiscal quarter and the results of its operations and
the operations of such Subsidiaries during such fiscal quarter and the then elapsed portion
of the fiscal year, and comparative figures for the same periods in the immediately
preceding fiscal year, all certified by one of its Financial Officers as fairly presenting
in all material respects the financial condition and results of operations of the Borrower
and its consolidated Subsidiaries on a consolidated basis in accordance with GAAP
consistently applied, subject to normal year-end audit adjustments and the absence of
footnotes; and (ii) as soon as available and in any event within 60 days after the close of
each of the first three quarterly accounting periods in each fiscal year of each Regulated
Insurance Subsidiary, quarterly financial statements of such Regulated Insurance Company
(prepared in accordance with SAP) for such quarterly accounting period as filed with the
Insurance Regulators of the state in which such Regulated Insurance Subsidiary is domiciled
(together with any certifications or statements of such Regulated Insurance Subsidiary
relating to such quarterly financial statements which are required by such Insurance
Regulators);




     (c) within 30 days after the end of the first two fiscal months of each fiscal quarter,
its consolidated balance sheet and related statements of income and cash flows showing the
financial condition of the Borrower and its consolidated Subsidiaries during such fiscal
month and the then elapsed portion of the fiscal year, all certified by one of its Financial
Officers as fairly presenting in all material respects the financial condition and results
of operations of the Borrower and its consolidated Subsidiaries on a consolidated basis in
accordance with GAAP consistently applied, subject to normal year-end audit adjustments and
the absence of footnotes;




     (d) concurrently with any delivery of financial statements under paragraph (a) or (b)
above, (i) a certificate of the Financial Officer certifying such statements (i) certifying
that no Event of Default or Default has occurred or, if such an Event of Default or Default
has occurred, specifying the nature and extent thereof and any corrective action taken or
proposed to be taken with respect thereto and (ii) setting forth computations in reasonable
detail satisfactory to the Administrative Agent demonstrating



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compliance with the covenants
contained in Sections 6.11, 6.12, 6.13, 6.14, 6.15 and 6.16, and, in the case of a
certificate delivered with the financial statements required by
paragraph (a) above, setting forth the Borrower’s calculation of Excess Cash Flow and
(ii) the related unaudited consolidating financial statements reflecting the adjustments
necessary to eliminate the accounts of Premium Finance Co. (if any) from such consolidated
financial statements;




     (e) concurrently with any delivery of financial statements under paragraph (a) above, a
certificate of the accounting firm that reported on such financial statements stating
whether they obtained knowledge during the course of their examination of such financial
statements of any Event of Default or Default with respect to Sections 6.11, 6.12, 6.13,
6.14, 6.15 or 6.16 (which certificate may be limited to the extent required by generally
accepted accounting rules or guidelines);




     (f) at least 90 days after the end of each fiscal year of the Borrower, a detailed
consolidated budget for the fiscal year following such fiscal year then ended (including a
projected consolidated balance sheet and related statements of projected operations and cash
flows as of the end of and for such following fiscal year and setting forth the assumptions
used for purposes of preparing such budget) and, promptly when available, any significant
revisions of such budget;




     (g) promptly after the same become publicly available, copies of all periodic and other
reports, proxy statements and other materials filed by the Borrower or any Subsidiary with
the Securities and Exchange Commission, or any Governmental Authority succeeding to any or
all of the functions of said Commission, or with any national securities exchange, or
distributed to its shareholders, as the case may be;




     (h) promptly after the receipt thereof by the Borrower or any of the Subsidiaries, a
copy of any “management letter” (whether in final or draft form) received by any such person
from its certified public accountants and the management’s response thereto;




     (i) promptly following receipt or as promptly as reasonably practicable following the
request of the Administrative Agent or the Required Lenders, a report prepared by an
independent actuarial consulting firm of recognized professional standing reasonably
satisfactory to the Administrative Agent and the Required Lenders reviewing the adequacy of
reserves of each Regulated Insurance Subsidiary determined in accordance with SAP, which
firm shall be provided access to or copies of all reserve analyses and valuations relating
to the insurance business of each Regulated Insurance Subsidiary in the possession of or
available to the Borrower or its Subsidiaries; provided that no request may be made pursuant
to this clause (i) unless there shall have occurred and be continuing an Event of Default;




     (j) promptly (i) after receipt thereof, copies of all regular and periodic reports of
examinations (including, without limitation, triennial examinations and annual risk adjusted
capital reports) of any Regulated Insurance Subsidiary, delivered to such person by any
Insurance Regulators, insurance commission or similar regulatory authority,



81









 







(ii) after receipt thereof, written notice of any assertion by any Insurance Regulators or any
governmental agency or agencies substituted therefor, as to a violation of any
Requirement of Law by any Regulated Insurance Subsidiary which could reasonably be
expected to have a Material Adverse Effect, (iii) after receipt thereof, a copy of any
notice of termination, cancellation or recapture of any Reinsurance Agreement or
Retrocession Agreement to which a Regulated Insurance Subsidiary is a party to the extent
such termination or cancellation is likely to have a Material Adverse Effect, (iv) after
receipt thereof, copies of any notice of actual suspension, termination or revocation of any
material license of any Regulated Insurance Subsidiary by any Insurance Regulators,
including any request by an Insurance Regulators which commits a Regulated Insurance
Subsidiary to take or refrain from taking any action or which otherwise affects the
authority of such Regulated Insurance Subsidiary to conduct its business and (v) an in any
event within 30 Business Days after Borrower or any of its Subsidiaries obtains knowledge
thereof, notice of any actual changes in the insurance Requirements of Laws enacted in any
state in which any Regulated Insurance Subsidiary is domiciled which would reasonably be
expected to have a Material Adverse Effect;




     (k) concurrently with any delivery of financial statements under paragraph (a) or (b)
above, (i) in connection with the termination of each Reinsurance Agreement and Retrocession
Agreement (other than with respect to any such agreement with the Borrower or any Subsidiary
thereof), a copy of the slip or other document, agreement or correspondence with each
reinsurer, retrocessionaire, reinsurance broker or agent which will amend, restate or
supersede such terminating Reinsurance Agreement or Retrocession Agreement, and (ii) in
connection with the execution of any Reinsurance Agreement and Retrocession Agreement, a
copy of each such Reinsurance Agreement and Retrocession Agreement (other than with respect
to any such agreement with the Borrower or any Subsidiary thereof), certified to be complete
and correct by an authorized Signatory of the Regulated Insurance Subsidiary a party to such
agreement acceptable to Administrative Agent;




     (l) concurrently with any delivery of financial statements under paragraph (a) or (b)
above, a copy of (i) each A.M. Best report, if any, with respect to Borrower of any of its
Subsidiaries, and (ii) all correspondence from A.M. Best to Borrower or any of its
Subsidiaries the contents of which (A) relate to a probable downgrade of the A.M. Best
rating of any Regulated Insurance Subsidiary or (B) describe or relate to a circumstance
that would reasonably be expected to have a Material Adverse Effect; and




     (m) promptly, from time to time, such other information regarding the operations,
business affairs and financial condition of the Borrower or any Subsidiary, or compliance
with the terms of any Loan Document, as the Administrative Agent or any Lender may
reasonably request.



     SECTION 5.05. Litigation and Other Notices. Furnish to the Administrative Agent (who will deliver to the Issuing Bank and each Lender)
prompt written notice of the following:




     (a) any Event of Default or Default, specifying the nature and extent thereof and the
corrective action (if any) taken or proposed to be taken with respect thereto;



82









 






     (b) the filing or commencement of, or any threat or notice of intention of any person
to file or commence, any action, suit or proceeding, whether at law or in equity or by or
before any arbitrator or Governmental Authority, against the Borrower or any Subsidiary that
could reasonably be expected to result in a Material Adverse Effect;




     (c) the occurrence of any ERISA Event described in clause (b) of the definition thereof
or any other ERISA Event that, alone or together with any other ERISA Events that have
occurred, could reasonably be expected to result in liability of the Borrower and the
Subsidiaries in an aggregate amount exceeding $2,500,000; and




     (d) any development that has resulted in, or could reasonably be expected to result in,
a Material Adverse Effect.



     SECTION 5.06. Information Regarding Collateral. (a) Furnish to each of the Administrative Agent and the Collateral Agent prompt
written notice of any change (i) in any Loan Party’s corporate name or in any trade name used to
identify it in the conduct of its business or in the ownership of its properties, (ii) in the
location of any Loan Party’s chief executive office, its principal place of business, any office in
which it maintains books or records relating to Collateral owned by it or any office or facility at
which Collateral owned by it is located (including the establishment of any such new office or
facility), (iii) in any Loan Party’s identity or corporate structure or (iv) in any Loan Party’s
Federal Taxpayer Identification Number. The Borrower agrees not to effect or permit any change
referred to in the preceding sentence unless all filings have been made under the UCC or otherwise
and all other actions have been taken that are required in order for the Collateral Agent to
continue at all times following such change to have a valid, legal and perfected security interest
in all the Collateral. The Borrower also agrees promptly to notify each of the Administrative
Agent and the Collateral Agent if any material portion of the Collateral is damaged or destroyed.



     (b) In the case of the Borrower, each year, at the time of delivery of the annual financial
statements with respect to the preceding fiscal year pursuant to Section 5.04(a), deliver to the
Administrative Agent a certificate of a Financial Officer setting forth the information required
pursuant to Section I of the Perfection Certificate or confirming that there has been no change in
such information since the date of the Perfection Certificate delivered on the Closing Date or the
date of the most recent certificate delivered pursuant to this Section.



     SECTION 5.07. Maintaining Records; Access to Properties and Inspections; Environmental
Assessments. (a) Keep proper books of record and account in which full, true and correct entries in
conformity with GAAP and all requirements of law are made of all dealings and transactions in
relation to its business and activities. The Borrower will, and will cause each of its
subsidiaries to, permit any representatives designated by the Administrative Agent or any Lender to
visit and inspect the financial records and the properties of the Borrower, as the case may be, or
any of its subsidiaries at reasonable times and as reasonably requested, and to make extracts from
and copies of such financial records, and permit any representatives designated by the
Administrative Agent or any Lender to discuss the affairs, finances and condition of the Borrower, as the
case may be, or any of its subsidiaries with the officers thereof and independent accountants
therefore, provided that a member of management of the applicable Loan Party shall be
afforded a reasonable opportunity to be present at any meeting with such



83









 







accountants, provided further, that so long as no Event of Default or Default has occurred and is continuing, there
shall be no more than three visits in the aggregate by the Administrative Agent, Lenders, or their
representatives per calendar year (or such additional number of visits as any of the Administrative
Agent or Lenders may reasonably request provided such additional visits are coordinated with the
Administrative Agent so as to reasonably minimize the burden imposed on each Loan Party and its
Subsidiaries) and such visits shall be limited to normal business hours.



     (b) At its election, the Administrative Agent or any Lender may, at its own cost and expense,
retain an independent engineer or environmental consultant to conduct an environmental assessment
of any Mortgaged Property or facility of any Loan Party. The Borrower shall, and shall cause each
of the Subsidiaries to, cooperate in the performance of any such environmental assessment and
permit any such engineer or consultant designated by the Administrative Agent or such Lender to
have full access to each property or facility at reasonable times and after reasonable advance
notice to the Borrower of the plans to conduct such an environmental assessment. Environmental
assessments conducted under this paragraph shall be limited to visual inspections of the Mortgaged
Property or facility, interviews with representatives of the Loan Parties or facility personnel,
and review of applicable records and documents pertaining to the property or facility.



     (c) In the event that the Administrative Agent or any Lender shall have reason to believe that
Hazardous Materials have been Released on or from any Mortgaged Property or other facility of the
Borrower or the Subsidiaries or that any such property or facility is not being operated in
material compliance with applicable Environmental Law, the Administrative Agent may, at its
election and after reasonable advance notice to the Borrower, retain an independent engineer or
other qualified environmental consultant to evaluate whether Hazardous Materials are present in the
soil, groundwater, or surface water at such Mortgaged Property or facility or whether the
facilities or properties are being operated and maintained in material compliance with applicable
Environmental Laws. Such environmental assessments may include detailed visual inspections of the
Mortgaged Property or facility, including any and all storage areas, storage tanks, drains, dry
wells and leaching areas, and the taking of soil samples, surface water samples and groundwater
samples as well as such other reasonable investigations or analyses as are necessary. The scope of
any such environmental assessments under this paragraph shall be within the reasonable discretion
of the Administrative Agent. The Borrower shall, and shall cause each of the Subsidiaries to,
cooperate in the performance of any such environmental assessment and permit any such engineer or
consultant designated by the Administrative Agent to have full access to each property or facility
at reasonable times and after reasonable advance notice to the Borrower of the plans to conduct
such an environmental assessment. All environmental assessments conducted pursuant to this
paragraph shall be at the Borrower’s sole cost and expense.



     SECTION 5.08. Use of Proceeds. Use the proceeds of the Loans and request the issuance of Letters of Credit only for the
purposes set forth in Section 3.13.



     SECTION 5.09. Additional Collateral, etc. (a) With respect to any Collateral acquired after the Closing Date or, in the case of
inventory or equipment, any material Collateral moved after the Closing Date by the Borrower or any
other Loan Party (other than any Collateral described in paragraphs (b), (c), (d) (e) or (f) of
this Section) as to which the Collateral Agent,




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for the benefit of the Secured Parties, does not have a first priority perfected security interest,
promptly (and, in any event, within 10 days following the date of such acquisition) (i) execute and
deliver to the Administrative Agent and the Collateral Agent such amendments to the Guarantee and
Collateral Agreement or such other Security Documents as the Collateral Agent deems necessary or
advisable to grant to the Collateral Agent, for the benefit of the Secured Parties, a security
interest in such Collateral and (ii) take all actions necessary or advisable to grant to, or
continue on behalf of, the Collateral Agent, for the benefit of the Secured Parties, a perfected
first priority security interest in such Collateral, including the filing of UCC financing
statements in such jurisdictions as may be required by the Guarantee and Collateral Agreement or by
law or as may be requested by the Administrative Agent or the Collateral Agent.




     (b)   With respect to any fee interest in any Collateral consisting of Material Real Property
or any lease of Collateral consisting of Material Real Property acquired or leased after the
Closing Date by the Borrower or any other Loan Party, promptly (and, in any event, within 10 days
following the date of such acquisition) (i) execute and deliver a first priority Mortgage in favor
of the Collateral Agent, for the benefit of the Secured Parties, covering such real property and
complying with the provisions herein and in the Security Documents, (ii) provide the Secured
Parties with title and extended coverage insurance in an amount at least equal to the purchase
price of such Material Real Property (or such other amount as the Administrative Agent shall
reasonably specify), Surveys, and if applicable, flood insurance, lease estoppel certificates,
memoranda or amendments, all in accordance with the standards for deliveries contemplated on the
Closing Date, as described in Sections 4.02(o) through (r) hereof, (iii) if requested by the
Administrative Agent, deliver to the Administrative Agent and the Collateral Agent legal opinions
relating to the matters described above, which opinions shall be in form and substance, and from
counsel, reasonably satisfactory to the Administrative Agent and the Collateral Agent and (iv)
deliver to the Administrative Agent a notice identifying, and upon the Administrative Agent’s
request, provide a copy of, the consultant’s reports, environmental site assessments or other
documents, if any, relied upon by the Borrower or any other Loan Party to determine that any such
real property included in such Collateral does not contain Hazardous Materials of a form or type or
in a quantity or location that could reasonably be expected to result in a material Environmental
Liability.



     (c)   With respect to any Subsidiary (other than an Excluded Foreign Subsidiary, any Regulated
Insurance Subsidiary, any Qualified Insurance Holding Company any TruPS Business Trust or a Premium
Finance Co.) created or acquired after the Closing Date (which, for the purposes of this paragraph,
shall include any existing Subsidiary that ceases to be an Excluded Foreign Subsidiary or a
Regulated Insurance Subsidiary or ceases to meet the requirement of being a Qualified Insurance
Holding Company, TruPS Business Trust or a Premium Finance Co.
at any time after the Closing Date) by the Borrower or any of the Subsidiaries, promptly (and,
in any event, within 10 days following such creation or the date of such acquisition) (i) execute
and deliver to the Administrative Agent and the Collateral Agent such amendments to the Guarantee
and Collateral Agreement as the Administrative Agent or the Collateral Agent deems necessary or
advisable to grant to the Collateral Agent, for the benefit of the Secured Parties, a valid,
perfected first priority security interest in the Equity Interests in such new Subsidiary that are
owned by the Borrower or any of the Subsidiaries, (ii) deliver to the Collateral Agent the
certificates, if any, representing such Equity Interests, together with undated stock powers, in
blank, executed and delivered by a duly authorized officer of the Borrower or such Subsidiary, as



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the case may be, (iii) cause such new Subsidiary (A) to become a party to the Guarantee and
Collateral Agreement (and provide Guarantees of the Obligations) and the Intellectual Property
Security Agreements and (B) to take such actions necessary or advisable to grant to the Collateral
Agent, for the benefit of the Secured Parties, a perfected first priority security interest in the
Collateral described in the Guarantee and Collateral Agreement and the Intellectual Property
Security Agreement with respect to such new Subsidiary, including the recording of instruments in
the United States Patent and Trademark Office and the United States Copyright Office and the filing
of UCC financing statements in such jurisdictions as may be required by the Guarantee and
Collateral Agreement, the Intellectual Property Security Agreement or by law or as may be requested
by the Administrative Agent or the Collateral Agent and (iv) if requested by the Administrative
Agent, deliver to the Administrative Agent and the Collateral Agent legal opinions relating to the
matters described above, which opinions shall be in form and substance, and from counsel,
reasonably satisfactory to the Administrative Agent and the Collateral Agent.



     (d)   With respect to any Excluded Foreign Subsidiary created or acquired after the Closing
Date by the Borrower or any of its Domestic Subsidiaries, promptly (and, in any event, within 10
days following such creation or the date of such acquisition) (i) execute and deliver to the
Administrative Agent and the Collateral Agent such amendments to the Guarantee and Collateral
Agreement as the Administrative Agent or the Collateral Agent deems necessary or advisable in order
to grant to the Collateral Agent, for the benefit of the Secured Parties, a perfected first
priority security interest in the Equity Interests in such new Excluded Foreign Subsidiary that is
owned by the Borrower or any of its Domestic Subsidiaries (provided that in no event shall
more than 65% of the total outstanding voting Equity Interests in any such new Excluded Foreign
Subsidiary be required to be so pledged), (ii) if certificated, deliver to the Collateral Agent the
certificates representing such Equity Interests, together with undated stock powers, in blank,
executed and delivered by a duly authorized officer of the Borrower or such Domestic Subsidiary, as
the case may be, and take such other action as may be necessary or, in the opinion of the
Administrative Agent or the Collateral Agent, desirable to perfect the security interest of the
Collateral Agent thereon and (iii) if requested by the Administrative Agent, deliver to the
Administrative Agent and the Collateral Agent legal opinions relating to the matters described
above, which opinions shall be in form and substance, and from counsel, reasonably satisfactory to
the Administrative Agent and the Collateral Agent.



     (e)   With respect to any Regulated Insurance Subsidiary, Premium Finance Co. or TruPS
Business Trust created or acquired after the Closing Date by the Borrower or any of its Domestic
Subsidiaries, promptly (and, in any event, within 10 days following such creation or the date of
such acquisition) (i) execute and deliver to the Administrative Agent and the Collateral Agent such
amendments to the Guarantee and Collateral Agreement as the
Administrative Agent or the Collateral Agent deems necessary or advisable in order to grant to
the Collateral Agent, for the benefit of the Secured Parties, a perfected first priority security
interest in the Equity Interests in such new Regulated Insurance Subsidiary, Premium Finance Co. or
TruPS Business Trust that is owned by the Borrower or any of its Domestic Subsidiaries
provided that such security interest shall remain limited by and subject to any and
all Requirements of Law as further set forth in the Guarantee and Collateral Agreement, (ii) if
certificated, deliver to the Collateral Agent the certificates representing such Equity Interests,
together with undated stock powers, in blank, executed and delivered by a duly authorized officer
of the Borrower or such Domestic Subsidiary, as the case may be, and take such other



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action as may
be necessary or, in the opinion of the Administrative Agent or the Collateral Agent, desirable to
perfect the security interest of the Collateral Agent thereon and (iii) if requested by the
Administrative Agent, deliver to the Administrative Agent and the Collateral Agent legal opinions
relating to the matters described above, which opinions shall be in form and substance, and from
counsel, reasonably satisfactory to the Administrative Agent and the Collateral Agent.



     (f)   With respect to any Qualified Insurance Holding Company created or acquired after the
Closing Date by the Borrower or any of the Subsidiaries, promptly (and, in any event, within 10
days following such creation or the date of such acquisition) (i) execute and deliver to the
Administrative Agent and the Collateral Agent such amendments to the Guarantee and Collateral
Agreement as the Administrative Agent or the Collateral Agent deems necessary or advisable in order
to grant to the Collateral Agent, for the benefit of the Secured Parties, a perfected first
priority security interest in the Equity Interests in such new Qualified Insurance Holding Company
that is owned by the Borrower or any of its Domestic Subsidiaries provided that
such security interest shall remain limited by and subject to any and all Requirements of Law as
further set forth in the Guarantee and Collateral Agreement, (ii) if certificated, deliver to the
Collateral Agent the certificates, if any, representing such Equity Interests, together with
undated stock powers, in blank, executed and delivered by a duly authorized officer of the Borrower
or such Subsidiary, as the case may be, (iii) cause such new Subsidiary (A) to become a party to
the Guarantee and Collateral Agreement (and provide Guarantees of the Obligations) and the
Intellectual Property Security Agreements and (B) to take such actions necessary or advisable to
grant to the Collateral Agent, for the benefit of the Secured Parties, a perfected first priority
security interest in the Collateral described in the Guarantee and Collateral Agreement and the
Intellectual Property Security Agreement with respect to such new Subsidiary, including the
recording of instruments in the United States Patent and Trademark Office and the United States
Copyright Office and the filing of UCC financing statements in such jurisdictions as may be
required by the Guarantee and Collateral Agreement, the Intellectual Property Security Agreement or
by law or as may be requested by the Administrative Agent or the Collateral Agent and (iv) if
requested by the Administrative Agent, deliver to the Administrative Agent and the Collateral Agent
legal opinions relating to the matters described above, which opinions shall be in form and
substance, and from counsel, reasonably satisfactory to the Administrative Agent and the Collateral
Agent.



     SECTION 5.10.   Further Assurances. From time to time duly authorize, execute and
deliver, or cause to be duly authorized, executed and delivered, such additional instruments,
certificates, financing statements,
agreements or documents, and take all such actions (including filing UCC and other financing
statements), as the Administrative Agent or the Collateral Agent may reasonably request, for the
purposes of implementing or effectuating the provisions of this Agreement and the other Loan
Documents, or of more fully perfecting or renewing the rights of the Administrative Agent, the
Collateral Agent and the Secured Parties with respect to the Collateral (or with respect to any
additions thereto or replacements or proceeds or products thereof or with respect to any other
property or assets hereafter acquired by the Borrower or any Subsidiary which may be deemed to be
part of the Collateral) pursuant hereto or thereto. Upon the exercise by the Administrative Agent,
the Collateral Agent or any Lender of any power, right, privilege or remedy pursuant to this
Agreement or the other Loan Documents which requires any consent, approval, recording,
qualification or authorization of any Governmental



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Authority, the Borrower will execute and
deliver, or will cause the execution and delivery of, all applications, certifications, instruments
and other documents and papers that the Administrative Agent, the Collateral Agent or such Lender
may be required to obtain from the Borrower or any of the Subsidiaries for such governmental
consent, approval, recording, qualification or authorization.



     SECTION 5.11.   Interest Rate Protection. The Borrower shall ensure that for at least
2 years following the Closing Date no less than 25% of the Borrower’s long-term Indebtedness
(excluding the Subordinated Debt) effectively bears interest at a fixed rate, either by its terms
or through the Borrower entering into, as promptly as practicable (and in any event no later than
the 120th day after the Closing Date), Hedging Agreements reasonably acceptable to the
Administrative Agent.



     SECTION 5.12.   Maintain Reinsurance. Maintain such quota-share reinsurance as is
prudent in the reasonable business judgment of the Borrower.



     SECTION 5.13.   Tax Sharing Arrangements. (a) With respect to USAgencies and
USCasualty, maintain and act in accordance with that certain Inter-Company Tax Allocation Agreement
(the “USAgencies Intercompany Tax Agreement”), dated as of August 21, 1997 by and between
USAgencies and USCasualty, and shall not amend, modify or terminate the USAgencies Intercompany Tax
Agreement in any way adverse to the Lenders without the prior written consent of the Lenders (other
than any such amendments or modifications necessary to conform to the Affirmative Intercompany Tax
Agreement in effect as of the Closing Date, as modified in accordance with Section 5.13(b)).



     (b) With respect to Borrower and its Subsidiaries, maintain and act in accordance with that
certain Intercompany Tax Allocation Agreement (the “Affirmative Intercompany Tax
Agreement”), effective as of January 1, 2004, by and among Borrower and each of the
Subsidiaries listed on the signature pages thereto, and shall not amend, modify or terminate the
Affirmative Intercompany Tax Agreement in any way adverse to the Lenders without the prior written
consent of the Lenders.



     (c) Other than the USAgencies Intercompany Tax Agreement and the Affirmative Intercompany Tax
Agreement, the Borrower and its Subsidiaries are not a party to any tax sharing, tax allocation or
similar agreement and shall not enter into any such agreement without the prior written consent of
the Lenders.



ARTICLE VI.




Negative Covenants




     The Borrower covenants and agrees with each Lender that, so long as this Agreement shall
remain in effect and until the Commitments have expired, been terminated and the principal of and
interest on each Loan, all Fees and all other expenses or amounts payable under any Loan Document
have been paid in full and all Letters of Credit have been cancelled or have expired and all
amounts drawn thereunder have been reimbursed in full, the Borrower will not, nor will it cause or
permit any of the Subsidiaries to:



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     SECTION 6.01.   Indebtedness. Incur, create, assume or permit to exist any
Indebtedness, except:




     (a)   Indebtedness existing on the date hereof and set forth in Schedule 6.01 and any
Permitted Refinancing Indebtedness in respect of any such Indebtedness;




     (b)   Indebtedness created hereunder and under the other Loan Documents;




     (c)   unsecured intercompany Indebtedness of the Borrower and the Subsidiary Guarantors
to the extent permitted by Section 6.04(a) so long as such Indebtedness is subordinated to
the Obligations pursuant to an Affiliate Subordination Agreement;




     (d)   Capital Lease Obligations and Synthetic Lease Obligations of Borrower of any
Subsidiary Guarantor in an aggregate principal amount, not exceeding $5,000,000 at any time
outstanding;




     (e)   (i) Indebtedness of the Borrower and the Subsidiary Guarantors under the
Subordinated Debt and (ii) Indebtedness of the Borrower and the Subsidiary Guarantors under
the Qualified Additional Subordinated Debt, in the case of clause (ii), not to exceed a
principal amount equal to $50,000,000;




     (f)   Indebtedness of any person that becomes a Subsidiary Guarantor after the date
hereof; provided that (i) such Indebtedness exists at the time such persons becomes
a Subsidiary and is not created in contemplation of or in connection with such person
becoming a Subsidiary, (ii) immediately before and after such person becomes a Subsidiary,
no Default or Event of Default shall have occurred and be continuing and (iii) the aggregate
principal amount of Indebtedness permitted by this Section 6.01(f) shall not exceed
$2,000,000 at any time outstanding;




     (g)   Indebtedness under performance bonds or with respect to workers’ compensation
claims, in each case incurred in the ordinary course of business;




     (h)   Indebtedness arising from the honoring by a bank or other financial institution
of a check, draft or similar instrument inadvertently drawn against insufficient funds in
the ordinary course of business; provided that such Indebtedness is promptly covered
by the Borrower or any Subsidiary;




     (i)   Indebtedness of Premium Finance Co. incurred in connection with any Approved
Premium Finance Facility in an aggregate principal amount not to exceed $50,000,000,
provided, that for the avoidance of doubt, such Indebtedness (i) shall be secured
solely by the assets of the Premium Finance Co. (which may include, without limitation, a
pledge of eligible accounts receivable of the Premium Finance Co.), (ii) shall not be
secured by any Equity Interests of the Borrower or any of its Subsidiaries, (iii) shall not
be guaranteed by any Subsidiary of the Borrower other than in accordance with Section
6.01(j) below, and (iv) shall not be exchangeable or convertible into Indebtedness or Equity
Interests of the Borrower or any of its Subsidiaries;



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     (j)   unsecured Guaranties by any Loan Party of Indebtedness incurred in accordance
with Section 6.01(i) above;




     (k)   Customary indemnity obligations for the benefit of a seller or purchaser in
connection with the acquisition or disposition of assets otherwise permitted by this
Agreement (excluding for the avoidance of doubt, Indebtedness for borrowed money or
Guarantees of the payment of borrowed money, whether in the form of a seller or purchaser
note or otherwise); and




     (l)   other unsecured Indebtedness of the Borrower or the Subsidiary Guarantors in an
aggregate principal amount not exceeding $5,000,000 at any time outstanding.



     SECTION 6.02.   Liens. Create, incur, assume or permit to exist any Lien on any
property or assets (including Equity Interests or other securities of any person, including any
Subsidiary) now owned or hereafter acquired by it or on any income or revenues or rights in respect
of any thereof, except:




     (a)   Liens on property or assets of the Borrower and the Subsidiary Guarantors
existing on the date hereof and set forth in Schedule 6.02; provided that such Liens
shall secure only those obligations which they secure on the date hereof and refinancings,
extensions, renewals and replacements thereof permitted hereunder;




     (b)   any Lien created under the Loan Documents;




     (c)   any Lien existing on any property or asset prior to the acquisition thereof by
the Borrower or any Subsidiary Guarantor; provided that (i) such Lien is not created
in contemplation of or in connection with such acquisition, (ii) such Lien does not apply to
any other property or assets of the Borrower or any Subsidiary Guarantor and (iii) such Lien
does not (A) materially interfere with the use, occupancy and operation of any Mortgaged
Property, (B) materially reduce the fair market value of such Mortgaged
Property but for such Lien or (C) result in any material increase in the cost of
operating, occupying or owning or leasing such Mortgaged Property;




     (d)   Liens for taxes not yet due or which are being contested in compliance with
Section 5.03;




     (e)   carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s or other like
Liens arising in the ordinary course of business and securing obligations that are not due
and payable or which are being contested in compliance with Section 5.03;




     (f)   pledges and deposits made in the ordinary course of business in compliance with
workmen’s compensation, unemployment insurance and other social security laws or
regulations;




     (g)   deposits to (i) secure the performance of bids, trade contracts (other than for
Indebtedness), leases (other than Capital Lease Obligations), statutory obligations, surety
and appeal bonds, performance bonds and other obligations of a like nature



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incurred in the
ordinary course of business; (ii) secure liabilities for payment of liability insurance or
for reimbursement or indemnification obligations of insurance carriers; (iii) satisfy escrow
obligations under reinsurance agreements; and (iv) satisfy statutory obligations to grant
Liens in favor of any Insurance Regulator imposed by such Insurance Regulator, in the case
of clauses (ii), (iii) and (iv) if and only (A) to the extent granted by any Regulated
Insurance Subsidiary in the course of its customary and ordinary Business and (B) in any
event limited to an amount not to exceed, in the aggregate at any time outstanding,
$5,000,000;




     (h)   zoning restrictions, easements, rights-of-way, restrictions on use of real
property and other similar encumbrances incurred in the ordinary course of business which,
in the aggregate, are not substantial in amount and do not materially detract from the value
of the property subject thereto or interfere with the ordinary conduct of the business of
the Borrower or any of the Subsidiary Guarantors or the ability of the Borrower or any of
the Subsidiary Guarantors to utilize such property for its intended purpose;




     (i)   purchase money security interests in real property, improvements thereto or other
fixed or capital assets hereafter acquired (or, in the case of improvements, constructed) by
the Borrower or any Subsidiary Guarantors; provided that (i) such security interests
secure Indebtedness permitted by Section 6.01, (ii) such security interests are incurred,
and the Indebtedness secured thereby is created, within 90 days after such acquisition (or
construction) and (iii) such security interests do not apply to any other property or assets
of the Borrower or any Subsidiary Guarantors;




     (j)   judgment Liens securing judgments not constituting an Event of Default under
Article VII;




     (k)   any interest or title of a lessor or sublessor under any lease entered into by
the Borrower or any of the Subsidiary Guarantor in the ordinary course of business and
covering only the assets so leased;




     (l)   Liens on cash deposits and other funds maintained with a depositary institution,
in each case arising in the ordinary course of business by virtue of any statutory or common
law provision relating to banker’s liens; provided that (i) the applicable deposit
account is not a dedicated cash collateral account and is not subject to restrictions
against access by the Borrower or the Subsidiary Guarantors in excess of those set forth in
regulations promulgated by the Board and (ii) the applicable deposit account is not intended
by the Borrower or any of the Subsidiary Guarantor to provide collateral or security to the
applicable depositary institution or any other person;




     (m)   any Lien in respect of eligible receivables or other assets of Premium Finance
Co. granted by Premium Finance Co. to secure any Approved Premium Finance Facility in favor
or the lenders or their agent thereunder;




     (n)   Liens deemed to exist in connection with Investments in repurchase agreements
permitted under Section 6.04;



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     (o)   Liens arising from precautionary uniform commercial code financing statements
regarding operating leases not constituting Indebtedness or consignments;




     (p)   Liens solely on any cash earnest money deposits made in connection with any
letter of intent or purchase agreement permitted hereunder; and




     (q)   other liens securing obligations of the Borrower or the subsidiaries the
aggregate principal amount of the obligations secured by which does not exceed $2,000,000 at
any time outstanding.



     SECTION 6.03.   Sale and Lease-Back Transactions. Enter into any arrangement,
directly or indirectly, with any person whereby it shall sell or transfer any property, real or
personal or mixed, used or useful in its business, whether now owned or hereafter acquired, and
thereafter rent or lease such property or other property which it intends to use for substantially
the same purpose or purposes as the property being sold or transferred unless (a) the sale of such
property is permitted by Section 6.05 and (b) any Capital Lease Obligations or Liens arising in
connection therewith are permitted by Sections 6.01 and 6.02, respectively.



     SECTION 6.04.   Investments, Loans and Advances. Purchase, hold or acquire any Equity
Interests, evidences of indebtedness or other securities of, make or permit to exist any loans or
advances or capital contributions to, or make or permit to exist any investment or any other
interest in, any other person (all of the foregoing, “Investments”), except:




     (a)   (i) Investments by the Borrower and the Subsidiaries existing on the date hereof
in the Equity Interests of the Borrower and the Subsidiaries and (ii) additional Investments
by the Borrower and the Subsidiaries in the Equity Interests of the Borrower and the
whollyowned Subsidiaries of the Borrower; provided that (A) any such Equity
Interests held by a Loan Party shall be pledged pursuant to the Guarantee and Collateral
Agreement (subject to the limitation referred to in Sections 5.09(c), (d) and (e) in
the case of any Excluded Foreign Subsidiary, Regulated Insurance Subsidiary or Premium
Finance Co.), (B) the aggregate amount of Investments by Loan Parties in Subsidiaries that
are either Excluded Foreign Subsidiaries or a Premium Finance Co. shall not exceed
$2,000,000 at any time outstanding and (C) if such Investment shall be in the form of a loan
or advance, such loan or advance shall be unsecured and subordinated to the Obligations
pursuant to an Affiliate Subordination Agreement and, if such loan or advance shall be made
by a Loan Party, it shall be evidenced by a promissory note pledged to the Collateral Agent
for the ratable benefit of the Secured Parties pursuant to the Guarantee and Collateral
Agreement;




     (b)   (i) Permitted Investments by the Borrower and its Subsidiaries (other than
Regulated Insurance Subsidiaries) and (ii) investments by Regulated Insurance Subsidiaries
to the extent permitted under applicable Requirements of Law;




     (c)   Investments received in connection with the bankruptcy or reorganization of, or
settlement of delinquent accounts and disputes with, customers and suppliers, in each case
in the ordinary course of business;



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     (d)   the Borrower and the Subsidiaries may make loans and advances in the ordinary
course of business to their respective employees so long as the aggregate principal amount
thereof at any time outstanding (determined without regard to any write-downs or write-offs
of such loans and advances) shall not exceed $1,000,000;




     (e)   the Acquisition and Permitted Acquisitions;




     (f)   Investments existing on the date hereof and set forth on Schedule 6.04;




     (g)   extensions of trade credit in the ordinary course of business;




     (h)   Investments made as a result of the receipt of non-cash consideration from a
sale, transfer or other disposition of any asset in compliance with Section 6.05;




     (i)   intercompany loans and advances to Borrower to the extent that the Subsidiaries
may pay dividends to the Borrower pursuant to Section 6.06 (and in lieu of paying such
dividends); provided that such intercompany loans and advances (i) shall be made for
the purposes, and shall be subject to all the applicable limitations set forth in, Section
6.06 and (ii) shall be unsecured and subordinated to the Obligations pursuant to an
Affiliate Subordination Agreement; and




     (j)   in addition to Investments permitted by paragraphs (a) through (i) above,
additional Investments by the Borrower and the Subsidiaries so long as the aggregate amount
invested, loaned or advanced pursuant to this paragraph (j) (determined without regard to
any write-downs or write-offs of such investments, loans and advances) does not exceed
$5,000,000 in the aggregate.



     SECTION 6.05.  
Mergers, Consolidations, Sales of Assets and Acquisitions. (a)
Merge into or consolidate with any other person, or permit any other person to merge into or
consolidate with it, or liquidate or dissolve, or sell, transfer, lease, issue or otherwise dispose
of (in one transaction or in a series of transactions) all or substantially all the assets (whether
now owned or hereafter acquired) of the Borrower or less than all the Equity Interests of any
Subsidiary, or purchase, lease or otherwise acquire (in one transaction or a series of
transactions) all or any substantial part of the assets of any other person, except for (i) the
purchase and sale by the Borrower or any Subsidiary of inventory in the ordinary course of
business, (ii) the sale or discount by the Borrower or any Subsidiary in each case without recourse
and in the ordinary course of business of overdue accounts receivable arising in the ordinary
course of business, but only in connection with the compromise or collection thereof consistent
with customary industry practice (and not as part of any bulk sale or financing transaction), (iii)
any Regulated Insurance Subsidiary may (x) enter into any Insurance Contract, Reinsurance Agreement
or Retrocession Agreement in the ordinary course of business in accordance with its normal
underwriting, indemnity and retention policies, provided that any counterparty to any such
Reinsurance Agreement or Retrocession Agreement shall have an A.M. Best financial strength rating
of B++ (or equivalent rating level if A.M. Best changes its ratings methodology or designations) or
better, unless such counterparty’s obligations under such Reinsurance Agreement or Retrocession
Agreement are collateralized by irrevocable letters of credit and/or a trust or similar arrangement
containing cash and/or marketable securities with an average quality rating of B++



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(or its
equivalent) or better of which the applicable Regulated Insurance Subsidiary is the beneficiary,
and (y) dispose of any assets in its investment portfolio, and (iv) if at the time thereof and
immediately after giving effect thereto no Event of Default or Default shall have occurred and be
continuing, (1) the merger or consolidation of any wholly owned Subsidiary into or with the
Borrower in a transaction in which the Borrower is the surviving corporation, (2) the merger or
consolidation of any wholly owned Subsidiary (other than any Regulated Insurance Subsidiary or any
Premium Finance Co.) into or with any other wholly owned Subsidiary (other than any Regulated
Insurance Subsidiary or any Premium Finance Co.) in a transaction in which the surviving entity is
a wholly owned Subsidiary and no person other than the Borrower or a wholly owned Subsidiary
receives any consideration (provided that if any party to any such transaction is (A) a
Loan Party, the surviving entity of such transaction shall be a Loan Party, (B) a Domestic
Subsidiary, the surviving entity of such transaction shall be a Domestic Subsidiary and (C)
USAgencies or a Subsidiary thereof, the surviving entity shall be USAgencies or a surviving
Subsidiary thereof) and (3) Permitted Acquisitions by the Borrower or any Subsidiary.



     (b)   Engage in any Asset Sale otherwise permitted under paragraph (a) above unless (i) such
Asset Sale is for consideration at least 80% of which is cash (and no portion of the remaining
consideration shall be in the form of Indebtedness of the Borrower or any Subsidiary), (ii) such
consideration is at least equal to the fair market value of the assets being sold, transferred,
leased or disposed of, (iii) the fair market value of all assets sold, transferred, leased or
disposed of pursuant to this paragraph (b) shall not exceed $30,000,000 in the aggregate and (iv)
such sale, transfer, lease or disposition of assets is from USAgencies or a Subsidiary thereof to
the Borrower or its Subsidiaries, and the acquirer of such assets is not USAgencies or a Subsidiary
thereof.



     SECTION 6.06.  
Restricted Payments; Restrictive Agreements. (a) Declare or
make, or agree to declare or make, directly or indirectly, any Restricted Payment (including
pursuant to any Synthetic Purchase Agreement), or incur any obligation (contingent or otherwise) to
do so; provided, however, that (i) any Subsidiary may declare and pay dividends or
make other distributions ratably to its equity holders, (ii) so long as no Event of Default or
Default shall have occurred and be continuing or would result therefrom, the Borrower may
repurchase its Equity Interests owned by employees of the Borrower or the Subsidiaries or make
payments to employees of the Borrower or the Subsidiaries upon termination of employment in
connection with the exercise of stock options, stock appreciation rights or similar equity
incentives or equity based incentives pursuant to management incentive plans or in connection with
the death or disability of such employees in an aggregate amount not to exceed $1,500,000 in any
fiscal year, (iii) so long as no Default or Event of Default shall have occurred or be continuing
or would result therefrom, the Borrower may declare and pay dividends or make other customary
distributions ratably to its equity holders consistent with past practice and in an amount not to
exceed $3,000,000 in any fiscal year, and (iv) Borrower may declare and pay dividends to holders of
a class of Equity Interests payable solely in Equity Interests of such class of Equity Interests
held by such holders.



     (b)   Enter into, incur or permit to exist any agreement or other arrangement that prohibits,
restricts or imposes any condition upon (i) the ability of the Borrower or any Subsidiary to
create, incur or permit to exist any Lien upon any of its property or assets, or (ii) the ability
of any Subsidiary to pay dividends or other distributions with respect to any of its



94









 







Equity
Interests or to make or repay loans or advances to the Borrower or any other Subsidiary or to
Guarantee Indebtedness of the Borrower or any other Subsidiary; provided that (A) the
foregoing shall not apply to restrictions and conditions imposed by law or by any Loan Document,
(B) the foregoing shall not apply to customary restrictions and conditions contained in agreements
relating to the sale of a Subsidiary pending such sale, provided such restrictions and
conditions apply only to the Subsidiary that is to be sold and such sale is permitted hereunder,
(C) the foregoing shall not apply to restrictions and conditions imposed on any Subsidiary that is
not a Loan Party (other than any Premium Finance Co. and its Subsidiaries, as to which the
foregoing shall apply) by the terms of any Indebtedness of such Subsidiary permitted to be incurred
hereunder (other than any Approved Premium Finance Facility, as to which the foregoing shall
apply), (D) clause (i) of the foregoing shall not apply to restrictions or conditions imposed by
any agreement relating to secured Indebtedness permitted by this Agreement if such restrictions or
conditions apply only to the property or assets securing such Indebtedness, (E) clause (i) of the
foregoing shall not apply to restrictions or conditions imposed by the Subordinated Debt Documents
or any restrictions or conditions no less favorable to the Borrower, its Subsidiaries and the
Lenders contained in the Qualified Additional Subordinated Debt Documents and (F) clause (i) of the
foregoing shall not apply to customary provisions in leases and other contracts restricting the
assignment thereof.



     SECTION 6.07.   Transactions with Affiliates. Except for transactions by or among
Loan Parties, sell or transfer any property or assets to, or purchase or acquire any property or
assets from, or otherwise engage in any other transactions with, any of its Affiliates, except that
(a) the Borrower or any Subsidiary may engage in any of the foregoing transactions in the ordinary
course of business at prices and on terms and conditions not less favorable to the Borrower or such
Subsidiary than could be
obtained on an arm’s-length basis from unrelated third parties, (b) Restricted Payments may be
made to the extent provided in Section 6.06, (c) Borrower and its Subsidiaries may engage in
transactions with Premium Finance Co. in the ordinary course of business and on terms no less
favorable to the Loan Parties than would be obtained in a comparable arm’s-length transaction with
a third party who is not an Affiliate.



     SECTION 6.08.   Business of the Borrower and Subsidiaries; Limitation on Hedging
Agreements. (a) With respect to Borrower, engage in any business activities or have any
assets or liabilities other than its ownership of the Equity Interests in its direct whollyowned
Domestic Subsidiaries (none of which shall be a Premium Finance Co.) and liabilities incidental
thereto, including its liabilities pursuant to the Loan Documents.



     (b)   With respect to the Borrower and the Subsidiaries, engage at any time in any business or
business activity other than the business conducted by it as of the date hereof and business
activities reasonably incidental thereto.



     (c)   With respect to LIFCO, (i) directly or indirectly be merged with or into or otherwise
transfer any of its assets to any Premium Finance Co. or any person that becomes a Premium Finance
Co. or (ii) provide any premium financing to any persons other than customers of USAgencies or any
of its Subsidiaries.



     (d)   With respect to any Premium Finance Co., (i) directly or indirectly be merged with or
into or otherwise transfer any of its assets to LIFCO or any of its Subsidiaries or (ii)



95









 







provide
any premium financing to customers of USAgencies or any of its Subsidiaries or otherwise compete in
the state of Louisiana with USAgencies or any of its Subsidiaries with respect to the provision of
premium financing to customers of USAgencies, its Subsidiaries or any other Subsidiary of the
Borrower operating under the brand or trade name of “USAgencies” or any other brand or trade name
used by the Borrower or its Subsidiaries.



     (e)   Enter into any Hedging Agreement other than (a) any such agreement or arrangement
entered into in the ordinary course of business and consistent with prudent business practice to
hedge or mitigate risks to which the Borrower or any Subsidiary is exposed in the conduct of its
business or the management of its liabilities or (b) any such agreement entered into to hedge
against fluctuations in interest rates or currency incurred in the ordinary course of business and
consistent with prudent business practice; provided that in each case such agreements or
arrangements shall not have been entered into for speculation purposes.



     SECTION 6.09.   Other Indebtedness and Agreements; Amendments to Acquisition
Documentation. (a) Permit any waiver, supplement, modification, amendment, termination or
release of any indenture, instrument or agreement pursuant to which the Subordinated Debt, any
Qualified Additional Subordinated Debt, any Approved Premium Financing, any other Material
Indebtedness of the Borrower or any of the Subsidiaries is outstanding if the effect of such
waiver, supplement, modification, amendment, termination or release would materially increase
the obligations of the obligor or confer additional material rights on the holder of such
Indebtedness in a manner adverse to the Borrower or any of the Subsidiaries or the Lenders.



     (b)   (i) Make any distribution, whether in cash, property, securities or a combination
thereof, other than regular scheduled payments of principal and interest as and when due (to the
extent not prohibited by applicable subordination provisions), in respect of, or pay, or offer or
commit to pay, or directly or indirectly (including pursuant to any Synthetic Purchase Agreement)
redeem, repurchase, retire or otherwise acquire for consideration, or set apart any sum for the
aforesaid purposes, any Indebtedness, except (A) the payment of the Indebtedness created hereunder,
(B) refinancings of Indebtedness permitted by Section 6.01, (C) payments by Premium Finance Co. of
any Approved Premium Financing made in accordance with the terms of such Approved Premium Financing
and (D) the payment of secured Indebtedness that becomes due as a result of the voluntary sale or
transfer of the property or assets securing such Indebtedness, (ii) pay in cash any amount in
respect of any Indebtedness or preferred Equity Interests that may at the obligor’s option be paid
in kind or in other securities or (iii) to optionally or voluntarily redeem any Indebtedness of the
Borrower or any of its Subsidiaries incurred pursuant to the issuance of any TruPS and any related
TruPS instrument, at any time prior to the date that is six months after the latest of the
Revolving Credit Maturity Date and the Term Loan Maturity Date, other than upon issuance of
additional Qualified Additional Subordinated Debt;



     (c)   (i) Permit any waiver, supplement, modification, amendment, termination or release of,
or fail to enforce strictly the terms and conditions of, any of the indemnities and licenses
furnished to the Borrower and the Subsidiaries pursuant to the Acquisition Documentation such that
after giving effect thereto such indemnities or licenses shall be materially less favorable to the
interests of the Loan Parties or the Secured Parties with respect thereto or (ii) otherwise permit
any waiver, supplement, modification, amendment, termination



96









 







or release of, or fail to enforce
strictly the terms and conditions of, any of the Acquisition Documentation except to the extent
that such waiver, supplement, modification, amendment, termination or release or failure to enforce
could not reasonably be expected to have a Material Adverse Effect.



     SECTION 6.10.   Capital Expenditures. Permit the aggregate amount of Capital
Expenditures made by the Borrower and the Subsidiaries (other than Premium Finance Co.) in any
period set forth below to exceed the amount set forth below for such period:



	 	 	 	 	 
	Fiscal Year Ending	 	Amount
	December 31, 2007
	 	$	7,000,000	 
	December 31, 2008
	 	$	7,300,000	 
	December 31, 2009
	 	$	7,500,000	 
	December 31, 2010
	 	$	7,800,000	 
	December 31, 2011
	 	$	8,000,000	 
	December 31, 2012
	 	$	8,000,000	 
	December 31, 2013
	 	$	8,000,000	 





; provided, however, (x) if the aggregate amount of permitted Capital Expenditures
set forth above in respect of any fiscal year commencing with the fiscal year ending on December
31, 2008, shall be less than the maximum amount of Capital Expenditures permitted under this
Section 6.10 for such fiscal year (before giving effect to any carryover), then an amount
of such shortfall not exceeding 50% of such maximum amount may be added to the amount of Capital
Expenditures permitted under this Section 6.10 for the immediately succeeding (but not any
other) fiscal year and (y) in determining whether any amount is available for carryover, the amount
expended in any fiscal year shall first be deemed to be from the amount allocated to such fiscal
year (before giving effect to any carryover), provided further, that Borrower shall be
allowed to expend an amount up to $35,000,000 in the aggregate during the period beginning on
January 1, 2007 and ending on December 31, 2008 (the “Permitted IT Capital Expenditures”),
in addition to the aggregate amounts of permitted Capital Expenditures set forth above in the
fiscal years commencing on January 1, 2007 and January 1, 2008, respectively, in connection with
the upgrade of its information technology infrastructure by Accenture or another technology
services provider reasonably acceptable to the Administrative Agent.




     SECTION 6.11.   Interest Coverage Ratio. Permit the Interest Coverage Ratio during
any period set forth below to be less than the ratio set forth opposite such period below:



	 	 	 	 	 
	Four Fiscal Quarters Ended	 	Ratio
	March 31, 2007
	 	 	3.00:1.00	 
	June 30, 2007
	 	 	3.00:1.00	 
	September 30, 2007
	 	 	3.00:1.00	 
	December 31, 2007
	 	 	3.00:1.00	 
	March 31, 2008
	 	 	3.25:1.00	 
	June 30, 2008
	 	 	3.25:1.00	 
	September 30, 2008
	 	 	3.50:1.00	 






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	Four Fiscal Quarters Ended	 	Ratio
	December 31, 2008
	 	 	3.50:1.00	 
	March 31, 2009
	 	 	4.00:1.00	 
	June 30, 2009
	 	 	4.00:1.00	 
	September 30, 2009
	 	 	4.00:1.00	 
	December 31, 2009
	 	 	4.00:1.00	 
	March 31, 2010
	 	 	4.50:1.00	 
	June 30, 2010
	 	 	4.50:1.00	 
	September 30, 2010
	 	 	4.50:1.00	 
	December 31, 2010
	 	 	4.50:1.00	 
	March 31, 2011
	 	 	4.50:1.00	 
	June 30, 2011
	 	 	4.50:1.00	 
	September 30, 2011
	 	 	4.50:1.00	 
	December 31, 2011
	 	 	4.50:1.00	 
	March 31, 2012
	 	 	4.50:1.00	 
	June 30, 2012
	 	 	4.50:1.00	 
	September 30, 2012
	 	 	4.50:1.00	 
	December 31, 2012
	 	 	4.50:1.00	 
	March 31, 2013
	 	 	4.50:1.00	 
	June 30, 2013
	 	 	4.50:1.00	 
	September 30, 2013
	 	 	4.50:1.00	 
	December 31, 2013
	 	 	4.50:1.00	 






     SECTION 6.12.   Leverage Ratio. Permit the Leverage Ratio during any period set forth
below to be greater than the ratio set forth opposite such period below:



	 	 	 	 	 
	Four Fiscal Quarters Ended	 	Ratio
	March 31, 2007
	 	 	4.25:1.00	 
	June 30, 2007
	 	 	4.25:1.00	 
	September 30, 2007
	 	 	4.00:1.00	 
	December 31, 2007
	 	 	4.00:1.00	 
	March 31, 2008
	 	 	3.75:1.00	 
	June 30, 2008
	 	 	3.75:1.00	 
	September 30, 2008
	 	 	3.25:1.00	 
	December 31, 2008
	 	 	3.25:1.00	 
	March 31, 2009
	 	 	3.00:1.00	 
	June 30, 2009
	 	 	3.00:1.00	 
	September 30, 2009
	 	 	2.75:1.00	 
	December 31, 2009
	 	 	2.75:1.00	 
	March 31, 2010
	 	 	2.50:1.00	 
	June 30, 2010
	 	 	2.50:1.00	 
	September 30, 2010
	 	 	2.00:1.00	 
	December 31, 2010
	 	 	2.00:1.00	 
	March 31, 2011
	 	 	2.00:1.00	 
	June 30, 2011
	 	 	2.00:1.00	 
	September 30, 2011
	 	 	2.00:1.00	 






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	Four Fiscal Quarters Ended	 	Ratio
	December 31, 2011
	 	 	2.00:1.00	 
	March 31, 2012
	 	 	2.00:1.00	 
	June 30, 2012
	 	 	2.00:1.00	 
	September 30, 2012
	 	 	2.00:1.00	 
	December 31, 2012
	 	 	2.00:1.00	 
	March 31, 2013
	 	 	2.00:1.00	 
	June 30, 2013
	 	 	2.00:1.00	 
	September 30, 2013
	 	 	2.00:1.00	 
	December 31, 2013
	 	 	2.00:1.00	 






     SECTION 6.13.   Minimum Risk-Based Capital Ratio. The Borrower will not permit the
Risk-Based Capital Ratio for any Regulated Insurance Subsidiary determined on an individual basis
calculated as of the last day of any fiscal
year to be less than 250%, provided that if any such person fails to maintain such
Risk-Based Capital Ratio as of the last day of any fiscal year the Borrower shall nevertheless be
deemed to be in compliance with this Section 6.13, and no Default or Event of Default shall exist,
so long as (i) the Combined Risk-Based Capital Ratio for all Regulated Insurance Subsidiaries as of
the last day of such fiscal year is at least 275% and (ii) the Risk-Based Capital Ratio of each
Regulated Insurance Subsidiary determined on an individual basis as of the last day of such fiscal
year is at least 200%.



     SECTION 6.14.   Combined Ratio. Borrower shall not permit the Combined Ratio of any
Regulated Insurance Subsidiary to be greater than 105% at any time.



     SECTION 6.15.   Fixed Charge Coverage Ratio. From and after any Increased Amount Date
in respect of which any Primary New Revolving Loan Commitments have become effective in accordance
with Section 2.24 hereof, Borrower shall not permit the Fixed Charge Coverage Ratio to be less than
1.50 to 1.00 as at the last day of any fiscal year of Borrower (for the avoidance of doubt, as such
covenant may be waived, amended or modified by the Required Revolving Credit Lenders in accordance
with the final “provided further” clause contained in Section 9.08(b) hereof).



     SECTION 6.16.   Consolidated Net Worth. From and after any Increased Amount Date in
respect of which any Primary New Revolving Loan Commitments have become effective in accordance
with Section 2.24 hereof, Borrower shall not permit Consolidated Net Worth to be less than
$195,000,000 at any time (for the avoidance of doubt, as such covenant may be waived, amended or
modified by the Required Revolving Credit Lenders in accordance with the final “provided
further” clause contained in Section 9.08(b) hereof).



     SECTION 6.17.   Fiscal Year. With respect to the Borrower or USAgencies, change its
fiscal year-end to a date other than December 31.



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ARTICLE VII.  




Events of Default




     In case of the happening of any of the following events (“Events of Default”):



     (a)   any representation or warranty made or deemed made in or in connection with any Loan
Document or the Borrowings or issuances of Letters of Credit hereunder, or any representation,
warranty, statement or information contained in any report, certificate, financial statement or
other instrument furnished in connection with or pursuant to any Loan Document, shall prove to have
been false or misleading in any material respect when so made, deemed made or furnished;



     (b)   default shall be made in the payment of any principal of any Loan or the reimbursement
with respect to any L/C Disbursement when and as the same shall become due and payable, whether at
the due date thereof or at a date fixed for prepayment thereof or by acceleration thereof or
otherwise;



     (c)   default shall be made in the payment of any interest on any Loan or L/C Disbursement or
any Fee or any other amount (other than an amount referred to in (b) above) due under any Loan
Document, when and as the same shall become due and payable, and such default shall continue
unremedied for a period of five Business Days;



     (d)   default shall be made in the due observance or performance by the Borrower or any
Subsidiary of any covenant, condition or agreement contained in Section 5.01(a), 5.02, 5.05 or 5.08
or in Article VI;



     (e)   default shall be made in the due observance or performance by the Borrower or any
Subsidiary of any covenant, condition or agreement contained in any Loan Document (other than those
specified in clauses (b), (c) or (d) above) and such default shall continue unremedied for a period
of 30 days;



     (f)   (i) the Borrower or any Subsidiary shall (i) fail to pay any principal or interest,
regardless of amount, due in respect of any Subordinated Debt, any Qualified Additional
Subordinated Debt, any Approved Premium Financing or any other Material Indebtedness, when and as
the same shall become due and payable, or (ii) any other event or condition occurs that results in
any Subordinated Debt, any Qualified Additional Subordinated Debt, any Approved Premium Finance
Facility or any other Material Indebtedness becoming due prior to its scheduled maturity or that
enables or permits (with or without the giving of notice, the lapse of time or both) the holder or
holders of any Subordinated Debt, any Qualified Additional Subordinated Debt, any Approved Premium
Financing or any other Material Indebtedness or any trustee or agent on its or their behalf to
cause any Material Indebtedness to become due, or to require the prepayment, repurchase, redemption
or defeasance thereof, prior to its scheduled maturity; provided that this clause (ii)
shall not apply to secured Indebtedness that becomes due as a result of the voluntary sale or
transfer of the property or assets securing such Indebtedness;



     (g)   an involuntary proceeding shall be commenced or an involuntary petition shall be filed
in a court of competent jurisdiction seeking (i) relief in respect of the Borrower or any



100









 







Subsidiary, or of a substantial part of the property or assets of the Borrower or a Subsidiary,
under Title 11 of the United States Code, as now constituted or hereafter amended, or any other
Federal, state or foreign bankruptcy, insolvency, receivership or similar law, (ii) the appointment
of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Borrower
or any Subsidiary or for a substantial part of the property or assets of the Borrower or a
Subsidiary or (iii) the winding-up or liquidation of the Borrower or any Subsidiary; and such
proceeding or petition shall continue undismissed for 60 days or an order or decree approving or
ordering any of the foregoing shall be entered;



     (h)   the Borrower or any Subsidiary shall (i) voluntarily commence any proceeding or file any
petition seeking relief under Title 11 of the United States Code, as now constituted or hereafter
amended, or any other Federal, state or foreign bankruptcy, insolvency, receivership or
similar law, (ii) consent to the institution of, or fail to contest in a timely and
appropriate manner, any proceeding or the filing of any petition described in (g) above, (iii)
apply for or consent to the appointment of a receiver, trustee, custodian, sequestrator,
conservator or similar official for the Borrower or any Subsidiary or for a substantial part of the
property or assets of the Borrower or any Subsidiary, (iv) file an answer admitting the material
allegations of a petition filed against it in any such proceeding, (v) make a general assignment
for the benefit of creditors, (vi) become unable, admit in writing its inability or fail generally
to pay its debts as they become due or (vii) take any action for the purpose of effecting any of
the foregoing;



     (i)   one or more judgments for the payment of money in an aggregate amount in excess of
$2,500,000 or other judgments that, individually or in the aggregate, could reasonably be expected
to result in a Material Adverse Effect shall be rendered against the Borrower, any Subsidiary or
any combination thereof and the same shall remain undischarged for a period of 30 consecutive days
during which execution shall not be effectively stayed, or any action shall be legally taken by a
judgment creditor to levy upon assets or properties of the Borrower or any Subsidiary to enforce
any such judgment;



     (j)   an ERISA Event described in clause (b) of the definition thereof shall have occurred or
any other ERISA Event shall have occurred that, when taken together with all other such ERISA
Events, could reasonably be expected to result in liability of the Borrower and its ERISA
Affiliates in an aggregate amount exceeding $2,500,000;



     (k)   any Guarantee under the Guarantee and Collateral Agreement for any reason shall cease to
be in full force and effect (other than in accordance with its terms), or any Guarantor shall deny
that it has any further liability under its Guarantee (other than as a result of the discharge of
such Guarantor in accordance with the terms of the Loan Documents);



     (l)   any Lien purported to be created under any Security Document shall cease to be, or shall
be asserted by the Borrower or any other Loan Party not to be, a valid, perfected and, with respect
to the Secured Parties, first priority (except as otherwise expressly provided in this Agreement or
such Security Document) Lien on any material Collateral covered thereby, except to the extent that
any such loss of perfection or priority results from the failure of the Collateral Agent to
maintain possession of certificates representing Equity Interests pledged under the Guarantee and
Collateral Agreement; or



101









 





     (m)   there shall have occurred a Change in Control;



then, and in every such event (other than an event with respect to the Borrower described in
paragraph (g) or (h) above), and at any time thereafter during the continuance of such event either
or both of the following actions may be taken: (i) the Administrative Agent may, and at the request
of the Majority Facility Lenders with respect to the Revolving Credit Facility shall, by notice to
the Borrower, terminate forthwith the Revolving Credit Commitments and the Swingline Commitment and
(ii) the Administrative Agent may, and at the request of the Required Lenders shall, declare the
Loans then outstanding to be forthwith due and payable in whole or in part, whereupon the principal
of the Loans so declared to be due and payable, together with accrued interest thereon and any
unpaid accrued Fees and all other liabilities of the Borrower accrued hereunder and under any other
Loan Document, shall become forthwith due
and payable, without presentment, demand, protest or any other notice of any kind, all of which are
hereby expressly waived by the Borrower, anything contained herein or in any other Loan Document to
the contrary notwithstanding, and the Administrative Agent and the Collateral Agent shall have the
right to take all or any actions and exercise any remedies available to a secured party under the
Security Documents or applicable law or in equity; and in any event with respect to the Borrower
described in paragraph (g) or (h) above, the Revolving Credit Commitments and the Swingline
Commitment shall automatically terminate and the principal of the Loans then outstanding, together
with accrued interest thereon and any unpaid accrued Fees and all other liabilities of the Borrower
accrued hereunder and under any other Loan Document, shall automatically become due and payable,
without presentment, demand, protest or any other notice of any kind, all of which are hereby
expressly waived by the Borrower, anything contained herein or in any other Loan Document to the
contrary notwithstanding, and the Administrative Agent and the Collateral Agent shall have the
right to take all or any actions and exercise any remedies available to a secured party under the
Security Documents or applicable law or in equity.




ARTICLE VIII.




The Agents and the Arranger




     Each of the Lenders and the Issuing Bank hereby irrevocably appoints each of the
Administrative Agent and the Collateral Agent (for purposes of this Article VIII, the
Administrative Agent and the Collateral Agent are referred to collectively as the “Agents”)
its agent and authorizes the Agents to take such actions on its behalf, including the execution of
the other Loan Documents, and to exercise such powers as are delegated to such Agent by the terms
of the Loan Documents, together with such actions and powers as are reasonably incidental thereto.
Without limiting the generality of the foregoing, the Agents are hereby expressly authorized by the
Lenders to execute any and all documents (including releases and the Security Documents) with
respect to the Collateral and the rights of the Secured Parties with respect thereto, as
contemplated by and in accordance with the provisions of this Agreement and the Security Documents.



     Each bank serving as an Agent hereunder shall have the same rights and powers in its capacity
as a Lender as any other Lender and may exercise the same as though it were not an Agent, and such
bank and its Affiliates may accept deposits from, lend money to and generally



102









 







engage in any kind of
business with the Borrower or any Subsidiary or any of their respective Affiliates as if it were
not an Agent hereunder.



     No Agent shall have any duties or obligations except those expressly set forth in the Loan
Documents. Without limiting the generality of the foregoing, (a) no Agent shall be subject to any
fiduciary or other implied duties, regardless of whether a Default has occurred and is continuing,
(b) no Agent shall have any duty to take any discretionary action or exercise any discretionary
powers, except discretionary rights and powers expressly contemplated by the Loan Documents that
such Agent is required to exercise in writing as directed by the Required Lenders (or such other
number or percentage of the Lenders as shall be necessary under the circumstances as provided in
Section 9.08), and (c) except as expressly set forth in the Loan Documents, no Agent shall have any
duty to disclose, nor shall it be liable for the failure to
disclose, any information relating to the Borrower or any of the Subsidiaries or any of their
respective Affiliates that is communicated to or obtained by the bank serving as an Agent or any of
its Affiliates in any capacity. No Agent shall be liable for any action taken or not taken by it
with the consent or at the request of the Required Lenders (or such other number or percentage of
the Lenders as shall be necessary under the circumstances as provided in Section 9.08) or in the
absence of its own gross negligence or willful misconduct. No Agent shall be deemed to have
knowledge of any Default unless and until written notice thereof is given to such Agent by the
Borrower or a Lender, and no Agent shall be responsible for or have any duty to ascertain or
inquire into (i) any statement, warranty or representation made in or in connection with any Loan
Document, (ii) the contents of any certificate, report or other document delivered thereunder or in
connection therewith, (iii) the performance or observance of any of the covenants, agreements or
other terms or conditions set forth in any Loan Document, (iv) the validity, enforceability,
effectiveness or genuineness of any Loan Document or any other agreement, instrument or document,
(v) the creation, perfection or priority of Liens on the Collateral or the existence of the
Collateral or (vi) the satisfaction of any condition set forth in Article IV or elsewhere in any
Loan Document, other than to confirm receipt of items expressly required to be delivered to such
Agent.



     Each Agent shall be entitled to rely upon, and shall not incur any liability for relying upon,
any notice, request, certificate, consent, statement, instrument, document or other writing
believed by it to be genuine and to have been signed or sent by the proper person. Each Agent may
also rely upon any statement made to it orally or by telephone and believed by it to have been made
by the proper person, and shall not incur any liability for relying thereon. Each Agent may
consult with legal counsel (who may be counsel for the Borrower), independent accountants and other
experts selected by it, and shall not be liable for any action taken or not taken by it in
accordance with the advice of any such counsel, accountants or experts.



     Each Agent may perform any and all its duties and exercise its rights and powers by or through
any one or more sub-agents appointed by it. Each Agent and any such sub-agent may perform any and
all its duties and exercise its rights and powers by or through their respective Related Parties.
The exculpatory provisions of the preceding paragraphs shall apply to any such sub-agent and to the
Related Parties of each Agent and any such sub-agent, and shall apply to their respective
activities in connection with the syndication of the credit facilities provided for herein as well
as activities as Agent.



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     Subject to the appointment and acceptance of a successor Agent as provided in this paragraph,
each Agent may resign at any time by notifying the Lenders, the Issuing Bank and the Borrower.
Upon any such resignation, the Required Lenders shall have the right, with the consent (not to be
unreasonably withheld or delayed) of the Borrower, to appoint a successor; provided that
during the existence and continuance of an Event of Default no such consent of the Borrower shall
be required. If no successor shall have been so appointed by the Required Lenders and shall have
accepted such appointment within 30 days after the retiring Agent gives notice of its resignation,
then the retiring Agent may, on behalf of the Lenders and the Issuing Bank, appoint a successor
Agent which shall be a bank with an office in New York, New York, or an Affiliate of any such bank.
Upon the acceptance of its appointment as Agent hereunder by a successor, such successor shall
succeed to and become vested with all the rights, powers, privileges and duties of the retiring
Agent, and the retiring Agent shall be discharged from its
duties and obligations hereunder. The fees payable by the Borrower to a successor Agent shall
be the same as those payable to its predecessor unless otherwise agreed between the Borrower and
such successor. After an Agent’s resignation hereunder, the provisions of this Article and Section
9.05 shall continue in effect for the benefit of such retiring Agent, its sub-agents and their
respective Related Parties in respect of any actions taken or omitted to be taken by any of them
while acting as Agent. In addition, notwithstanding the effectiveness of a resignation by the
Administrative Agent hereunder, (a) the retiring Administrative Agent may, in its sole discretion,
continue to provide the services of the Administrative Agent solely with respect to administering,
collecting and delivering any payments of principal, interest, fees, premium or other amounts in
respect of the Loans and maintaining the books and records relating thereto (such Administrative
Agent acting in such capacity, the “Paying Agent”), (b) the term “Administrative Agent”
when used in connection with any such functions shall be deemed to mean such retiring
Administrative Agent in its capacity as the Paying Agent and (c) such retiring Administrative Agent
shall, in its capacity as the Paying Agent, continue to be vested with and enjoy all of the rights
and benefits of an Administrative Agent hereunder.



     The Arranger, in its capacity as such, shall have no duties or responsibilities, and shall
incur no liability, under this Agreement or any other Loan Document.



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



     To the extent required by any applicable law, the Administrative Agent may withhold from any
interest payment to any Lender an amount equivalent to any applicable withholding tax. If the
Internal Revenue Service or any other Governmental Authority asserts a claim that the
Administrative Agent did not properly withhold tax from amounts paid to or for the account of any
Lender because the appropriate form was not delivered or was not properly executed or because such
Lender failed to notify the Administrative Agent of a change in circumstance which rendered the
exemption from, or reduction of, withholding tax ineffective or for any other



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reason, such Lender
shall indemnify the Administrative Agent fully for all amounts paid, directly or indirectly, by the
Administrative Agent as tax or otherwise, including any penalties or interest and together with all
expenses (including legal expenses, allocated internal costs and out-of-pocket expenses) incurred.



ARTICLE IX.




Miscellaneous




     SECTION 9.01.   Notices. (a) Except in the case of notices and other communications expressly permitted to be given
by telephone (and subject to paragraph (b) of this Section 9.01), 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 fax, as follows:




     (i) if to the Borrower or any other Loan Party, to the Borrower at Affirmative
Insurance Holdings, Inc., Attention of Joseph Fisher, 150 Harvester Drive, Burr Ridge, IL
60527 (Tel. No. (708) 233-7080) (Fax No. (708) 233-7013) (e-mail:
joseph.fisher@affirmativeinsurance.com) and to Affirmative Insurance Holdings, Inc.,
Attention of Mark E. Pape, 4450 Sojourn Drive, Suite 500, Addison, TX 75001 (e-mail:
mark.pape@affirmativeinsurance.com);




     (ii) if to the Administrative Agent or the Collateral Agent, to Credit Suisse, Eleven
Madison Avenue, New York, NY 10010, Attention of Agency Group (Fax No. (212) 325-8304); and




     (iii) if to a Lender, to it at its address (or fax number) set forth in the Lender
Addendum or the Assignment and Acceptance pursuant to which such Lender shall have become a
party hereto or set forth in its Administrative Questionnaire.


All such notices and other communications (i) sent by hand or overnight courier service, or mailed
by certified or registered mail, shall be deemed to have been given when received or (ii) sent by
fax shall be deemed to have been given when sent and when receipt has been confirmed by telephone;
provided 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.




     (b) Notices and other communications to the Lenders hereunder may be delivered or furnished
by electronic communications (including e-mail and internet or intranet websites) pursuant to
procedures approved by the Administrative Agent; provided that the foregoing shall not
apply to notices to any Lender pursuant to Article II if such Lender has notified the
Administrative Agent that it is incapable of receiving notices under such Article by electronic
communication. The Administrative Agent or the Borrower (on behalf of the Loan Parties) may, in
its discretion, agree to accept notices and other communications to it hereunder by electronic
communications pursuant to procedures approved by it; provided that approval of such
procedures may be limited to particular notices or communications. All such notices and other
communications (i) sent to an e-mail address shall be deemed received upon the sender’s receipt of
an acknowledgement from the intended recipient (such as by the “return receipt requested”



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function,
return e-mail or other written acknowledgment); provided that if not given during the
normal business hours of the recipient, such notice or communication shall be deemed to have been
given at the opening of business on the next Business Day for the recipient, and (ii) posted to an
internet or intranet website shall be deemed received upon the deemed receipt by the intended
recipient at its e-mail address as described in the foregoing clause (b)(i) of notification that
such notice or communication is available and identifying the website address therefor.



     (c) Any party hereto may change its address or fax number for notices and other
communications hereunder by notice to the other parties hereto in accordance with the provisions
hereof.



     SECTION 9.02.   Survival of Agreement. All covenants, agreements, representations and
warranties made by the Loan Parties in the Loan Documents and in the certificates or other
documents delivered in connection with or pursuant to this Agreement or any other Loan Document
shall be considered to have been relied upon by the other parties hereto and shall survive the
execution and delivery of the Loan Documents and the making of any Loans and the issuance of any
Letters of Credit, regardless of any investigation made by any such other party or on its behalf
and notwithstanding that any such other party may have had notice or knowledge of any Default or
incorrect representation or warranty at the time any credit is extended hereunder, and shall
continue in full force and effect as long as the principal of or any accrued interest on any Loan
or any Fee or any other amount payable under this Agreement or any other Loan Document is
outstanding and unpaid or any Letter of Credit is outstanding and so long as the Commitments have
not expired or terminated. The provisions of Sections 2.14, 2.16, 2.20 and 9.05 and Article VIII
shall survive and remain operative and in full force and effect regardless of the expiration or
termination of this Agreement (or any provisions hereof), the consummation of the transactions
contemplated hereby, the repayment of any Loan, the expiration or termination of the Commitments,
the expiration of any Letter of Credit, the invalidity or unenforceability of any provision of this
Agreement or any other Loan Document or any investigation made by or on behalf of the
Administrative Agent, the Collateral Agent, the Arranger, any Lender or the Issuing Bank.



     SECTION 9.03.   Binding Effect. This Agreement shall become effective when it shall
have been executed by each of the parties hereto and when the Administrative Agent shall have
received counterparts hereof which, when taken together, bear the signatures of each of the other
parties hereto.



     SECTION 9.04.   Successors and Assigns. (a) Whenever in this Agreement any of
the parties hereto is referred to, such reference shall be deemed to include the permitted
successors and assigns of such party; and all covenants, promises and agreements by or on behalf of
the Borrower, the Administrative Agent, the Collateral Agent, the Issuing Bank or the Lenders that
are contained in this Agreement shall bind and inure to the benefit of their respective successors
and assigns.



     (b)   Each Lender may assign to one or more assignees all or a portion of its interests,
rights and obligations under this Agreement (including all or a portion of its Commitment and the
Loans at the time owing to it); provided, however, that (i) the Administrative
Agent must give its prior written consent to such assignment (which consent shall not be
unreasonably



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withheld or delayed), (ii) in the case of any assignment of a Revolving Credit
Commitment, each of the Issuing Bank, the Swingline Lender and the Borrower must give its prior
written consent to such assignment (which consent shall not be
unreasonably withheld or delayed);
provided that the consent of the Borrower shall not be required to any such assignment
during the continuance of any Default or in connection with the initial syndication of the
Facility, (iii) the amount of the Commitment of the assigning Lender subject to each such
assignment (determined as of the date the Assignment and Acceptance with respect to such assignment
is delivered to the
Administrative Agent) shall not be less than $1,000,000 in the case of Term Loans and
$5,000,000 in the case of Revolving Loans (or, if less, the entire remaining amount of such
Lender’s Commitment) and shall be in an amount that is an integral multiple of $1,000,000 (or the
entire remaining amount of such Lender’s Commitment) (it being understood and agreed that, with
respect to any Lender that is an investment fund, such Lender and any other one or more investment
funds that invest in commercial loans and that is or are managed or advised by the same investment
advisor as such Lender or by an Affiliate of such Lender shall be deemed to be a single Lender for
purpose of calculating such minimum thresholds), (iv) the parties to each assignment shall execute
and deliver to the Administrative Agent an Assignment Agreement via an electronic settlement system
acceptable to the Administrative Agent (or, if previously agreed with the Agent, manually), and
shall pay to the Administrative Agent a processing and recordation fee of $3,500 (which fee may be
waived or reduced in the sole discretion of the Administrative Agent) and (v) the assignee, if it
shall not be a Lender immediately prior to the assignment, shall deliver to the Administrative
Agent an Administrative Questionnaire and applicable tax forms. Upon acceptance and recording
pursuant to paragraph (e) of this Section 9.04, from and after the effective date specified in each
Assignment and Acceptance, (A) the assignee thereunder shall be a party hereto and, to the extent
of the interest assigned by such Assignment and Acceptance, have the rights and obligations of a
Lender under this Agreement and (B) the assigning Lender thereunder shall, to the extent of the
interest assigned by such Assignment and Acceptance, be released from its obligations under this
Agreement (and, in the case of an Assignment and Acceptance covering all or the remaining portion
of an assigning Lender’s rights and obligations under this Agreement, such Lender shall cease to be
a party hereto but shall continue to be entitled to the benefits of Sections 2.14, 2.16, 2.20 and
9.05, as well as to any Fees accrued for its account and not yet paid).



     (c)   By executing and delivering an Assignment and Acceptance, the assigning Lender
thereunder and the assignee thereunder shall be deemed to confirm to and agree with each other and
the other parties hereto as follows: (i) such assigning Lender warrants that it is the legal and
beneficial owner of the interest being assigned thereby free and clear of any adverse claim and
that its Term Loan Commitment and Revolving Credit Commitment, and the outstanding balances of its
Term Loans and Revolving Loans, in each case without giving effect to assignments thereof which
have not become effective, are as set forth in such Assignment and Acceptance, (ii) except as set
forth in (i) above, such assigning Lender makes no representation or warranty and assumes no
responsibility with respect to any statements, warranties or representations made in or in
connection with this Agreement, or the execution, legality, validity, enforceability, genuineness,
sufficiency or value of this Agreement, any other Loan Document or any other instrument or document
furnished pursuant hereto, or the financial condition of the Borrower or any Subsidiary or the
performance or observance by the Borrower or any Subsidiary of any of its obligations under this
Agreement, any other Loan Document or any other instrument or document furnished pursuant hereto;
(iii) such assignee represents and warrants that it is



107









 







legally authorized to enter into such
Assignment and Acceptance; (iv) such assignee confirms that it has received a copy of this
Agreement, together with copies of the most recent financial statements referred to in Section
3.05(a) or delivered pursuant to Section 5.04 and such other documents and information as it has
deemed appropriate to make its own credit analysis and decision to enter into such Assignment and
Acceptance; (v) such assignee will independently and without reliance upon the Administrative
Agent, the Collateral Agent, the Arranger, such assigning Lender or any other Lender and based on
such documents and information as it shall
deem appropriate at the time, continue to make its own credit decisions in taking or not
taking action under this Agreement; (vi) such assignee appoints and authorizes the Administrative
Agent and the Collateral Agent to take such action as agent on its behalf and to exercise such
powers under this Agreement as are delegated to the Administrative Agent and the Collateral Agent,
respectively, by the terms hereof, together with such powers as are reasonably incidental thereto;
and (vii) such assignee agrees that it will perform in accordance with their terms all the
obligations which by the terms of this Agreement are required to be performed by it as a Lender.



     (d)   The Administrative Agent, acting for this purpose as an agent of the Borrower, shall
maintain at one of its offices in The City of New York a copy of each Assignment and Acceptance
delivered to it and a register for the recordation of the names and addresses of the Lenders, and
the Commitment of, and principal amount of the Loans owing to, each Lender pursuant to the terms
hereof from time to time (the “Register”). The entries in the Register shall be conclusive
and the Borrower, the Administrative Agent, the Issuing Bank, the Collateral Agent and the Lenders
may treat each person whose name is recorded in the Register pursuant to the terms hereof as a
Lender hereunder for all purposes of this Agreement, notwithstanding notice to the contrary. The
Register shall be available for inspection by the Borrower, the Issuing Bank, the Collateral Agent
and any Lender, at any reasonable time and from time to time upon reasonable prior notice.



     (e)   Upon its receipt of a duly completed Assignment and Acceptance executed by an assigning
Lender and an assignee, an Administrative Questionnaire and all applicable tax forms completed in
respect of the assignee (unless the assignee shall already be a Lender hereunder) and the written
consent of the Swingline Lender, the Issuing Bank and the Administrative Agent to such assignment,
the Administrative Agent shall promptly (i) accept such Assignment and Acceptance and (ii) record
the information contained therein in the Register. No assignment shall be effective unless it has
been recorded in the Register as provided in this paragraph (e).



     (f)   Each Lender may without the consent of the Borrower, the Swingline Lender, the Issuing
Bank or the Administrative Agent sell participations to one or more banks or other entities in all
or a portion of its rights and obligations under this Agreement (including all or a portion of its
Commitment and the Loans); provided, however, that (i) such Lender’s obligations
under this Agreement shall remain unchanged, (ii) such Lender shall remain solely responsible to
the other parties hereto for the performance of such obligations, (iii) the participating banks or
other entities shall be entitled to the benefit of the cost protection provisions contained in
Sections 2.14, 2.16 and 2.20 to the same extent as if they were Lenders (but, with respect to any
particular participant, to no greater extent than the Lender that sold the participation to such
participant) and (iv) the Borrower, the Administrative Agent, the Issuing Bank and the Lenders
shall continue to deal solely and directly with such Lender in connection with such Lender’s rights
and obligations under this Agreement, and such Lender shall retain the sole right to



108









 







enforce the
obligations of the Borrower relating to the Loans or L/C Disbursements and to approve any
amendment, modification or waiver of any provision of this Agreement (other than amendments,
modifications or waivers decreasing any fees payable hereunder or the amount of principal of or the
rate at which interest is payable on the Loans, extending any scheduled principal payment date or
date fixed for the payment of interest on the Loans, increasing or extending the Commitments or
releasing any Guarantor or all or any substantial part of the Collateral).



     (g)   Any Lender or participant may, in connection with any assignment or participation or
proposed assignment or participation pursuant to this Section 9.04, disclose to the assignee or
participant or proposed assignee or participant any information relating to the Borrower furnished
to such Lender by or on behalf of the Borrower; provided that, prior to any such disclosure
of information designated by the Borrower as confidential, each such assignee or participant or
proposed assignee or participant shall execute an agreement whereby such assignee or participant
shall agree (subject to customary exceptions) to preserve the confidentiality of such confidential
information on terms no less restrictive than those applicable to the Lenders pursuant to Section
9.16.



     (h)   Any Lender may at any time assign all or any portion of its rights under this Agreement
to secure extensions of credit to such Lender or in support of obligations owed by such Lender;
provided that no such assignment shall release a Lender from any of its obligations
hereunder or substitute any such assignee for such Lender as a party hereto.



     (i)   Notwithstanding anything to the contrary contained herein, any Lender (a “Granting
Lender”) may grant to a special purpose funding vehicle (an “SPC”), identified as such
in writing from time to time by the Granting Lender to the Administrative Agent and the Borrower,
the option to provide to the Borrower all or any part of any Loan that such Granting Lender would
otherwise be obligated to make to the Borrower pursuant to this Agreement; provided that
(i) nothing herein shall constitute a commitment by any SPC to make any Loan and (ii) if an SPC
elects not to exercise such option or otherwise fails to provide all or any part of such Loan, the
Granting Lender shall be obligated to make such Loan pursuant to the terms hereof. The making of a
Loan by an SPC hereunder shall utilize the Commitment of the Granting Lender to the same extent,
and as if, such Loan were made by such Granting Lender. Each party hereto hereby agrees that no
SPC shall be liable for any indemnity or similar payment obligation under this Agreement (all
liability for which shall remain with the Granting Lender). In furtherance of the foregoing, each
party hereto hereby agrees (which agreement shall survive the termination of this Agreement) that,
prior to the date that is one year and one day after the payment in full of all outstanding
commercial paper or other senior indebtedness of any SPC, it will not institute against, or join
any other person in instituting against, such SPC any bankruptcy, reorganization, arrangement,
insolvency or liquidation proceedings under the laws of the United States or any State thereof. In
addition, notwithstanding anything to the contrary contained in this Section 9.04, any SPC may (i)
with notice to, but without the prior written consent of, the Borrower and the Administrative Agent
and without paying any processing fee therefor, assign all or a portion of its interests in any
Loans to the Granting Lender or to any financial institutions (consented to by the Borrower and
Administrative Agent) providing liquidity and/or credit support to or for the account of such SPC
to support the funding or maintenance of Loans and (ii) disclose on a confidential basis any
non-public information



109









 







relating to its Loans to any rating agency, commercial paper dealer or
provider of any surety, guarantee or credit or liquidity enhancement to such SPC.



     (j)   The Borrower shall not assign or delegate any of its rights or duties hereunder without
the prior written consent of the Administrative Agent, the Issuing Bank and each Lender, and any
attempted assignment without such consent shall be null and void.



     SECTION 9.05.   Expenses; Indemnity. (a) The Borrower agrees to pay all
out-of-pocket costs and expenses incurred by the Administrative Agent, the Collateral Agent, the
Arranger, the Issuing Bank and the Swingline Lender in connection with the syndication of the
credit facilities provided for herein and the preparation and administration of this Agreement and
the other Loan Documents or in connection with any amendments, modifications or waivers of the
provisions hereof or thereof (whether or not the transactions hereby or thereby contemplated shall
be consummated) or incurred by the Administrative Agent, the Collateral Agent, the Arranger, the
Issuing Bank or any Lender in connection with the enforcement or protection of its rights in
connection with this Agreement and the other Loan Documents or in connection with the Loans made or
Letters of Credit issued hereunder, including in each case the fees, disbursements and other
charges of Latham & Watkins LLP, counsel for the Administrative Agent and the Collateral Agent,
and, in connection with any such enforcement or protection, the reasonable fees, disbursements and
other charges of any counsel for the Administrative Agent, the Collateral Agent, the Arranger, the
Issuing Bank or any Lender.



     (b)   The Borrower agrees to indemnify the Administrative Agent, the Collateral Agent, the
Arranger, each Lender, the Issuing Bank and each Related Party of any of the foregoing persons
(each such person being called an “Indemnitee”) against, and to hold each Indemnitee
harmless from, any and all losses, claims, damages, liabilities and related costs and expenses,
including reasonable counsel fees, disbursements and other charges, incurred by or asserted against
any Indemnitee arising out of, in any way connected with, or as a result of (i) the execution or
delivery of this Agreement or any other Loan Document or any agreement or instrument contemplated
thereby, the performance by the parties thereto of their respective obligations thereunder or the
consummation of the Transactions and the other transactions contemplated thereby, (ii) the use of
the proceeds of the Loans or issuance of Letters of Credit, (iii) any claim, litigation,
investigation or proceeding relating to any of the foregoing, whether or not any Indemnitee is a
party thereto, or (iv) any actual or alleged presence or Release of Hazardous Materials on any
property owned or operated by the Borrower or any of the Subsidiaries, or any Environmental
Liability related in any way to the Borrower or any of the Subsidiaries; provided that such
indemnity shall not, as to any Indemnitee, be available to the extent that such losses, claims,
damages, liabilities or related costs and expenses are determined by a court of competent
jurisdiction by final and nonappealable judgment to have resulted from primarily the gross
negligence or willful misconduct of such Indemnitee (and, upon any such determination, any
indemnification payments with respect to such losses, claims, damages, liabilities or related costs
and expenses previously received by such Indemnitee shall be subject to reimbursement by such
Indemnitee).



     (c)   To the extent that the Borrower fails to pay any amount required to be paid by it to the
Administrative Agent, the Collateral Agent, the Arranger, the Issuing Bank or the Swingline Lender
under paragraph (a) or (b) of this Section, each Lender severally agrees to pay



110









 







to the
Administrative Agent, the Collateral Agent, the Arranger, the Issuing Bank or the Swingline Lender,
as the case may be, such Lender’s pro rata share (determined as of the time that the applicable
unreimbursed expense or indemnity payment is sought) of such unpaid amount; provided that
the unreimbursed expense or indemnified loss, claim, damage, liability or related expense, as the
case may be, was incurred by or asserted against the Administrative Agent, the Collateral Agent,
the Arranger, the Issuing Bank or the Swingline Lender in its capacity as such. For purposes
hereof, a Lender’s “pro rata share” shall be determined based
upon its share of the sum of the Aggregate Revolving Credit Exposure, outstanding Term Loans
and unused Commitments at the time.



     (d)   To the extent permitted by applicable law, the Borrower shall not assert, and it hereby
waives, any claim against any Indemnitee, on any theory of liability, for special, indirect,
consequential or punitive damages (as opposed to direct or actual damages) arising out of, in
connection with, or as a result of, this Agreement or any agreement or instrument contemplated
hereby, the Transactions, any Loan or Letter of Credit or the use of the proceeds thereof.



     (e)   The provisions of this Section 9.05 shall remain operative and in full force and effect
regardless of the expiration of the term of this Agreement, the consummation of the Transactions or
the other transactions contemplated hereby, the repayment of any of the Loans, the expiration of
the Commitments, the expiration of any Letter of Credit, the invalidity or unenforceability of any
term or provision of this Agreement or any other Loan Document, or any investigation made by or on
behalf of the Administrative Agent, the Collateral Agent, the Arranger, any Lender or the Issuing
Bank. All amounts due under this Section 9.05 shall be payable on written demand therefor.



     SECTION 9.06.   Right of Setoff. If an Event of Default shall have occurred and be
continuing, each Lender is hereby authorized at any time and from time to time, except to the
extent prohibited by law, to set off and apply any and all deposits (general or special, time or
demand, provisional or final) at any time held and other indebtedness at any time owing by such
Lender to or for the credit or the account of the Borrower against any of and all the obligations
of the Borrower now or hereafter existing under this Agreement and other Loan Documents held by
such Lender, irrespective of whether or not such Lender shall have made any demand under this
Agreement or such other Loan Document and although such obligations may be unmatured. The rights
of each Lender under this Section 9.06 are in addition to other rights and remedies (including
other rights of setoff) which such Lender may have.



     SECTION 9.07.   Applicable Law. THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS (OTHER
THAN LETTERS OF CREDIT AND AS EXPRESSLY SET FORTH IN OTHER LOAN DOCUMENTS) SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK. EACH LETTER OF CREDIT SHALL BE
GOVERNED BY, AND SHALL BE CONSTRUED IN ACCORDANCE WITH, THE LAWS OR RULES DESIGNATED IN SUCH LETTER
OF CREDIT, OR IF NO SUCH LAWS OR RULES ARE DESIGNATED, THE UNIFORM CUSTOMS AND PRACTICE FOR
DOCUMENTARY CREDITS MOST RECENTLY PUBLISHED AND IN EFFECT, ON THE DATE SUCH LETTER OF CREDIT WAS
ISSUED, BY THE INTERNATIONAL CHAMBER OF COMMERCE (THE “UNIFORM CUSTOMS”)



111









 







AND, AS TO MATTERS
NOT GOVERNED BY THE UNIFORM CUSTOMS, THE LAWS OF THE STATE OF NEW YORK.



     SECTION 9.08.   Waivers; Amendment. (a) No failure or delay of the
Administrative Agent, the Collateral Agent, any Lender or the Issuing Bank in exercising any power
or right hereunder or under any other Loan Document shall operate as a waiver thereof, nor shall
any single or partial exercise of any such right or power, or any abandonment or discontinuance of
steps to enforce such a right or power, preclude any other or further exercise thereof or the
exercise of any other right or power. The rights and remedies of the Administrative Agent, the
Collateral Agent, the Issuing Bank and the Lenders hereunder and under the other Loan Documents are
cumulative and are not exclusive of any rights or remedies that they would otherwise have. No
waiver of any provision of this Agreement or any other Loan Document or consent to any departure by
the Borrower or any other Loan Party therefrom shall in any event be effective unless the same
shall be permitted by paragraph (b) below, and then such waiver or consent shall be effective only
in the specific instance and for the purpose for which given. No notice or demand on the Borrower
in any case shall entitle the Borrower to any other or further notice or demand in similar or other
circumstances.



     (b)   Neither this Agreement nor any provision hereof may be waived, amended or modified
except pursuant to an agreement or agreements in writing entered into by the Borrower and the
Required Lenders; provided, however, that no such agreement shall (i) decrease the
principal amount of, or extend the maturity of or any scheduled principal payment date or date for
the payment of any interest on any Loan or any date for reimbursement of an L/C Disbursement, or
waive or excuse any such payment or any part thereof, or decrease the rate of interest on any Loan
or L/C Disbursement, without the prior written consent of each Lender affected thereby, (ii)
increase or extend the Commitment or decrease or extend the date for payment of any Fees of any
Lender without the prior written consent of such Lender, (iii) amend or modify the pro rata
requirements of Section 2.17, the provisions of Section 9.04(j), the provisions of this Section or
the definition of the term “Required Lenders,” or release any Guarantor, without the prior written
consent of each Lender, (iv) amend or modify the definition of the term “Majority Facility Lenders”
without the prior written consent of each Lender affected thereby, (v) release all or any
substantial part of the Collateral without the prior written consent of each Lender, (vi) change
the provisions of any Loan Document in a manner that by its terms adversely affects the rights in
respect of payments due to Lenders holding Loans of one Class differently from the rights of
Lenders holding Loans of any other Class without the prior written consent of Lenders holding a
majority in interest of the outstanding Loans and unused Commitments of each adversely affected
Class or (vii) modify the protections afforded to an SPC pursuant to the provisions of Section
9.04(i) without the written consent of such SPC; provided further that no such
agreement shall amend, modify or otherwise affect the rights or duties of the Administrative Agent,
the Collateral Agent, the Issuing Bank or the Swingline Lender hereunder or under any other Loan
Document without the prior written consent of the Administrative Agent, the Collateral Agent, the
Issuing Bank or the Swingline Lender, as applicable; provided further that on or
prior to the date upon which, in accordance with Article VII hereof, any Loans then outstanding
shall have been declared to be forthwith due and payable in whole or in part, Sections 6.15 and
6.16 may be waived, amended or modified (in each case in a manner such that the foregoing Sections
shall be no more onerous to the Borrower and its



112









 







Subsidiaries than the existing provisions
contained therein) pursuant to an agreement or agreements in writing entered into by the Borrower
and the Required Revolving Credit Lenders.



     SECTION 9.09.   Interest Rate Limitation. Notwithstanding anything herein to the contrary, if at any time the interest rate
applicable to any Loan or participation in any L/C Disbursement, together with all fees, charges
and other amounts which are treated as interest on such Loan or participation in such L/C
Disbursement under applicable law (collectively the “Charges”), shall exceed the maximum
lawful rate (the “Maximum Rate”) which may be contracted for, charged, taken, received or
reserved by the Lender holding such Loan or participation in accordance with applicable law, the
rate of interest payable in respect of such Loan or participation hereunder, together with all
Charges payable in respect thereof, shall be limited to the Maximum Rate and, to the extent lawful,
the interest and Charges that would have been payable in respect of such Loan or participation but
were not payable as a result of the operation of this Section 9.09 shall be cumulated and the
interest and Charges payable to such Lender in respect of other Loans or participations or periods
shall be increased (but not above the Maximum Rate therefor) until such cumulated amount, together
with interest thereon at the Federal Funds Effective Rate to the date of repayment, shall have been
received by such Lender.



     SECTION 9.10.   Entire Agreement. This Agreement, the Fee Letter and the other Loan
Documents constitute the entire contract between the parties relative to the subject matter hereof.
Any other previous agreement among the parties with respect to the subject matter hereof is
superseded by this Agreement and the other Loan Documents. Nothing in this Agreement or in the
other Loan Documents, expressed or implied, is intended to confer upon any person (other than the
parties hereto and thereto, their respective successors and assigns permitted hereunder (including
any Affiliate of the Issuing Bank that issues any Letter of Credit) and, to the extent expressly
contemplated hereby, the Related Parties of each of the Administrative Agent, the Collateral Agent,
the Arranger, the Issuing Bank and the Lenders ) any rights, remedies, obligations or liabilities
under or by reason of this Agreement or the other Loan Documents.



     SECTION 9.11.   WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST
EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY
LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY
OF THE OTHER LOAN DOCUMENTS. EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR
ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD
NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT
AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS, AS APPLICABLE, BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS
SECTION 9.11.



     SECTION 9.12.   Severability. In the event any one or more of the provisions
contained in this Agreement or in any other Loan Document should be held invalid, illegal or
unenforceable in any respect, the validity,
legality and enforceability of the remaining provisions contained herein and therein shall not
in any way be affected or impaired thereby (it being



113









 







understood that the invalidity of a particular
provision in a particular jurisdiction shall not in and of itself affect the validity of such
provision in any other jurisdiction). The parties shall endeavor in good-faith negotiations to
replace the invalid, illegal or unenforceable provisions with valid provisions the economic effect
of which comes as close as possible to that of the invalid, illegal or unenforceable provisions.



     SECTION 9.13.   Counterparts. This Agreement may be executed in counterparts (and by
different parties hereto on different counterparts), each of which shall constitute an original but
all of which when taken together shall constitute a single contract, and shall become effective as
provided in Section 9.03. Delivery of an executed signature page to this Agreement or of a Lender
Addendum by facsimile transmission shall be as effective as delivery of a manually signed
counterpart of this Agreement.



     SECTION 9.14.   Headings. Article and Section headings and the Table of Contents used
herein are for convenience of reference only, are not part of this Agreement and are not to affect
the construction of, or to be taken into consideration in interpreting, this Agreement.



     SECTION 9.15.   Jurisdiction; Consent to Service of Process. (a) The Borrower
hereby irrevocably and unconditionally submits, for itself and its property, to the exclusive
jurisdiction of any New York State court or Federal court of the United States of America sitting
in New York City, and any appellate court from any thereof, in any action or proceeding arising out
of or relating to this Agreement or the other Loan Documents, or for recognition or enforcement of
any judgment, and each of the parties hereto hereby irrevocably and unconditionally agrees that all
claims in respect of any such action or proceeding may be heard and determined in such New York
State or, to the extent permitted by law, in such Federal court. Each of the parties hereto agrees
that a final judgment in any such action or proceeding shall be conclusive and may be enforced in
other jurisdictions by suit on the judgment or in any other manner provided by law. Nothing in
this Agreement shall affect any right that the Administrative Agent, the Collateral Agent, the
Arranger, the Issuing Bank or any Lender may otherwise have to bring any action or proceeding
relating to this Agreement or the other Loan Documents against the Borrower or its properties in
the courts of any jurisdiction.



     (b)   The Borrower hereby irrevocably and unconditionally waives, to the fullest extent it may
legally and effectively do so, any objection which it may now or hereafter have to the laying of
venue of any suit, action or proceeding arising out of or relating to this Agreement or the other
Loan Documents in any New York State or Federal court. Each of the parties hereto hereby
irrevocably waives, to the fullest extent permitted by law, the defense of an inconvenient forum to
the maintenance of such action or proceeding in any such court.



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



     SECTION 9.16.   Confidentiality. Each of the Administrative Agent, the Collateral
Agent, the Issuing Bank and the Lenders agrees to maintain the confidentiality of the Information,
except that Information may be disclosed (a) to its and its Affiliates’ officers, directors,
employees and agents, including accountants, legal counsel and other advisors (it being



114









 







understood
that the persons to whom such disclosure is made will be informed of the confidential nature of
such Information and instructed to keep such Information confidential), (b) to the extent requested
by any regulatory authority or quasi-regulatory authority (such as the National Association of
Insurance Commissioners), (c) to the extent required by applicable laws or regulations or by any
subpoena or similar legal process, (d) in connection with the exercise of any remedies hereunder or
under the other Loan Documents or any suit, action or proceeding relating to the enforcement of its
rights hereunder or thereunder, (e) subject to an agreement containing provisions substantially the
same as those of this Section 9.16, to (i) any actual or prospective assignee of or participant in
any of its rights or obligations under this Agreement and the other Loan Documents or (ii) any
actual or prospective counterparty (or its advisors) to any swap or derivative transaction relating
to the Borrower or any Subsidiary or any of their respective obligations, (f) with the consent of
the Borrower or (g) to the extent such Information becomes publicly available other than as a
result of a breach of this Section 9.16. For the purposes of this Section, “Information”
shall mean all information received from the Borrower and related to the Borrower or its business,
other than any such information that was available to the Administrative Agent, the Collateral
Agent, the Issuing Bank or any Lender on a nonconfidential basis prior to its disclosure by the
Borrower; provided that, in the case of Information received from the Borrower after the
date hereof, such information is clearly identified at the time of delivery as confidential. Any
person required to maintain the confidentiality of Information as provided in this Section 9.16
shall be considered to have complied with its obligation to do so if such person has exercised the
same degree of care to maintain the confidentiality of such Information as such person would accord
its own confidential information. Notwithstanding any other express or implied agreement,
arrangement or understanding to the contrary, each of the parties hereto agrees that each other
party hereto (and each of its employees, representatives or agents) are permitted to disclose to
any persons, without limitation, the tax treatment and tax structure of the Loans and the other
transactions contemplated by the Loan Documents and all materials of any kind (including opinions
and tax analyses) that are provided to the Loan Parties, the Lenders, the Arranger or any Agent
related to such tax treatment and tax aspects. To the extent not inconsistent with the immediately
preceding sentence, this authorization does not extend to disclosure of any other information or
any other term or detail not related to the tax treatment or tax aspects of the Loans or the
transactions contemplated by the Loan Documents.



     SECTION 9.17.   Delivery of Lender Addenda. Each initial Lender shall become a party
to this Agreement by delivering to the Administrative Agent a Lender Addendum duly executed by such
Lender, the Borrower and the Administrative Agent.



[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]




115









 








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



	 	 	 	 	 
	 	AFFIRMATIVE INSURANCE HOLDINGS, INC., as Borrower

 	 
	 	By:  	/s/ Mark E. Pape
 	 
	 	 	Name:  	Mark E. Pape 	 
	 	 	Title:  	Chief Financial Officer and Executive Vice
President 	 
	 
	 	CREDIT SUISSE, CAYMAN ISLANDS BRANCH, as

Administrative Agent, Collateral Agent, Issuing Bank

and Swingline Lender

 	 
	 	By:  	/s/ John D. Toronto
 	 
	 	 	Name:  	John D. Toronto 	 
	 	 	Title:  	Director 	 
	 
	 	 	 
	 	By:  	                                              /s/ Denise L. Alvarez
 	 
	 	 	Name:  	Denise L. Alvarez 	 
	 	 	Title:  	Associate 	 



 









 






	 	 	 	 	 



Exhibit A




Administrative Questionnaire 




	 	 	 
	I. Borrower Name: Affirmative Insurance Holdings, Inc.
	 	 
	 

	 	 
	 
	 	 
	II. Legal Name of Lender for Signature Page:
	 	 
	 

	 	 
	 
	 	 
	III. Name of Lender for any eventual tombstone:
	 	 
	 

	 	 
	 
	 	 
	IV. Legal Address:
	 	 
	 
	 	 
	 


	 	 
	 
	 	 
	 


V. Contact Information:

	 	 






	 	 	 	 	 	 	 
	 	 	Credit Contact	 	Operations Contact	 	Legal Counsel
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Name:

	 	 
	 	 
	 	 
	 
	 	 	 	 	 	 
	Title:
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	Address:
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	Telephone:
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	Facsimile:
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	Email: Address:
	 	 	 	 	 	 
	 
	 	 	 	 	 	 





VI. Lender’s Wire Payment Instructions:




	 	 	 	 	 
	Pay to:
	 	 	 	 
	 	 	 
	 

	 	(Name of Lender)	 	 
	 	 	 
	 

	 	(ABA#)
	 	(City/State)
	 	 	 
	 

	 	(Account #)
	 	(Account Name)





Please return this form, by fax, to the attention of “Credit Suisse, Agency
Group” fax (212) 325-8304, no later than 5:00 p.m. New York City time, on [          ], 2007.




 









 








Exhibit A




Administrative Questionnaire 




Borrower Name: Affirmative Insurance Holdings, Inc.




	 	 	 
	VII. Organizational Structure:
	 	 
	Foreign Branch, organized under which laws etc.
	 	 
	 

	 	 
	 
	 	 	 	 
	Lender’s Tax ID:
	 	 
	 

	 	 





Tax withholding Form Attached (For Foreign Buyers)

[   ]    Form W-9

[   ]    Form W-8

[   ]    Form 4224 effective:

[   ]    Form 1001

[   ]    W/Hold                     % Effective

[___]  Form 4224 on file with Administrative Agent from previous current year’s transaction




VIII. Payment Instructions:




Servicing
Site:


Pay To:




	 	 	 
	IX. Name of Authorized Officer:
	 	 
	 

	 	 
	Name:
	 	 
	 

	 	 
	Signature:
	 	 
	 

	 	 
	Date:
	 	 
	 

	 	 





A-2









 





Exhibit A




Administrative Questionnaire 




X. Institutional Investor Sub-Allocations




	 	 	 
	Institution Legal
	 	 
	 

	 	 
	Fund Manager:
	 	 
	 

	 	 
	Sub-Allocations:
	 	 






	 	 	 	 	 	 	 	 	 
	Exact Legal	 	 	 	 	 	 	 	 
	Name	 	Sub-	 	Direct Signer to	 	 	 	 
	(for	 	Allocation	 	Credit	 	Purchase by	 	Date of Post
	documentation	 	(Indicate	 	Agreement	 	Assignment	 	Closing
	purposes)	 	US$)	 	(Yes / No)	 	(Yes / No)	 	Assignment
	1.	 	 	 	 	 	 	 	 
	 
	 	 
	 	 
	 	 
	 	 
	2.	 	 	 	 	 	 	 	 
	 
	 	 
	 	 
	 	 
	 	 
	3.	 	 	 	 	 	 	 	 
	 
	 	 
	 	 
	 	 
	 	 
	4.	 	 	 	 	 	 	 	 
	 
	 	 
	 	 
	 	 
	 	 
	5.	 	 	 	 	 	 	 	 
	 
	 	 
	 	 
	 	 
	 	 
	6.	 	 	 	 	 	 	 	 
	 
	 	 
	 	 
	 	 
	 	 
	7.	 	 	 	 	 	 	 	 
	 
	 	 
	 	 
	 	 
	 	 
	Total	 	 	 	 	 	 	 	 
	 





Special Instructions




 





 





 





 





A-3









 








Exhibit B




AFFIRMATIVE INSURANCE HOLDINGS, INC.




FORM OF AFFILIATE SUBORDINATION AGREEMENT



AFFILIATE
SUBORDINATION AGREEMENT dated as of [     ], 200___ (this “Agreement”), among
the subordinated lenders listed on Schedule 1 hereto (each a “Subordinated Lender” and
collectively, the “Subordinated Lenders”), AFFIRMATIVE INSURANCE HOLDINGS,
INC.(“Borrower”) and each Subsidiary listed on Schedule 2 hereto (together with the
Borrower, each a “Subordinated Borrower” and collectively, the “Subordinated
Borrowers”) and CREDIT SUISSE, CAYMAN ISLANDS BRANCH, in its capacity as administrative agent
(the “Administrative Agent”) under the Credit Agreement (as defined below), for the benefit
of the Lenders (as defined in the Credit Agreement referred to below).



Reference is made to the Credit Agreement dated as of January 31, 2007 (as amended, supplemented,
replaced or otherwise modified from time to time, the “Credit Agreement”), among the
Borrower, the Lenders from time to time party thereto, the Administrative Agent, and other parties
thereto.



Terms used herein and not otherwise defined herein shall have the meanings assigned to such terms
in the Credit Agreement. All references to articles, sections, exhibits and schedules shall be
deemed references to articles and sections of, and exhibits and schedules to, this Agreement,
unless the context shall otherwise require.



The ability under the Credit Agreement of any Subordinated Borrower to incur Indebtedness to any
Subordinated Lender is conditioned upon the execution and delivery by such Subordinated Lender and
each Subordinated Borrower of an agreement in the form hereof pursuant to which such Subordinated
Lender agrees to subordinate its rights with respect to the Subordinated Obligations (as defined
below) to the rights of the Senior Lenders (as defined below) under the Credit Agreement, all on
the terms set forth herein.



Accordingly, each Subordinated Lender, each Subordinated Borrower and the Administrative Agent, on
behalf of itself and each Senior Lender (and each of their respective successors or assigns),
hereby agrees as follows:



SECTION 1. Subordination. (a) Each Subordinated Lender hereby agrees that all its right,
title and interest in and to the Subordinated Obligations shall be subordinate and junior in right
of payment to the rights of the Lenders and the Agents (each, as defined in the Credit Agreement
and collectively, the “Senior Lenders”) in respect of the Obligations of the Borrower
arising under the Credit Agreement and the other Loan Documents, including the payment of
principal, premium (if any), interest (including interest accruing on or after the filing of any
petition in bankruptcy or for reorganization relating to the Borrower or any Subsidiary whether or
not a claim for post-filing interest is allowed or allowable in any such proceeding), fees,
charges, expenses, indemnities, reimbursement obligations, Guarantees and all other amounts payable
thereunder or in respect thereof (collectively, the “Senior Obligations.”). For purposes
hereof, “Subordinated Obligations” means all obligations of each Subordinated Borrower to
each Subordinated Lender in respect of loans, advances, extensions of credit or other Indebtedness,
including in respect of principal, premium (if any), interest, fees, charges, expenses,
indemnities, reimbursement obligations and other amounts payable in respect thereof.




B-1









 







(b) Each Subordinated Borrower and each Subordinated Lender agrees (in each case solely with
respect to the Subordinated Obligations in respect of which it is the obligor or obligee, as the
case may be, and solely with respect to each Subordinated Borrower or Subordinated Lender that is
its counterparty on such Subordinated Obligations) that no payment (whether directly, by purchase,
redemption or exercise of any right of setoff or otherwise) in respect of the Subordinated
Obligations, whether as principal, interest or otherwise, and whether in cash, securities or other
property, shall be made by or on behalf of any Subordinated Borrower or received, accepted or
demanded, directly or indirectly, by or on behalf of any Subordinated Lender at any time when an
Event of Default exists as defined under the Credit Agreement and the Borrower has received a
written notice from the Administrative Agent prohibiting any further payment in respect of the
Subordinated Obligations so long as any such Event of Default is continuing (provided that
such notice shall not be required to be given (and no such payment may be made) if the Event of
Default is of the type set forth in clauses (b), (c), (g) or (h) of Article VII of the Credit
Agreement).



(c) Upon any distribution of the assets of any Subordinated Borrower or upon any dissolution,
winding up, liquidation or reorganization of any Subordinated Borrower, whether in bankruptcy,
insolvency, reorganization, arrangement or receivership proceedings or otherwise, or upon any
assignment for the benefit of creditors or any other marshalling of the assets and liabilities of
any Subordinated Borrower, or otherwise:





     (i) the Senior Lenders shall first be entitled to receive indefeasible payment in full
in cash of the Senior Obligations (whenever arising) (other than indemnification obligations
and other contingent obligations not then due and payable) before any Subordinated Lender
shall be entitled to receive any payment on account of the Subordinated Obligations of such
Subordinated Borrower, whether of principal, interest or otherwise; and




     (ii) any payment by, or on behalf of, or distribution of the assets of, such
Subordinated Borrower of any kind or character, whether in cash, securities or other
property, to which any Subordinated Lender would be entitled except for the provisions of
this Section 1 shall be paid or delivered by the person making such payment or distribution
(whether a trustee in bankruptcy, a receiver, custodian or liquidating trustee or otherwise)
directly to the Administrative Agent, for the benefit of the Senior Lenders (pro rata, in
accordance with the respective amounts of the Senior Obligations owed to each of the Senior
Lenders), until the indefeasible payment in full of all Senior Obligations (other than
indemnification obligations and other contingent obligations not then due and payable).


At any time when an Event of Default exists under the Credit Agreement, each Subordinated Lender
agrees not to ask, demand, sue for or take or receive from any Subordinated Borrower in cash,
securities or other property or by setoff, purchase or redemption (including, without limitation,
from or by way of collateral), payment of all or any part of the Subordinated Obligations and
agrees that in connection with any proceeding involving any Subordinated Borrower under any
bankruptcy, insolvency, reorganization, arrangement, receivership or similar law (i) the
Administrative Agent is irrevocably authorized and empowered (in its own name or in the name of
such Subordinated Lender or otherwise), but shall have no obligation, to demand, sue for, collect
and receive every payment or distribution referred to in the preceding sentence


B-2









 






and give acquittance therefor and to file claims and proofs of claim and take such other action
(including, without limitation, voting the applicable Subordinated Obligations and enforcing any
security interest or other Lien securing payment of such Subordinated Obligations) as the
Administrative Agent may deem necessary or advisable for the exercise or enforcement of any of the
rights or interest of the Senior Lenders and (ii) such Subordinated Lender shall duly and promptly
take such action as the Administrative Agent may request to (A) collect amounts in respect of the
applicable Subordinated Obligations for the account of the Senior Lenders and to file appropriate
claims or proofs of claim in respect of such Subordinated Obligations, (B) execute and deliver to
the Administrative Agent such irrevocable powers of attorney, assignments or other instruments as
the Administrative Agent may request in order to enable the Administrative Agent to enforce any and
all claims with respect to, and any security interests and other Liens securing payment of, the
applicable Subordinated Obligations and (C) collect and receive any and all payments or
distributions which may be payable or deliverable upon or with respect to the applicable
Subordinated Obligations. A copy of this Agreement may be filed with any court as evidence of the
Senior Lenders’ right, power and authority hereunder.



(d) In the event that any payment by, or on behalf of, or distribution of the assets of, any
Subordinated Borrower of any kind or character, whether in cash, securities or other property, and
whether directly, by purchase, redemption, exercise of any right of setoff or otherwise, shall be
received by or on behalf of any Subordinated Lender or any Affiliate thereof at a time when such
payment is prohibited by this Agreement, such payment or distribution shall be held by such
Subordinated Lender or Affiliate in trust (segregated from other property of such Subordinated
Lender or Affiliate) for the benefit of, and shall forthwith be paid over to, the Administrative
Agent, for the benefit of the Senior Lenders (pro rata, in accordance with the respective amounts
of the Senior Obligations owed to each of the Senior Lenders), until the indefeasible payment in
full in cash of all Senior Obligations (other than indemnification obligations and other contingent
obligations not then due and payable).



(e) Subject to the prior indefeasible payment in full in cash of the Senior Obligations (other
than indemnification obligations and other contingent obligations not then due and payable), each
applicable Subordinated Lender shall be subrogated to the rights of the Senior Lenders to receive
payments or distributions in cash, securities or other property of each applicable Subordinated
Borrower applicable to the Senior Obligations until all amounts owing on the Senior Obligations
shall be indefeasibly paid in full in cash, and, as between and among a Subordinated Borrower, its
creditors (other than the Senior Lenders) and the applicable Subordinated Lenders, no such payment
or distribution made to the Senior Lenders by virtue of this Agreement that otherwise would have
been made to any applicable Subordinated Lender shall be deemed to be a payment by the applicable
Subordinated Borrower on account of the Subordinated Obligations, it being understood that the
provisions of this paragraph (e) are intended solely for the purpose of defining the relative
rights of the Subordinated Lenders and the Senior Lenders.



(f) Without the prior written consent of the Administrative Agent, no Subordinated Borrower shall
give, or permit to be given, and no Subordinated Lender shall receive, accept or demand, (i) any
security of any nature whatsoever for any Subordinated Obligations on any property or assets,
whether now existing or hereafter acquired, of any Subordinated Borrower or any subsidiary of any
Subordinated Borrower, unless such security shall by its terms be subject to enforcement and
collection by the Administrative Agent in connection with any action in respect of enforcement or
collection taken under paragraph (c) above or (ii) any Guarantee, of any nature


B-3









 






whatsoever, by any Subordinated Borrower or any subsidiary of any Subordinated Borrower, of any
Subordinated Obligations other than any Guarantee subordinated to the Senior Obligations on terms
substantially identical to (and no less favorable in any significant respect to the Senior Lenders
than) those hereof. Each Subordinated Lender agrees that all the proceeds of any such security or
Guarantee shall be subject to the provisions hereof with respect to payments and other
distributions in respect of the Subordinated Obligations.



(g) Each Subordinated Lender and each Subordinated Borrower agrees that all Subordinated
Obligations will be evidenced solely by a single promissory note in the form attached hereto as
Annex 1, and that such promissory note and any and all instruments or records now or hereafter
creating or evidencing the Subordinated Obligations, whether upon refunding, extension, renewal,
refinancing, replacement or otherwise, shall contain the following legend:





“Notwithstanding anything contained herein to the contrary, neither the principal of
nor the interest on, nor any other amounts payable in respect of, the indebtedness
created or evidenced by this instrument or record shall become due or be paid or
payable, except to the extent permitted under the Affiliate Subordination Agreement
dated [     ], 200___, among the Subordinated Lenders, the Subordinated Borrowers
and Credit Suisse, Cayman Islands Branch, in its capacity as Administrative Agent,
which Affiliate Subordination Agreement is incorporated herein with the same effect
as if fully set forth herein.”


(h) Each Subordinated Lender agrees that, except for claims submitted in any proceeding
contemplated by Section 1(c) hereof, it will not take any action to cause any Subordinated
Obligations to become payable prior to their scheduled maturity (which, in the case of any demand
notes, shall be the date demand is made thereunder) or exercise any remedies or take any action or
proceeding to enforce any Subordinated Obligation if the payment of such Subordinated Obligation is
then prohibited by this Agreement, and each Subordinated Lender further agrees not to file, or to
join with any other creditors of any Subordinated Borrower in filing, any petition commencing any
bankruptcy, insolvency, reorganization, arrangement or receivership proceeding or any assignment
for the benefit of creditors against or in respect of such Subordinated Borrower or any other
marshalling of the assets and liabilities of such Subordinated Borrower (provided that this
prohibition shall in no event be construed so as to limit any Subordinated Lender’s right to cause
any Subordinated Obligations to become payable prior to their scheduled maturity if all the
outstanding Loans under the Credit Agreement have been declared due and payable prior to their
scheduled maturity dates). Each Subordinated Lender further agrees, to the fullest extent
permitted under applicable law, that it will not cause any Subordinated Borrower to file any such
petition, commence any such proceeding or make any such assignment referred to above until all
Senior Obligations have been indefeasibly paid in full in cash (other than indemnification
obligations and other contingent obligations not then due and payable).



SECTION 2. Waivers and Consents. (a) Each Subordinated Lender waives the right to compel
that the Collateral or any other assets of property of any Subordinated Borrower or the assets of
property of any guarantor of the Senior Obligations or any other person be applied in any
particular order to discharge the Senior Obligations. Each Subordinated Lender expressly waives
the right to require the Senior Lenders to proceed against any Subordinated Borrower, the
Collateral or any guarantor of the Senior Obligations or any other person, or to pursue any other


B-4









 






remedy in any Senior Lender’s power which such Subordinated Lender cannot pursue and which would
lighten such Subordinated Lender’s burden, notwithstanding that the failure of any Senior Lender to
do so may thereby prejudice such Subordinated Lender. Each Subordinated Lender agrees that it
shall not be discharged, exonerated or have its obligations hereunder to the Senior Lenders reduced
by any Senior Lender’s delay in proceeding against or enforcing any remedy against any Subordinated
Borrower, the Collateral or any guarantor of the Senior Obligations or any other person; by any
Senior Lender releasing any Subordinated Borrower, the Collateral or any other guarantor of the
Senior Obligations or any other person from all or any part of the Senior Obligations; or by the
discharge of any Subordinated Borrower, the Collateral or any guarantor of the Senior Obligations
or any other person by an operation of law or otherwise, with or without the intervention or
omission of a Senior Lender. Any Senior Lender’s vote to accept or reject any plan of
reorganization relating to any Subordinated Borrower, the Collateral, or any guarantor of the
Senior Obligations or any other person, or any Senior Lender’s receipt on account of the Senior
Obligations other than the indefeasible payment in full in cash thereof of any cash, securities or
other property distributed in any bankruptcy, reorganization, or insolvency case, shall not
discharge, exonerate, or reduce the obligations of any Subordinated Lender hereunder to the Senior
Lenders.



(b) Each Subordinated Lender waives all rights and defenses arising out of an election of remedies
by the Senior Lenders, even though that election of remedies, including, without limitation, any
nonjudicial foreclosure with respect to security for the Senior Obligations, has impaired the value
of such Subordinated Lender’s rights of subrogation, reimbursement or contribution against any
Subordinated Borrower or any other guarantor of the Senior Obligations or any other person. Each
Subordinated Lender expressly waives any rights or defenses it may have by reason of protection
afforded to any Subordinated Borrower or any other guarantor of the Senior Obligations or any other
person with respect to the Senior Obligations pursuant to any anti-deficiency laws or other laws of
similar import which limit or discharge the principal debtor’s indebtedness upon judicial or
nonjudicial foreclosure of real property or personal property Collateral for the Senior
Obligations.



(c) Each Subordinated Lender agrees that, without the necessity of any reservation of rights
against it, and without notice to or further assent by it, any demand for payment of any Senior
Obligations made by a Senior Lender may be rescinded in whole or in part by the Senior Lender, and
any Senior Obligation may be continued, and the Senior Obligations, or the liability of the
applicable Subordinated Borrower or any other guarantor or any other party upon or for any part
thereof, or any Collateral or Guarantee therefor or right of offset with respect thereto, may, from
time to time, in whole or in part, be renewed, extended, modified, accelerated, compromised,
waived, surrendered, or released by the Senior Lenders, in each case without notice to or further
assent by any Subordinated Lender, which will remain bound under this Agreement and without
impairing, abridging, releasing or affecting the subordination and other agreements provided for
herein.



(d) Each Subordinated Lender waives any and all notice of the creation, renewal, extension or
accrual of any of the Senior Obligations and notice of or proof of reliance by the Senior Lenders
upon this Agreement. The Senior Obligations, and any of them, shall be deemed conclusively to have
been created, contracted or incurred and the consent given to create the obligations of each
Subordinated Borrower in respect of the Subordinated Obligations in reliance upon this Agreement,
and all dealings between each Subordinated Borrower and the Senior Lenders shall


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be deemed to have been consummated in reliance upon this Agreement. Each Subordinated Lender
acknowledges and agrees that the Senior Lenders have relied upon the subordination and other
agreements provided for herein in consenting to the Subordinated Obligations. Each Subordinated
Lender waives notice of or proof of reliance on this Agreement and protest, demand for payment and
notice of default.



SECTION 3. Transfers. Each Subordinated Lender shall not sell, assign or otherwise
transfer or dispose of, in whole or in part, all or any part of the Subordinated Obligations or any
interest therein to any other person (a “Transferee”) or create, incur or suffer to exist
any security interest, Lien, charge or other encumbrance whatsoever upon all or any part of the
Subordinated Obligations or any interest therein in favor of any Transferee unless (i) such action
is made expressly subject to this Agreement and (ii) the Transferee, expressly acknowledges to the
Administrative Agent, by a writing in form and substance reasonably satisfactory to the
Administrative Agent, the subordination and other agreements provided for herein and in such
writing agrees to be bound by all of the terms of this Agreement, including, without limitation,
this Section 3, as if such person were a Subordinated Lender.



SECTION 4. Senior Obligations Unconditional. All rights and interests of the Senior
Lenders hereunder, and all agreements and obligations of the Subordinated Lenders and the
Subordinated Borrowers hereunder, shall remain in full force and effect irrespective of:




     (a) any lack of validity or enforceability of the Credit Agreement or any other Loan
Document;



     (b) any change in the time, manner or place of payment of, or in any other term of, all or
any of the Senior Obligations, or any amendment or waiver or other modification, whether by course
of conduct or otherwise, of, or consent to departure from, the Credit Agreement or any other Loan
Document;



     (c) any exchange, release or nonperfection of any Lien in any collateral, or any release,
amendment, waiver or other modification, whether in writing or by course of conduct or otherwise,
of, or consent to departure from, any Guarantee of any of the Senior Obligations; or



     (d) any other circumstances that might otherwise constitute a defense available to, or a
discharge of, any Subordinated Borrower in respect of the Senior Obligations, or of the
Subordinated Lender or any Subordinated Borrower in respect of this Agreement.


SECTION 5. Representations and Warranties. Each Subordinated Lender represents and
warrants to the Administrative Agent, for the benefit of the Senior Lenders, that:




     (a) It has the power and authority to execute and deliver and to perform its obligations
under this Agreement and has taken all necessary action to authorize its execution, delivery and
performance of this Agreement.



     (b) This Agreement has been duly executed and delivered by such Subordinated Lender and
constitutes a legal, valid and binding obligation of such Subordinated Lender, enforceable against
it in accordance with its terms, subject to applicable bankruptcy, insolvency,



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reorganization, moratorium or other laws affecting creditors’ rights generally and subject to
general principles of equity, regardless of whether considered in a proceeding in equity or at law.



     (c) The execution, delivery and performance of this Agreement will not violate any provision
of any requirement of law applicable to such Subordinated Lender or of any contractual obligation
of such Subordinated Lender.



     (d) No consent or authorization of filing with, or other act by or in respect of, any
Governmental Authority, is required in connection with the execution, delivery or performance of
this Agreement, except as may be required by the Insurance Laws.


SECTION 6. Waiver of Claims. (a) To the maximum extent permitted by law, each
Subordinated Lender waives any claim it might have against any Senior Lender with respect to, or
arising out of, any action or failure to act or any error of judgment, negligence, or mistake or
oversight whatsoever on the part of any Senior Lender or its directors, officers, employees, agents
or Affiliates with respect to any exercise of rights or remedies under the Loan Documents or any
transaction relating to the Collateral. Neither the Senior Lenders nor any of their respective
directors, officers, employees, agents or Affiliates shall be liable for failure to demand, collect
or realize upon any of the Collateral or any Guarantee or for any delay in doing so or shall be
under any obligation to sell or otherwise dispose of any Collateral upon the request of any
Subordinated Borrower or any Subordinated Lender or any other person or to take any other action
whatsoever with regard to the Security Documents, including, without limitation, the Guarantee and
Collateral Agreement, or any part thereof.



(b) Each Subordinated Lender, for itself and on behalf of its successors and assigns, hereby
waives any and all now existing or hereafter arising rights it may have to require the Senior
Lenders to marshal assets for the benefit of such Subordinated Lender, or to otherwise direct the
timing, order or manner of any sale, collection or other enforcement of the Collateral or
enforcement of the Loan Documents. The Senior Lenders are under no duty or obligation, and each
Subordinated Lender hereby waives any right it may have to compel the Senior Lenders, to pursue any
guarantor or other person who may be liable for the Senior Obligations, or to enforce any Lien or
security interest in any Collateral.



(c) Each Subordinated Lender hereby waives and releases all rights which a guarantor or surety
with respect to the Senior Obligations could exercise.



(d) Each Subordinated Lender hereby waives any duty on the part of the Senior Lenders to disclose
to it any fact known or hereafter known by the Senior Lenders relating to the operation or
financial condition of any Subordinated Borrower or any guarantor of the Senior Obligations, or
their respective businesses. Each Subordinated Lender enters into this Agreement based solely upon
its independent knowledge of the applicable Subordinated Borrower’s results of operations,
condition (financial or otherwise) and business and the Subordinated Lender assumes full
responsibility for obtaining any further or future information with respect to the applicable
Subordinated Borrower or its results of operations, condition (financial or otherwise) or business.



SECTION 7. Further Assurances. Each Subordinated Lender and each Subordinated Borrower, at
their own expense and at any time from time to time, upon the written request of the Administrative
Agent shall promptly and duly execute and deliver such further instruments and documents and take
such further actions as the Administrative Agent reasonably may request for


B-7









 






the purposes of obtaining or preserving the full benefits of this Agreement and of the rights and
powers herein granted.



SECTION 8. Expenses; Indemnification. (a) Each Subordinated Borrower shall pay or
reimburse the Administrative Agent and the Senior Lenders, upon demand, for all their reasonable
costs and expenses in connection with the enforcement or preservation of any rights under this
Agreement, including, without limitation, reasonable fees and disbursements of counsel to the
Administrative Agent and the Senior Lenders.



(b) The Subordinated Borrowers shall, and jointly and severally agree to, pay, indemnify, and hold
the Administrative Agent and the Senior Lenders harmless from and against any and all other
liabilities, obligations, losses, damages, penalties, actions (whether sounding in contract, tort
or on any other ground), judgments, suits, costs, expenses or disbursements of any kind or nature
whatsoever with respect to the failure of such Subordinated Borrower or any applicable Subordinated
Lender to perform any of its obligations arising out of or relating to this Agreement;
provided that such indemnity shall not, as to any such Indemnitee, be available to the
extent that such liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements are determined by a court of competent jurisdiction by final and
nonappealable judgment to have resulted from primarily the gross negligence, willful misconduct or
bad faith of such Indemnitee.



SECTION 9. Provisions Define Relative Rights. This Agreement is intended solely for the
purpose of defining the relative rights of the Senior Lenders on the one hand and the Subordinated
Lenders and the Subordinated Borrowers on the other, and no other person shall have any right,
benefit or other interest under this Agreement.



SECTION 10. Powers Coupled with an Interest. All powers, authorizations and agencies
contained in this Agreement are coupled with an interest and are irrevocable until the Senior
Obligations are indefeasibly paid in full in cash.



SECTION 11. Notices. All notices, requests and demands to or upon any party hereto shall
be in writing and shall be given in the manner provided in Section 9.01 of the Credit Agreement.



SECTION 12. Counterparts. This Agreement may be executed by one or more of the parties on
any number of separate counterparts, each of which shall constitute an original, but all of which
taken together shall be deemed to constitute but one instrument. Delivery of an executed signature
page to this Agreement by facsimile transmission shall be as effective as delivery of a manually
signed counterpart of this Agreement.



SECTION 13. Severability. In case any one or more of the provisions contained in this
Agreement should be held invalid, illegal or unenforceable in any respect, the validity, legality
and enforceability of the remaining provisions contained herein shall not in any way be affected or
impaired thereby (it being understood that the invalidity of a particular provision hereof in a
particular jurisdiction shall not in and of itself affect the validity of such provision in any
other jurisdiction). The parties hereto shall endeavor in good-faith negotiations to replace the
invalid, illegal or unenforceable provisions with valid provisions the economic effect of which
comes as close as possible to that of the invalid, illegal or unenforceable provisions.



SECTION 14. Integration. This Agreement represents the agreement of the Subordinated
Borrowers, the Subordinated Lenders and the Senior Lenders with respect to the subject matter
hereof and there are no promises or representations by any Subordinated Borrower, any


B-8









 






Subordinated Lender or the Senior Lenders relative to the subject matter hereof not reflected
herein.



SECTION 15. Amendments in Writing; No Waiver; Cumulative Remedies. (a) None of the terms
or provisions of this Agreement may be waived, amended, supplemented or otherwise modified except
by a written instrument executed by the Administrative Agent, each affected Subordinated Borrower
and each affected Subordinated Lender; provided that any provision of this Agreement may be
waived by the Senior Lenders in a letter or agreement executed by the Required Lenders and each
affected Subordinated Lender.



(b) No failure to exercise, nor any delay in exercising, on the part of the Senior Lenders, any
right, power or privilege hereunder shall operate as a waiver thereof. No single or partial
exercise of any right, power or privilege hereunder shall preclude any other or further exercise
thereof or the exercise of any other right, power or privilege.



(c) The rights and remedies herein provided are cumulative, may be exercised singly or
concurrently and are not exclusive of any other rights or remedies provided by law.



SECTION 16. Section Headings. The section headings used in this Agreement are for
convenience of reference only and are not to affect the construction hereof or be taken into
consideration in the interpretation hereof.



SECTION 17. Successors and Assigns. (a) This Agreement shall be binding upon the
successors and assigns of each of the Subordinated Borrowers and each of the Subordinated Lenders
and shall inure to the benefit of the Senior Lenders and their respective successors and assigns.



(b) Notwithstanding the provisions of Section 17(a) above, nothing herein shall be construed to
limit or relieve the obligations of any Subordinated Lender pursuant to Section 3 of this
Agreement, and no Subordinated Lender shall assign its obligations hereunder to any person (except
as otherwise specifically permitted under Section 3 of this Agreement); any such assignment other
than as specifically permitted under Section 3 shall be void.



SECTION 18. Governing Law; Jurisdiction; Consent to Service of Process. (a) THIS
AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.



(b) Each Subordinated Lender hereby irrevocably and unconditionally submits, for itself and its
property, to the nonexclusive jurisdiction of any New York State court or Federal court of the
United States of America sitting in New York City, and any appellate court from any thereof, in any
action or proceeding arising out of or relating to this Agreement or the other Loan Documents, or
for recognition or enforcement of any judgment, and each of the parties hereto hereby irrevocably
and unconditionally agrees that all claims in respect of any such action or proceeding may be heard
and determined in such New York State or, to the extent permitted by law, in such Federal court.
Each of the parties hereto agrees that a final judgment in any such action or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other
manner provided by law. Nothing in this Agreement shall affect any right that the Administrative
Agent, the Collateral Agent, the Syndication Agent, the Documentation Agent, the Arranger, the
Issuing Bank or any Lender may otherwise have to bring any action or proceeding relating to this
Agreement or the other Loan Documents against any Subordinated Lender or its properties in the
courts of any jurisdiction.




B-9









 







(c) Each Subordinated Lender hereby irrevocably and unconditionally waives, to the fullest extent
it may legally and effectively do so, any objection which it may now or hereafter have to the
laying of venue of any suit, action or proceeding arising out of or relating to this Agreement or
the other Loan Documents in any New York State or Federal court. Each of the parties hereto hereby
irrevocably waives, to the fullest extent permitted by law, the defense of an inconvenient forum to
the maintenance of such action or proceeding in any such court.



(d) Each Subordinated Lender hereby irrevocably consents to service of process in the manner
provided for notices in Section 11 hereof. Nothing in this Agreement, the Credit Agreement or any
other Loan Document will affect the right of any party to this Agreement to serve process in any
other manner permitted by law.



SECTION 19. Waiver Of Jury Trial. Each party hereto hereby waives, to the fullest extent
permitted by applicable law, any right it may have to a trial by jury in respect of any litigation
directly or indirectly arising out of, under or in connection with this agreement or any of the
other loan documents. each party hereto (a) certifies that no representative, agent or attorney of
any other party has represented, expressly or otherwise, that such other party would not, in the
event of litigation, seek to enforce the foregoing waiver and (b) acknowledges that it and the
other parties hereto have been induced to enter into this agreement and the other loan documents,
as applicable, by, among other things, the mutual waivers and certifications in this Section 19.



SECTION 20. Additional Subordinated Lenders. Upon execution and delivery by the
Administrative Agent and a Subsidiary of an instrument substantially in the form of Annex 2
attached hereto, such Subsidiary shall become a Subordinated Lender and a Subordinated Borrower
hereunder with the same force and effect as if originally named as a Subordinated Lender and a
Subordinated Borrower herein. The execution and delivery of any such instrument shall not require
the consent of any other Subordinated Lender or Subordinated Borrower hereunder. The rights and
obligations of each Subordinated Borrower and each Subordinated Lender herein shall remain in full
force and effect notwithstanding the addition of any Subordinated Lender and Subordinated Borrower
as a party to this Agreement.



[Remainder of page intentionally left blank]





B-10









 








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



	 	 	 	 	 
	 	AFFIRMATIVE INSURANCE HOLDINGS, INC.,

as Subordinated Lender and Subordinated Borrower,

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	[NAME OF SUBSIDIARY],

as Subordinated Lender and Subordinated Borrower,

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	CREDIT SUISSE, CAYMAN ISLANDS BRANCH,

as Administrative Agent,

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 



B-11









 






	 	 	 	 	 



Schedule 1 to

Affiliate Subordination Agreement




SUBORDINATED LENDERS




B-12









 








Schedule 2 to

Affiliate Subordination Agreement




SUBORDINATED BORROWERS




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Annex 1 to

Affiliate Subordination Agreement




INTERCOMPANY SUBORDINATED DEMAND PROMISSORY NOTE




			
	 	 	 
	Note Number: 1
	 	Dated: [     ], 200___






     FOR VALUE RECEIVED, Affirmative Insurance Holdings, Inc., and each of its respective
subsidiaries (collectively, the “Group Members” and each, a “Group Member”) which
is a party to this intercompany subordinated demand promissory note (the “Promissory Note”)
promises to pay to the order of such other Group Member as makes loans to such Group Member (each
Group Member which borrows money pursuant to this Promissory Note is referred to herein as a
“Payor” and each Group Member which makes loans and advances pursuant to this
Promissory Note is referred to herein as a “Payee”), on demand, in lawful money of the
United States of America, in immediately available funds and at the appropriate office of the
Payee, the aggregate unpaid principal amount of all loans and advances heretofore and hereafter
made by such Payee to such Payor and any other indebtedness now or hereafter owing by such Payor to
such Payee as shown either on Schedule A attached hereto (and any continuation thereof) or in the
books and records of such Payee. The failure to show any such Indebtedness or any error in showing
such Indebtedness shall not affect the obligations of any Payor hereunder. Capitalized terms used
herein but not otherwise defined herein shall have the meanings given such terms in the Credit
Agreement dated as of January 31, 2007 (as amended, supplemented, replaced or otherwise modified
from time to time, the “Credit Agreement”), among Affirmative Insurance Holdings, Inc., the
Lenders from time to time party thereto, Credit Suisse, Cayman Islands Branch, as administrative
agent (in such capacity, the “Administrative Agent”) and as collateral agent (in such
capacity, the “Collateral Agent”), and the other parties thereto.



     The unpaid principal amount hereof from time to time outstanding shall bear interest at a rate
equal to the rate as may be agreed upon from time to time by the relevant Payor and Payee or, at
the Administrative Agent’s option following the occurrence and during the continuation of a
Default, at the rate per annum then applicable to ABR Loans, plus 2% per annum. Interest
shall be due and payable on the last day of each month commencing after the date hereof or at such
other times as may be agreed upon from time to time by the relevant Payor and Payee. Upon demand
for payment of any principal amount hereof, accrued but unpaid interest on such principal amount
shall also be due and payable. Interest shall be paid in lawful money of the United States of
America and in immediately available funds. Interest shall be computed for the actual number of
days elapsed on the basis of a year consisting of 365 days.



     Each Payor and any endorser of this Promissory Note hereby waives presentment, demand, protest
and notice of any kind. No failure to exercise, and no delay in exercising, any rights hereunder
on the part of the holder hereof shall operate as a waiver of such rights.



     This Promissory Note has been pledged by each Payee to the Administrative Agent, for the
benefit of the Secured Parties, as security for such Payee’s obligations, if any, under the
applicable loan agreements, indentures or other agreements to which such Payee is a party. Each
Payor acknowledges and agrees that the Administrative Agent and the other Secured Parties may



B-14









 







exercise all the rights of the Payees under this Promissory Note and will not be subject to
any abatement, reduction, recoupment, defense, setoff or counterclaim available to such Payor.



     Notwithstanding anything contained herein to the contrary, neither the principal of nor the
interest on, nor any other amounts payable in respect of, the indebtedness created or evidenced by
this instrument or record shall become due or be paid or payable, except to the extent permitted
under the Affiliate Subordination Agreement dated [ ], 200___, among the Subordinated
Lenders, the Subordinated Borrowers and Credit Suisse, Cayman Islands Branch, in its capacity as
Administrative Agent, which Affiliate Subordination Agreement is incorporated herein with the same
effect as if fully set forth herein.



     Notwithstanding anything to the contrary contained herein, in any other agreement or in any
such promissory note or other instrument, this Promissory Note (i) replaces and supersedes any and
all promissory notes or other instruments which create or evidence any loans or advances made on or
before the date hereof by any Group Member to any other Group Member, and (ii) without the written
consent of the Administrative Agent, shall not be deemed replaced, superseded or in any way
modified by any promissory note or other instrument entered into on or after the date hereof which
purports to create or evidence any loan or advance by any Group Member to any other Group Member.



     THIS PROMISSORY NOTE AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS PROMISSORY NOTE
SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW
YORK.



     From time to time after the date hereof, additional subsidiaries of the Group Members may
become parties hereto by executing a counterpart signature page to this Promissory Note (each
additional subsidiary, an “Additional Payor”). Upon delivery of such counterpart signature
page to the Payees, notice of which is hereby waived by the other Payors, each Additional Payor
shall be a Payor and shall be as fully a party hereto as if such Additional Payor were an original
signatory hereof. Each Payor expressly agrees that its obligations arising hereunder shall not be
affected or diminished by the addition or release of any other Payor hereunder. This Promissory
Note shall be fully effective as to any Payor that is or becomes a party hereto regardless of
whether any other Person becomes or fails to become or ceases to be a Payor hereunder.



     This Promissory Note may be executed in any number of counterparts and by different parties
hereto in separate counterparts, each of which when so executed shall be deemed to be an original
and all of which taken together shall constitute one and the same agreement.



[Remainder of page intentionally left blank]




B-15









 





     IN WITNESS WHEREOF, each Payor has caused this Promissory Note to be executed and delivered by
its proper and duly authorized officer as of the date set forth above.



	 	 	 	 	 
	 	AFFIRMATIVE INSURANCE HOLDINGS, INC.

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	[NAME OF SUBSIDIARY]

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 



B-16









 






	 	 	 	 	 



SCHEDULE A




TRANSACTIONS

ON

INTERCOMPANY SUBORDINATED DEMAND PROMISSORY NOTE




	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	Outstanding	 	 
	 	 	 	 	 	 	 	 	 	 	Principal	 	 
	 	 	 	 	 	 	 	 	Amount of	 	Balance	 	 
	 	 	 	 	 	 	Amount of	 	Principal	 	from Payor	 	 
	 	 	Name of	 	Name of	 	Advance	 	Paid This	 	to Payee	 	Notation Made
	Date	 	Payor	 	Payee	 	This Date	 	Date	 	This Date	 	By
	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 





B-17









 





ENDORSEMENT




     FOR VALUE RECEIVED, each of the undersigned does hereby sell, assign and transfer to
                     all of its right, title and interest in and to the
Intercompany Subordinated Demand Promissory Note, dated
[          ], 200___ (as amended,
supplemented, replaced or otherwise modified from time to time, the “Promissory Note”),
made by Affirmative Insurance Holdings, Inc., and each of its respective subsidiaries or any other
person that is or becomes a party thereto, and payable to the undersigned. This endorsement is
intended to be attached to the Promissory Note and, when so attached, shall constitute an
endorsement thereof.



     The initial undersigned shall be the Group Members (as defined in the Promissory Note) party
to the Affiliate Subordination Agreement on the date of the Promissory Note. From time to time
after the date thereof, additional subsidiaries of the Group Members shall become parties to the
Promissory Note (each, an “Additional Payee”) and a signatory to this endorsement by
executing a counterpart signature page to the Promissory Note and to this endorsement. Upon
delivery of such counterpart signature page to the Payors, notice of which is hereby waived by the
other Payees, each Additional Payee shall be a Payee and shall be as fully a Payee under the
Promissory Note and a signatory to this endorsement as if such Additional Payee were an original
Payee under the Promissory Note and an original signatory hereof. Each Payee expressly agrees that
its obligations arising under the Promissory Note and hereunder shall not be affected or diminished
by the addition or release of any other Payee under the Promissory Note or hereunder. This
endorsement shall be fully effective as to any Payee that is or becomes a signatory hereto
regardless of whether any other Person becomes or fails to become or ceases to be a Payee to the
Promissory Note or hereunder.


Dated:                     




[Remainder of page intentionally left blank]




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	 	AFFIRMATIVE INSURANCE HOLDINGS, INC.

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	[NAME OF SUBSIDIARY]

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 




B-19









 








Annex 2 to the

Affiliate Subordination Agreement



SUPPLEMENT NO. [ ] dated as of [      ] (this “Supplement”), to the Affiliate Subordination
Agreement dated as of
[          ], 200___ (the “Affiliate Subordination Agreement”), among
the subordinated lenders named therein (the “Subordinated Lenders”), the subordinated
borrowers named therein (the “Subordinated Borrowers”) and Credit Suisse, Cayman Islands
Branch, as administrative agent (in such capacity, the “Administrative Agent”) for the
Senior Lenders.



A. Reference is made to the Affiliate Subordination Agreement.



B. Terms used herein and not otherwise defined herein shall have the meanings assigned to such
terms in the Affiliate Subordination Agreement.



C. Each of the Subordinated Lenders and each of the Subordinated Borrowers have entered into the
Affiliate Subordination Agreement in order to induce the Senior Lenders to make loans and other
extensions of credit under the Credit Agreement and the other Loan Documents. Section 20 of the
Affiliate Subordination Agreement provides that subsidiaries of Affirmative Insurance Holdings,
Inc., may become Subordinated Lenders and Subordinated Borrowers under the Affiliate Subordination
Agreement by execution and delivery of an instrument in the form of this Supplement. The
undersigned Subsidiary (the “New Subordinated Party”) is executing this Supplement to
become a Subordinated Lender and a Subordinated Borrower under the Affiliate Subordination
Agreement in accordance with the terms of the Credit Agreement as consideration for loans and
letters of credit previously made or issued or to be made or issued under the Credit Agreement.



Accordingly, the Administrative Agent and the New Subordinated Party agree as follows:



SECTION 1. In accordance with Section 20 of the Affiliate Subordination Agreement, the New
Subordinated Party by its signature below becomes a Subordinated Lender and a Subordinated Borrower
under the Affiliate Subordination Agreement with the same force and effect as if originally named
therein as a Subordinated Lender and a Subordinated Borrower and the New Subordinated Party hereby
(a) agrees to all the terms and provisions of the Affiliate Subordination Agreement applicable to
it as a Subordinated Lender and a Subordinated Borrower thereunder and (b) represents and warrants
that the representations and warranties made by it as a Subordinated Lender and a Subordinated
Borrower thereunder are true and correct on and as of the date hereof except for representations
and warranties which by their terms refer to a specific date. Each reference to a “Subordinated
Lender” or a “Subordinated Borrower” in the Affiliate Subordination Agreement shall be deemed to
include the New Subordinated Party. The Affiliate Subordination Agreement is hereby incorporated
herein by reference.



SECTION 2. The New Subordinated Party represents and warrants to the Administrative Agent and the
other Senior Lenders that this Supplement has been duly authorized, executed and delivered by it
and constitutes its legal, valid and binding obligation, enforceable against it in accordance with
its terms, subject to applicable bankruptcy, insolvency, moratorium or other laws affecting
creditors’ rights generally and subject to general principles of equity regardless of whether
considered in a proceeding in equity or at law.



SECTION 3. This Supplement may be executed in counterparts (and by different parties hereto on
different counterparts), each of which shall constitute an original, but all of which when taken


B-20









 






together shall constitute a single contract. This Supplement shall become effective when the
Administrative Agent shall have received counterparts of this Supplement that, when taken together,
bear the signatures of the New Subordinated Party and the Administrative Agent. Delivery of an
executed signature page to this Supplement by facsimile transmission shall be as effective as
delivery of a manually signed counterpart of this Supplement.



SECTION 4. Except as expressly supplemented hereby, the Affiliate Subordination Agreement shall
remain in full force and effect.



SECTION 5. THIS SUPPLEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE
STATE OF NEW YORK.



SECTION 6. In case any one or more of the provisions contained in this Supplement should be held
invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions contained herein and in the Affiliate Subordination Agreement shall not in any
way be affected or impaired thereby (it being understood that the invalidity of a particular
provision hereof in a particular jurisdiction shall not in and of itself affect the validity of
such provision in any other jurisdiction). The parties hereto shall endeavor in good-faith
negotiations to replace the invalid, illegal or unenforceable provisions with valid provisions the
economic effect of which comes as close as possible to that of the invalid, illegal or
unenforceable provisions.



SECTION 7. All communications and notices hereunder shall be in writing and given as provided in
Section 11 of the Affiliate Subordination Agreement. All communications and notices hereunder to
the New Subordinated Party shall be given to it at the address set forth under its signature below,
with a copy to the Borrower.



SECTION 8. The New Subordinated Party agrees to reimburse the Administrative Agent for its
reasonable out-of-pocket expenses in connection with this Supplement, including the reasonable
fees, disbursements and other charges of counsel for the Administrative Agent.




[Remainder of page intentionally left blank]




B-21









 







IN WITNESS WHEREOF, the New Subordinated Party and the Administrative Agent have duly executed this
Supplement to the Affiliate Subordination Agreement as of the day and year first above written.




	 	 	 	 	 
	 	[NAME OF NEW SUBORDINATED PARTY],

as New Subordinated Party

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	CREDIT SUISSE, CAYMAN ISLANDS BRANCH,

as Administrative Agent,

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 



B-22









 






	 	 	 	 	 



EXHIBIT C




AFFIRMATIVE INSURANCE HOLDINGS, INC.




FORM OF ASSIGNMENT AND ACCEPTANCE





     Reference is made to the Credit Agreement dated as of January, 31 2007 (as amended,
supplemented, replaced or otherwise modified from time to time, the “Credit Agreement”),
among the Borrower, the Lenders from time to time party thereto, Credit Suisse, Cayman Islands
Branch, as administrative agent (in such capacity, the “Administrative Agent”) and as
collateral agent (in such capacity, the “Collateral Agent”), and the other parties thereto.
Terms used herein and not otherwise defined herein shall have the meanings assigned to such terms
in the Credit Agreement.



     SECTION 1. The Assignor hereby sells and assigns, without recourse, to the Assignee, and the
Assignee hereby purchases and assumes, without recourse, from the Assignor, effective as of the
Effective Date set forth below (but not prior to the registration of the information contained
herein in the Register pursuant to Section 9.04(e) of the Credit Agreement), the interests set
forth below (the “Assigned Interest") in the Assignor’s rights and obligations under the
Credit Agreement and the other Loan Documents, including, without limitation, the amounts and
percentages set forth below of (i) the Commitments of the Assignor on the Effective Date, (ii) the
Loans owing to the Assignor which are outstanding on the Effective Date and (iii) participations of
the Assignor in Letters of Credit and Swingline Loans which are outstanding on the Effective Date.
Each of the Assignor and the Assignee hereby makes and agrees to be bound by all the
representations, warranties and agreements set forth in Section 9.04(c) of the Credit Agreement, a
copy of which has been received by each such party. From and after the Effective Date (i) the
Assignee shall be a party to and be bound by the provisions of the Credit Agreement and, to the
extent of the interests assigned by this Assignment and Acceptance, have the rights and obligations
of a Lender thereunder and under the Loan Documents and (ii) the Assignor shall, to the extent of
the interests assigned by this Assignment and Acceptance, relinquish its rights and be released
from its obligations under the Credit Agreement.



     SECTION 2. This Assignment and Acceptance is being delivered to the Administrative Agent
together with, if the Assignee is not already a Lender under the Credit Agreement, a completed
Administrative Questionnaire.



C-1









 





     SECTION 3. THIS ASSIGNMENT AND ACCEPTANCE SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED
BY THE LAWS OF THE STATE OF NEW YORK.



	 	 	 
	Date of Assignment:
	 	 
	 

	 	 
	 
	 	 
	Legal Name of Assignor:
	 	 
	 

	 	 
	 
	 	 
	Legal Name of Assignee:
	 	 
	 

	 	 
	 
	 	 
	Assignee’s Address for Notices:
	 	 
	 

	 	 
	 
	 	 
	 

	 	 
	 
	 	 
	Effective Date of Assignment:
	 	 
	 

	 	 
	 
	 	 





	 	 	 	 	 
	 	 	 	 	Percentage Assigned of
	 	 	 	 	Applicable
	 	 	 	 	Facility/Commitment
	 	 	 	 	(set forth, to at least
	 	 	 	 	8 decimals, as a
	 	 	 	 	percentage of the
	 	 	 	 	Facility and the
	 	 	 	 	aggregate Commitments
	 	 	Principal Amount	 	of all Lenders
	 	 	Assigned	 	thereunder)
	Facility/Commitment
	 	 	 	 
	Revolving Credit
	 	$ 	 	% 
	 
	 	 	 	 
	Term Loans
	 	$ 	 	% 






[Remainder of page intentionally left blank]




C-2









 









The terms set forth on the foregoing
pages are hereby agreed to:




	 	 	 	 	 
	 
	 	 	 	 
	 

	 	,
	 	 
	 	 	 
	as Assignor	 	 
	 
	 	 	 	 
	By:
	 	 	 	 
	 

	 	 	 	 
	 

	 	Name:	 	 
	 

	 	Title:	 	 
	 
	 	 	 	 
	 
	 	 	 	 
	 
	 	 	 	 
	 
	 	 	 	 
	 

	 	,
	 	 
	 	 	 
	as Assignor	 	 
	 
	 	 	 	 
	By:
	 	 	 	 
	 

	 	 	 	 
	 

	 	Name:	 	 
	 

	 	Title:	 	 









Accepted*




	 	 	 
	CREDIT SUISSE, CAYMAN ISLANDS BRANCH,
	as Administrative Agent and as
Swingline Lender,
	 
	 	 
	By:
	 	 
	 

	 	 
	 

	 	Name:
	 

	 	Title:
	 
	 	 
	By:
	 	 
	 

	 	 
	 

	 	Name:
	 

	 	Title:
	 
	 	 
	AFFIRMATIVE INSURANCE HOLDINGS, INC.
	 
	 	 
	By:
	 	 
	 

	 	 
	 

	 	Name:
	 

	 	Title:
	 
	 	 
	[Issuing Bank]
	 
	 	 
	By:
	 	 
	 

	 	 
	 

	 	Name:
	 

	 	Title:













 




			
	*	 	To be completed to the extent consents are
required under Section 9.04(b) of the Credit Agreement.




C-3









 










EXHIBIT D




AFFIRMATIVE INSURANCE HOLDINGS, INC.




FORM OF BORROWING REQUEST




Credit Suisse, Cayman Islands Branch as Administrative
Agent for the Lenders referred to below,



Eleven Madison Avenue

New York, NY 10010




Attention of Agency Group




[Date]



Ladies and Gentlemen:




     The undersigned, Affirmative Insurance Holdings, Inc., (the “Borrower”), refers to the
Credit Agreement dated as of January 31, 2007 (the “Credit Agreement”), among Affirmative
Insurance Holdings, Inc., the Borrower, the Lenders from time to time party thereto, Credit Suisse,
Cayman Islands Branch, as administrative agent (in such capacity, the “Administrative
Agent”) and as collateral agent (in such capacity, the “Collateral Agent”), Credit
Suisse Securities (USA) LLC, as sole lead arranger and sole bookrunner (the “Arranger”).
Terms used herein and not otherwise defined herein shall have the meanings assigned to such terms
in the Credit Agreement. The Borrower hereby gives you notice pursuant to Section 2.03 of the
Credit Agreement that it requests a Borrowing under the Credit Agreement, and in that connection
sets forth below the terms on which such Borrowing is requested to be made:




	(A)	 	Date of Borrowing

(which is a Business Day)                                                    
	 
	(B)	 	Principal Amount of Borrowing1                                         







 




			
	1	 	Not less than $100,000 and in an integral
multiple of $500,000, but in any event not exceeding the available Total
Revolving Credit Commitment at such time.




D-1









 











	(C)	 	Type of Borrowing2                                                             
	 
	(D)	 	Interest Period and the last day thereof3                                                             
	 
	(E)	 	Funds are requested to be disbursed to the Company’s account with                      (Account No.
                     ).





(signature page follows)






 




			
	2	 	Specify Eurodollar Borrowing or ABR Borrowing.
	 
	3	 	Which shall be subject to the definition of
“Interest Period” and Section 2.02 of the Credit Agreement and end
not later than the Maturity Date (applicable for Eurodollar Borrowings only).




D-2









 










     The Borrower hereby represents and warrants to the Administrative Agent and the Lenders that,
on the date of this Borrowing Request and on the date of the related Borrowing, the conditions to
lending specified in Section 4.01 of the Credit Agreement have been satisfied.



	 	 	 	 	 
	 	AFFIRMATIVE INSURANCE HOLDINGS, INC.

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 




D-3









 








EXHIBIT E

Form of Guarantee and Collateral Agreement




 





GUARANTEE AND COLLATERAL AGREEMENT




made by




AFFIRMATIVE INSURANCE HOLDINGS, INC.,




and certain Subsidiaries of Affirmative Insurance Holdings, Inc.




in favor of




CREDIT SUISSE, CAYMAN ISLANDS BRANCH as Collateral Agent




Dated as of January __, 2007




 





 









 








TABLE OF CONTENTS




	 	 	 	 	 	 	 
	 	 	 	 	Page
	SECTION 1 DEFINED TERMS	 	 	1	 
	 
	 	 	 	 	 	 
	1.1.
	 	Definitions	 	 	1	 
	1.2.
	 	Other Definitional Provisions	 	 	10	 
	 
	 	 	 	 	 	 
	SECTION 2. GUARANTEE	 	 	10	 
	 
	 	 	 	 	 	 
	2.1.
	 	Guarantee	 	 	10	 
	2.2.
	 	Rights of Reimbursement, Contribution and Subrogation	 	 	11	 
	2.3.
	 	Amendments, etc. with respect to the Borrower Obligations	 	 	13	 
	2.4.
	 	Guarantee Absolute and Unconditional	 	 	13	 
	2.5.
	 	Reinstatement	 	 	14	 
	2.6.
	 	Payments	 	 	14	 
	 
	 	 	 	 	 	 
	SECTION 3. GRANT OF SECURITY INTEREST; CONTINUING LIABILITY UNDER PLEDGED COLLATERAL	 	 	14	 
	 
	 	 	 	 	 	 
	SECTION 4. REPRESENTATIONS AND WARRANTIES	 	 	16	 
	 
	 	 	 	 	 	 
	4.1.
	 	Representations in Credit Agreement	 	 	17	 
	4.2.
	 	Title; No Other Liens	 	 	17	 
	4.3.
	 	Perfected First Priority Liens	 	 	17	 
	4.4.
	 	Name; Jurisdiction of Organization,
etc.	 	 	17	 
	4.5.
	 	Inventory and Equipment	 	 	18	 
	4.6.
	 	Farm Products	 	 	18	 
	4.7.
	 	Investment Property	 	 	18	 
	4.8.
	 	Receivables	 	 	19	 
	4.9.
	 	Intellectual Property	 	 	20	 
	4.10.
	 	Letters of Credit and Letter of Credit Rights	 	 	22	 
	4.11.
	 	Commercial Tort Claims	 	 	22	 
	4.12.
	 	Contracts	 	 	22	 
	4.13.
	 	Insurance	 	 	23	 
	4.14.
	 	Governmental Approval; Filings	 	 	24	 
	 
	 	 	 	 	 	 
	SECTION 5. COVENANTS	 	 	24	 
	 
	 	 	 	 	 	 
	5.1.
	 	Covenants in Credit Agreement	 	 	24	 
	5.2.
	 	Delivery and Control of
Instruments, Chattel Paper, Negotiable Documents, Investment Property and Deposit Accounts	 	 	24	 
	5.3.
	 	Maintenance of Insurance	 	 	26	 
	5.4.
	 	Payment of Obligations	 	 	27	 
	5.5.
	 	Maintenance of Perfected Security Interest; Further Documentation	 	 	27	 
	5.6.
	 	Changes in Locations, Name,
Jurisdiction of Incorporation, etc.	 	 	27	 






i









 






	 	 	 	 	 	 	 
	 	 	 	 	Page
	5.7.
	 	Notices	 	 	28	 
	5.8.
	 	Investment Property	 	 	28	 
	5.9.
	 	Receivables	 	 	29	 
	5.10.
	 	Intellectual Property	 	 	30	 
	5.11.
	 	Contracts	 	 	32	 
	5.12.
	 	Commercial Tort Claims	 	 	33	 
	 
	 	 	 	 	 	 
	SECTION 6. REMEDIAL PROVISIONS	 	 	33	 
	 
	 	 	 	 	 	 
	6.1.
	 	Certain Matters Relating to Receivables	 	 	33	 
	6.2.
	 	Communications with Obligors; Grantors Remain Liable	 	 	34	 
	6.3.
	 	Pledged Securities	 	 	34	 
	6.4.
	 	Proceeds to be Turned Over To Collateral Agent	 	 	35	 
	6.5.
	 	Application of Proceeds	 	 	36	 
	6.6.
	 	Code and Other Remedies	 	 	36	 
	6.7.
	 	Registration Rights	 	 	38	 
	6.8.
	 	Deficiency	 	 	39	 
	6.9.
	 	Executory Process	 	 	39	 
	 
	 	 	 	 	 	 
	SECTION 7. THE COLLATERAL AGENT	 	 	40	 
	 
	 	 	 	 	 	 
	7.1.
	 	Collateral Agent’s Appointment
as Attorney-in-Fact, etc.	 	 	40	 
	7.2.
	 	Duty of Collateral Agent	 	 	42	 
	7.3.
	 	Execution of Financing Statements	 	 	42	 
	7.4.
	 	Authority of Collateral Agent	 	 	43	 
	7.5.
	 	Appointment of Co-Collateral Agents	 	 	43	 
	 
	 	 	 	 	 	 
	SECTION 8. MISCELLANEOUS	 	 	43	 
	 
	 	 	 	 	 	 
	8.1.
	 	Amendments in Writing	 	 	43	 
	8.2.
	 	Notices	 	 	43	 
	8.3.
	 	No Waiver by Course of Conduct; Cumulative Remedies	 	 	43	 
	8.4.
	 	Enforcement Expenses; Indemnification	 	 	44	 
	8.5.
	 	Successors and Assigns	 	 	44	 
	8.6.
	 	Set-Off	 	 	44	 
	8.7.
	 	Counterparts	 	 	45	 
	8.8.
	 	Severability	 	 	45	 
	8.9.
	 	Section Headings	 	 	45	 
	8.10.
	 	Integration	 	 	45	 
	8.11.
	 	APPLICABLE LAW	 	 	45	 
	8.12.
	 	Submission to Jurisdiction; Waivers	 	 	45	 
	8.13.
	 	Acknowledgments	 	 	46	 
	8.14.
	 	Additional Grantors	 	 	46	 
	8.15.
	 	Releases	 	 	46	 
	8.16.
	 	WAIVER OF JURY TRIAL	 	 	47	 






ii









 






	 	 	 	 	 	 	 
	 	 	 	 	Page
	Annexes, Exhibits and Schedules	 	 	 	 
	 
	 	 	 	 	 	 
	Annex 1
	 	Assumption Agreement	 	 	 	 
	Exhibit A
	 	Form of Acknowledgment and Consent	 	 	 	 
	Exhibit B-1
	 	Form of Intellectual Property  Security Agreement	 	 	 	 
	Exhibit B-2
	 	Form of After Acquired Intellectual Property Security Agreement	 	 	 	 
	Exhibit C
	 	Form of Uncertificated Securities Control Agreement	 	 	 	 
	Exhibit D
	 	Form of Deposit Account Agreement	 	 	 	 
	Exhibit E
	 	Form of Securities Account Control Agreement	 	 	 	 
	Exhibit F
	 	Form of Landlord Waiver	 	 	 	 
	 
	 	 	 	 	 	 
	Schedule 4.3
	 	Perfected First Priority Liens	 	 	 	 
	Schedule 4.4
	 	Names, Jurisdiction of Organization	 	 	 	 
	Schedule 4.5(a)
	 	Inventory and Equipment	 	 	 	 
	Schedule 4.7(a,b,c)
	 	Investment Property	 	 	 	 
	Schedule 4.9(a)
	 	Owned Intellectual Property	 	 	 	 
	Schedule 4.9(c)
	 	Material Intellectual Property	 	 	 	 
	Schedule 4.9(f)
	 	Intellectual Property Proceedings	 	 	 	 
	Schedule 4.9(h)
	 	Intellectual Property Fees	 	 	 	 
	Schedule 4.10
	 	Letters of Credit and Letter of Credit Rights	 	 	 	 
	Schedule 4.11
	 	Commercial Tort Claims	 	 	 	 
	Schedule 4.12(a,b)
	 	Contracts	 	 	 	 
	Schedule 8.2
	 	Guarantor Notice Addresses	 	 	 	 






iii









 





Exhibit E




     GUARANTEE AND COLLATERAL AGREEMENT, dated as of January ___, 2007, made by each of the
signatories hereto (together with any other entity that may become a party hereto as provided
herein, the “Grantors”), in favor of CREDIT SUISSE, CAYMAN ISLANDS BRANCH as administrative
agent (in such capacity and together with its successors, the “Administrative Agent”) and
as collateral agent (in such capacity and together with its successors, the “Collateral
Agent”) for (i) the banks and other financial institutions or entities (the “Lenders”)
from time to time parties to the Credit Agreement, dated as of January ___, 2007 (as amended,
supplemented or otherwise modified from time to time, the “Credit Agreement”), among
AFFIRMATIVE INSURANCE HOLDINGS, INC., a Delaware corporation (“Borrower”), the Lenders
party thereto, the Administrative Agent, and (ii) the other Secured Parties (as hereinafter
defined).



W I T N E S S E T H:




     WHEREAS, pursuant to the Credit Agreement, the Lenders have severally agreed to make
extensions of credit to the Borrower upon the terms and subject to the conditions set forth
therein;



     WHEREAS, the Borrower is a member of an affiliated group of companies that includes each other
Grantor;



     WHEREAS, subject to the terms and conditions of the Credit Agreement, certain Grantors may
enter into one or more Hedging Agreements.



     WHEREAS, the proceeds of the extensions of credit under the Credit Agreement will be used in
part to enable the Borrower to acquire all of the Equity Interests in USAgencies pursuant to the
Purchase Agreement;



     WHEREAS, the Borrower and the other Grantors are engaged in related businesses, and each
Grantor will derive substantial direct and indirect benefit from the making of the extensions of
credit under the Credit Agreement; and



     WHEREAS, it is a condition precedent to the obligation of the Lenders to make their respective
extensions of credit to the Borrower under the Credit Agreement that the Grantors shall have
executed and delivered this Agreement to the Collateral Agent for the ratable benefit of the
Secured Parties;



     NOW, THEREFORE, in consideration of the premises and to induce the Arrangers, the Collateral
Agent and the Lenders to enter into the Credit Agreement and to induce the Lenders to make their
respective extensions of credit to the Borrower thereunder, each Grantor hereby agrees with the
Collateral Agent, for the ratable benefit of the Secured Parties, as follows:



SECTION 1. DEFINED TERMS




          1.1 Definitions. (a) Unless otherwise defined herein, terms defined in the Credit
Agreement and used herein shall have the meanings given to them in the Credit Agreement, and the
following terms are used herein as defined in the New York UCC (and if defined in more than one
Article of the New York UCC, such terms shall have the meanings




E-1









 








Exhibit E



given in Article 9 thereof): Accounts, Account Debtor, As-Extracted Collateral, Certificated
Security, Chattel Paper, Commercial Tort Claim, Commodity Account, Commodity Contract, Commodity
Intermediary, Documents, Deposit Account, Electronic Chattel Paper, Equipment, Farm Products,
Financial Asset, Fixtures, Goods, Instruments, Inventory, Letter of Credit, Letter of Credit
Rights, Money, Payment Intangibles, Securities Account, Securities Intermediary, Security, Security
Entitlement, Supporting Obligations, Tangible Chattel Paper and Uncertificated Security.




          (b) The following terms shall have the following meanings:





     “Administrative Agent” shall have the meaning assigned to such term in the
preamble.




     “Agreement” shall mean this Guarantee and Collateral Agreement, as the same
may be amended, supplemented, replaced or otherwise modified from time to time.




     “Applicable Subsidiary” shall have the meaning assigned to such term in Section
3(a).




     “Arrangers” shall have the meaning assigned to such term in the preamble.




     “Borrower” shall have the meaning assigned to such term in the preamble.




     “Borrower Obligations” shall mean the collective reference to the unpaid
principal of and interest on (including interest accruing after the maturity of the Loans
and reimbursement obligations in respect of amounts drawn under Letters of Credit and
interest accruing after the filing of any petition in bankruptcy, or the commencement of any
insolvency, reorganization or like proceeding, relating to any Grantor, whether or not a
claim for post-filing or post-petition interest is allowed in such proceeding) the Loans and
all other obligations and liabilities of the Grantors to the Arrangers, to any Agent or to
any Lender (or, in case of Specified Hedge Agreements, any Affiliate of any Lender or any
Agent or any Affiliate of any Agent), whether direct or indirect, absolute or contingent,
due or to become due, or now existing or hereafter incurred, which may arise under, out of,
or in connection with the Credit Agreement, any other Loan Document, the Letters of Credit,
any Specified Hedge Agreement or any other document made, delivered or given in connection
herewith or therewith, whether on account of principal, interest, reimbursement obligations,
fees, indemnities, costs, expenses (including all fees, charges and disbursements of counsel
to the Arrangers, to any Agent or to any Lender that are required to be paid by any Grantor
pursuant to the Credit Agreement or any other Loan Document) or otherwise; provided,
that (i) obligations of the Borrower or any other Loan Party under any Specified Hedge
Agreement shall be secured and guaranteed pursuant to the Security Documents only to the
extent that, and for so long as the other obligations are so secured and guaranteed, (ii)
any release of collateral or guarantors effected in the manner permitted by the Credit
Agreement or any other Loan Document shall not require the consent of holders of obligations
under Specified Hedge Agreements and (iii) the amount of secured obligations under any
Specified Hedge Agreements shall not exceed the net amount, including any net termination
payments, that would be



E-2









 





 Exhibit E





required to be paid to the counterparty to such Specified Hedge Agreement on the date
of termination of such Specified Hedge Agreement.




     “Business Day” shall mean any day other than a Saturday, Sunday or day on which
commercial banks in New York City are authorized or required by law to close.




     “Closing Date” shall mean the date hereof.




     “Collateral Account” shall mean (i) any collateral account established by the
Collateral Agent as provided in Section 6.1 or 6.4 or (ii) any cash collateral account
established as provided in Section 2.23(j) of the Credit Agreement.




     “Collateral Account Funds” shall mean, collectively, the following: all funds
(including all trust monies), investments (including all cash equivalents) credited to, or
purchased with funds from, any Collateral Account and all certificates and instruments from
time to time representing or evidencing such investments; all notes, certificates of
deposit, checks and other instruments from time to time hereafter delivered to or otherwise
possessed by the Collateral Agent for or on behalf of any Grantor in substitution for, or in
addition to, any or all of the Pledged Collateral; and all interest, dividends, cash,
instruments and other property from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all of the items constituting Pledged
Collateral.




     “Collateral Agent” shall have the meaning assigned to such term in the
preamble.




     “Contracts” shall mean all contracts and agreements between any Grantor and any
other person (in each case, whether written or oral, or third party or intercompany) as the
same may be amended, assigned, extended, restated, supplemented, replaced or otherwise
modified from time to time including (i) all rights of any Grantor to receive moneys due and
to become due to it thereunder or in connection therewith, (ii) all rights of any Grantor to
receive proceeds of any insurance, indemnity, warranty or guaranty with respect thereto,
(iii) all rights of any Grantor to damages arising thereunder and (iv) all rights of any
Grantor to terminate and to perform and compel performance of, such Contracts and to
exercise all remedies thereunder.




     “Copyright Licenses” shall mean any agreement, whether written or oral, naming
any Grantor as licensor or licensee (including those listed in Schedule 4.9(a) (as such
schedule may be amended or supplemented from time to time)), granting any right in, to or
under any Copyright, including the grant of rights to manufacture, print, publish, copy,
import, export, distribute, exploit and sell materials derived from any Copyright.




     “Copyrights” shall mean (i) all copyrights arising under the laws of the
United States, any other country, or union of countries, or any political subdivision of any
of the foregoing, whether registered or unregistered and whether published or unpublished
(including those listed in Schedule 4.9(a) (as such schedule may be amended or supplemented
from time to time)), all registrations and recordings thereof, and all applications in
connection therewith and rights corresponding thereto throughout the world, including all
registrations, recordings and applications in the United States



E-3









 





Exhibit E





Copyright Office, (ii) the right to, and to obtain, all extensions and renewals
thereof, and the right to sue for past, present and future infringements of any of the
foregoing, (iii) all proceeds of the foregoing, including license, royalties, income,
payments, claims, damages, and proceeds of suit and (iv) all other rights of any kind
whatsoever accruing thereunder or pertaining thereto.




     “Credit Agreement” shall have the meaning assigned to such term in the
preamble.




     “dollars” or “$” shall mean lawful money of the United States of
America.




     “Excluded Assets” shall mean any lease, license, contract, property right or
agreement to which any Grantor is a party or any of its rights, title or interests
thereunder if and only for so long as the grant of a security interest hereunder shall
constitute or result in a breach, termination or default under any such lease, license,
contract, property right or agreement (other than to the extent that any such term would be
rendered ineffective pursuant to Sections 9-406, 9-407, 9-408 or 9-409 of the UCC of any
relevant jurisdiction or any other applicable law or principles of equity);
provided, however, that such security interest shall attach immediately to
any portion of such lease, license, contract, property rights or agreement that does not
result in any of the consequences specified above.




     “Excluded Foreign Subsidiary Voting Stock” shall mean the voting Equity
Interests in any Excluded Foreign Subsidiary.




     “General Intangibles” shall mean all “general intangibles” as such term is
defined in Section 9-102(a)(42) of the New York UCC and, in any event, including with
respect to any Grantor, all rights of such Grantor to receive any tax refunds, all Hedging
Agreements and all contracts, agreements, instruments and indentures and all licenses,
permits, concessions, franchises and authorizations issued by Governmental Authorities in
any form, and portions thereof, to which such Grantor is a party or under which such Grantor
has any right, title or interest or to which such Grantor or any property of such Grantor is
subject, as the same may from time to time be amended, supplemented, replaced or otherwise
modified, including (i) all rights of such Grantor to receive moneys due and to become due
to it thereunder or in connection therewith, (ii) all rights of such Grantor to receive
proceeds of any insurance, indemnity, warranty or guaranty with respect thereto, (iii) all
rights of such Grantor to damages arising thereunder and (iv) all rights of such Grantor to
terminate and to perform and compel performance and to exercise all remedies thereunder.




     “Grantors” shall have the meaning assigned to such term in the preamble.




     “Guarantor Obligations” shall mean with respect to any Guarantor, all
obligations and liabilities of such Guarantor which may arise under or in connection with
this Agreement (including Section 2) or any other Loan Document to which such Guarantor is a
party, in each case whether on account of guarantee obligations, reimbursement obligations,
fees, indemnities, costs, expenses or otherwise (including all fees and



E-4









 





Exhibit E





disbursements of counsel to any Secured Party that are required to be paid by such
Guarantor pursuant to the terms of this Agreement or any other Loan Document).




     “Guarantors” shall mean the collective reference to each Grantor other than the
Borrower.




     “Insurance” shall mean (i) all insurance policies covering any or all of the
Pledged Collateral (regardless of whether the Collateral Agent is the loss payee thereof)
and (ii) any key man life insurance policies.




     “Insurance Law” shall mean a Requirement of Law pertaining to the business of
insurance and applicable to a Regulated Insurance Subsidiary.




     “Intellectual Property” shall mean the collective reference to all rights,
priorities and privileges relating to intellectual property, whether arising under United
States, multinational or foreign laws or otherwise, including the Copyrights, the Copyright
Licenses, the Patents, the Patent Licenses, the Trademarks, the Trademark Licenses, the
Trade Secrets and the Trade Secret Licenses, and all rights to sue at law or in equity for
any past, present and future infringement or other impairment thereof, including the right
to receive all proceeds and damages therefrom.




     “Intercompany Note” shall mean any promissory note evidencing loans made by any
Grantor to any Loan Party, including any subordinated intercompany note entered into in
connection with the Affiliate Subordination Agreement.




     “Investment Property” shall mean the collective reference to (i) all
“investment property” as such term is defined in Section 9-102(a)(49) of the New York UCC
(other than any Excluded Foreign Subsidiary Voting Stock, excluded from the definition of
“Pledged Equity Interests”) including all Certificated Securities and Uncertificated
Securities, all Security Entitlements, all Securities Accounts, all Commodity Contracts and
all Commodity Accounts, (ii) security entitlements, in the case of any United States
Treasury book-entry securities, as defined in 31 C.F.R. section 357.2, or, in the case of
any United States federal agency book-entry securities, as defined in the corresponding
United States federal regulations governing such book-entry securities, and (iii) whether or
not otherwise constituting “investment property”, all Pledged Notes, all Pledged Equity
Interests, all Pledged Security Entitlements and all Pledged Commodity Contracts.




     “Issuers” shall mean the collective reference to each issuer of a Pledged
Security.




     “Lenders” shall have the meaning assigned to such term in the preamble.




     “Licensed Intellectual Property” shall have the meaning assigned to such term
in Section 4.9(a).




     “Material Contract” shall mean any agreement, contract or license or other
arrangement (other than an agreement, contract or arrangement representing indebtedness for
borrowed money) to which any Grantor is a party that is material to the Grantors and



E-5









 





Exhibit E





their subsidiaries, taken as a whole, and for which breach, nonperformance,
cancellation or failure to renew could reasonably be expected to have a Material Adverse
Effect.




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




     “Non-Assignable Contract” shall mean any Contract that by its terms purports to
restrict or prevent the assignment thereof or granting of a security interest therein
(either by its terms or by any federal or state statutory or regulatory prohibition or
otherwise, irrespective of whether such prohibition or restriction is enforceable under
Sections 9-407 through 9-409 of the New York UCC).




     “Obligations” shall mean (i) in the case of the Borrower, the Borrower
Obligations, and (ii) in the case of each Guarantor, its Guarantor Obligations.




     “Owned Intellectual Property” shall have the meaning assigned to such term in
Section 4.9(a).




     “Patent License” shall mean all agreements, whether written or oral, providing
for the grant by or to any Grantor of any right to manufacture, use, import, export,
distribute or sell any invention covered in whole or in part by a Patent, including any of
the foregoing listed in Schedule 4.9(a) (as such schedule may be amended or supplemented
from time to time).




     “Patents” shall mean (i) all letters of patent of the United States, any other
country, union of countries or any political subdivision of any of the foregoing, all
reissues and extensions thereof and all goodwill associated therewith, including any of the
foregoing listed in Schedule 4.9(a) (as such schedule may be amended or supplemented from
time to time), (ii) all applications for letters of patent of the United States or any other
country or union of countries or any political subdivision of any of the foregoing and all
divisions, continuations and continuations-in-part thereof, all improvements thereof,
including any of the foregoing listed in Schedule 4.9(a) (as such schedule may be amended or
supplemented from time to time), (iii) all rights to, and to obtain, any reissues or
extensions of the foregoing and (iv) all proceeds of the foregoing, including licenses,
royalties, income, payments, claims, damages and proceeds of suit.




     “person” shall mean any natural person, corporation, trust, business trust,
joint venture, joint stock company, association company, limited liability company,
partnership, Governmental Authority or other entity.




     “Pledged Alternative Equity Interests” shall mean all interests of any Grantor
in participation or other interests in any equity or profits of any business entity and the
certificates, if any, representing such interests and all dividends, distributions, cash,
warrants, rights, options, instruments, securities and other property or proceeds from time
to time received, receivable or otherwise distributed in respect of or in exchange for any
or all of such interests and any other warrant, right or option to acquire any of the
foregoing; provided, however, that Pledged Alternative Equity Interests
shall not include



E-6









 





Exhibit E





any Pledged Stock, Pledged Partnership Interests, Pledged LLC Interests or Pledged
Trust Interests.




     “Pledged Collateral” shall have the meaning assigned to such term in Section 3.




     “Pledged Commodity Contracts” shall mean all commodity contracts listed on
Schedule 4.7(c) (as such schedule may be amended from time to time) and all other commodity
contracts to which any Grantor is party from time to time.




     “Pledged Debt Securities” shall mean all debt securities now owned or hereafter
acquired by any Grantor, including the debt securities listed on Schedule 4.7(b), (as such
schedule may be amended or supplemented from time to time), together with any other
certificates, options, rights or security entitlements of any nature whatsoever in respect
of the debt securities of any person that may be issued or granted to, or held by, any
Grantor while this Agreement is in effect.




     “Pledged Equity Interests” shall mean all Pledged Stock, Pledged LLC Interests,
Pledged Partnership Interests, Pledged Trust Interests and Pledged Alternative Equity
Interests.




     “Pledged LLC Interests” shall mean all interests of any Grantor now owned or
hereafter acquired in any limited liability company, including all limited liability company
interests listed on Schedule 4.7(a) hereto under the heading “Pledged LLC Interests” (as
such schedule may be amended or supplemented from time to time) and the certificates, if
any, representing such limited liability company interests and any interest of such Grantor
on the books and records of such limited liability company and all dividends, distributions,
cash, warrants, rights, options, instruments, securities and other property or proceeds from
time to time received, receivable or otherwise distributed in respect of or in exchange for
any or all of such limited liability company interests and any other warrant, right or
option to acquire any of the foregoing.




     “Pledged Notes” shall mean all promissory notes now owned or hereafter acquired
by any Grantor, including those listed on Schedule 4.7(b) (as such schedule may be amended
or supplemented from time to time) and all Intercompany Notes at any time issued to or held
by any Grantor.




     “Pledged Partnership Interests” shall mean all interests of any Grantor now
owned or hereafter acquired in any general partnership, limited partnership, limited
liability partnership or other partnership, including all partnership interests listed on
Schedule 4.7(a) hereto under the heading “Pledged Partnership Interests” (as such schedule
may be amended or supplemented from time to time) and the certificates, if any, representing
such partnership interests and any interest of such Grantor on the books and records of such
partnership and all dividends, distributions, cash, warrants, rights, options, instruments,
securities and other property or proceeds from time to time received, receivable or
otherwise distributed in respect of or in exchange for any or all of such partnership
interests and any other warrant, right or option to acquire any of the foregoing.



E-7









 




Exhibit E





     “Pledged Securities” shall mean the collective reference to the Pledged Debt
Securities, the Pledged Notes and the Pledged Equity Interests.




     “Pledged Security Entitlements” shall mean all security entitlements with
respect to the financial assets listed on Schedule 4.7(c) (as such schedule may be amended
from time to time) and all other security entitlements of any Grantor.




     “Pledged Stock”: shall mean all shares of capital stock now owned or hereafter
acquired by any Grantor, including all shares of capital stock listed on Schedule 4.7(a)
hereto under the heading “Pledged Stock” (as such schedule may be amended or supplemented
from time to time), and the certificates, if any, representing such shares and any interest
of such Grantor in the entries on the books of the issuer of such shares and all dividends,
distributions, cash, warrants, rights, options, instruments, securities and other property
or proceeds from time to time received, receivable or otherwise distributed in respect of or
in exchange for any or all of such shares and any other warrant, right or option to acquire
any of the foregoing; provided, however, that in no event shall more than
65% of the total outstanding Excluded Foreign Subsidiary Voting Stock be required to be
pledged hereunder.




     “Pledged Trust Interests” shall mean all interests of any Grantor now owned or
hereafter acquired in a Delaware business trust or other trust, including all trust
interests listed on Schedule 4.7(a) hereto under the heading “Pledged Trust Interests” (as
such schedule may be amended or supplemented from time to time) and the certificates, if
any, representing such trust interests and any interest of such Grantor on the books and
records of such trust or on the books and records of any securities intermediary pertaining
to such interest and all dividends, distributions, cash, warrants, rights, options,
instruments, securities and other property or proceeds from time to time received,
receivable or otherwise distributed in respect of or in exchange for any or all of such
trust interests and any other warrant, right or option to acquire any of the foregoing.




     “Proceeds” shall mean all “proceeds” as such term is defined in Section
9-102(a)(64) of the New York UCC and, in any event, shall include all dividends or other
income from the Investment Property, collections thereon or distributions or payments with
respect thereto.




     “Qualified Counterparty” shall mean, with respect to any Specified Hedge
Agreement, any counterparty thereto that, at the time such Specified Hedge Agreement was
entered into, was a Lender, an Agent or an Affiliate of a Lender or an Agent.




     “Receivable” shall mean all Accounts and any other right to payment for goods
or other property sold, leased, licensed or otherwise disposed of or for services rendered,
whether or not such right is evidenced by an Instrument or Chattel Paper or classified as a
Payment Intangible and whether or not it has been earned by performance. References herein
to Receivables shall include any Supporting Obligation or collateral securing such
Receivable.



E-8









 





Exhibit E




     “Secured Parties” shall mean, collectively, the Arrangers, the Collateral
Agent, the Collateral Agent, the Syndication Agent, the Documentation Agent, the Lenders
and, with respect to any Specified Hedge Agreement, any Qualified Counterparty that has
agreed to be bound by the provisions of Article VIII of the Credit Agreement as if it were a
Lender party thereto; provided that no Qualified Counterparty shall have any rights
in connection with the management or release of any Pledged Collateral or the obligations of
any Guarantor under this Agreement.




     “Securities Act” shall mean the Securities Act of 1933, as amended.




     “Specified Hedge Agreement” shall mean any Hedging Agreement (a) entered into
by (i) the Borrower or any of the Subsidiaries and (ii) any Lender or any Affiliate thereof
or any Agent or any Affiliate thereof, or any person that was a Lender or an Affiliate
thereof or an Agent or Affiliate thereof when such Hedging Agreement was entered into as
counterparty and (b) which has been designated by such Lender or Agent and the Borrower, by
notice to the Collateral Agent not later than 90 days after the execution and delivery
thereof by the Borrower or such Subsidiary, as a Specified Hedge Agreement; provided
that the designation of any Hedging Agreement as a Specified Hedge Agreement shall not
create in favor of any Lender or Affiliate thereof or any Agent or any Affiliate thereof
that is a party thereto any rights in connection with the management or release of any
Pledged Collateral or of the obligations of any Guarantor under this Agreement.




     “Trademark License” shall mean any agreement, whether written or oral,
providing for the grant by or to any Grantor of any right in, to or under any Trademark,
including any of the foregoing referred to in Schedule 4.9(a) (as such schedule may be
amended or supplemented from time to time).




     “Trademarks” shall mean (i) all trademarks, trade names, corporate names,
company names, business names, fictitious business names, trade styles, service marks, logos
and other source or business identifiers, and all goodwill associated therewith, now
existing or hereafter adopted or acquired, all registrations and recordings thereof, and all
applications in connection therewith, whether in the United States Patent and Trademark
Office or in any similar office or agency of the United States, any State thereof or any
other country, union of countries, or any political subdivision of any of the foregoing, or
otherwise, and all common-law rights related thereto, including any of the foregoing listed
in Schedule 4.9(a) (as such schedule may be amended or supplemented from time to time), (ii)
the right to, and to obtain, all renewals thereof, (iii) the goodwill of the business
symbolized by the foregoing, (iv) other source or business identifiers, designs and general
intangibles of a like nature and (v) the right to sue for past, present and future
infringements or dilution of any of the foregoing or for any injury to goodwill, and all
proceeds of the foregoing, including royalties, income, payments, claims, damages and
proceeds of suit.




     “Trade Secret License” shall mean any agreement, whether written or oral,
providing for the grant by or to any Grantor of any right in, to or under any Trade Secret,



E-9









 





Exhibit E





including any of the foregoing listed in Schedule 4.9(a) (as such schedule may be
amended or supplemented from time to time).




     “Trade Secrets” shall mean all trade secrets and all other confidential or
proprietary information and know-how (all of the foregoing being collectively called a
“Trade Secret”), whether or not reduced to a writing or other tangible form,
including all documents and things embodying, incorporating or describing such Trade Secret,
the right to sue for past, present and future infringements of any Trade Secret and all
proceeds of the foregoing, including royalties, income, payments, claims, damages and
proceeds of suit.



          1.2 Other Definitional Provisions. (a) The words “hereof”, “herein”, “hereto” and
“hereunder” and words of similar import when used in this Agreement shall refer to this Agreement
as a whole and not to any particular provision of this Agreement, and Section and Schedule
references are to the specific provisions of this Agreement unless otherwise specified.




          (a) The meanings given to terms defined herein shall be equally applicable to both the
singular and plural forms of such terms.




          (b) Where the context requires, terms relating to the Pledged Collateral or any part thereof,
when used in relation to a Grantor, shall refer to the property or assets such Grantor has granted
as Pledged Collateral or the relevant part thereof.




          (c) The expressions “payment in full,” “paid in full” and any other similar terms or phrases
when used herein with respect to the Borrower Obligations or the Guarantor Obligations shall mean
the unconditional, final and irrevocable payment in full, in immediately available funds, of all of
the Borrower Obligations or the Guarantor Obligations, as the case may be, in each case, unless
otherwise specified, other than indemnification and other contingent obligations not then due and
payable.




          (d) The words “include”, “includes” and “including”, and words of similar import, shall not be
limiting and shall be deemed to be followed by the phrase “without limitation”.




          (e) All references to the Lenders herein shall, where appropriate, include any Lender, the
Collateral Agent, the Collateral Agent or any Arranger or, in the case of any Lender or Agent, any
Affiliate thereof that is a party to a Specified Hedge Agreement.




SECTION 2. GUARANTEE




          2.1 Guarantee.




          (a) Each of the Guarantors hereby, jointly and severally, unconditionally and irrevocably,
guarantees to the Collateral Agent, for the ratable benefit of the Secured Parties and their
respective successors, indorsees, transferees and assigns, the prompt and complete payment and
performance by the Borrower when due (whether at the stated maturity, by acceleration or otherwise)
of the Borrower Obligations.




E-10









 






Exhibit E




          (b) If and to the extent required in order for the Obligations of any Guarantor to be
enforceable under applicable federal, state and other laws relating to the insolvency of debtors,
the maximum liability of such Guarantor hereunder shall be limited to the greatest amount which can
lawfully be guaranteed by such Guarantor under such laws, after giving effect to any rights of
contribution, reimbursement and subrogation arising under Section 2.2. Each Guarantor acknowledges
and agrees that, to the extent not prohibited by applicable law, (i) such Guarantor (as opposed to
its creditors, representatives of creditors or bankruptcy trustee, including such Guarantor in its
capacity as debtor in possession exercising any powers of a bankruptcy trustee) has no personal
right under such laws to reduce, or request any judicial relief that has the effect of reducing,
the amount of its liability under this Agreement, (ii) such Guarantor (as opposed to its creditors,
representatives of creditors or bankruptcy trustee, including such Guarantor in its capacity as
debtor in possession exercising any powers of a bankruptcy trustee) has no personal right to
enforce the limitation set forth in this Section 2.1(b) or to reduce, or request judicial relief
reducing, the amount of its liability under this Agreement, and (iii) the limitation set forth in
this Section 2.1(b) may be enforced only to the extent required under such laws in order for the
obligations of such Guarantor under this Agreement to be enforceable under such laws and only by or
for the benefit of a creditor, representative of creditors or bankruptcy trustee of such Guarantor
or other person entitled, under such laws, to enforce the provisions thereof.




          (c) Each Guarantor agrees that the Borrower Obligations may at any time and from time to time
be incurred or permitted in an amount exceeding the maximum liability of such Guarantor under
Section 2.1(b) without impairing the guarantee contained in this Section 2 or affecting the rights
and remedies of any Secured Party hereunder.




          (d) The guarantee contained in this Section 2 shall remain in full force and effect until
payment in full of the Obligations, notwithstanding that from time to time during the term of the
Credit Agreement the Borrower may be free from any Borrower Obligations.




          (e) No payment made by the Borrower, any of the Guarantors, any other guarantor or any other
person or received or collected by any Secured Party from the Borrower, any of the Guarantors, any
other guarantor or any other person by virtue of any action or proceeding or any set-off or
appropriation or application at any time or from time to time in reduction of or in payment of the
Borrower Obligations shall be deemed to modify, reduce, release or otherwise affect the liability
of any Guarantor hereunder which shall, notwithstanding any such payment (other than any payment
made by such Guarantor in respect of the Borrower Obligations or any payment received or collected
from such Guarantor in respect of the Borrower Obligations), remain liable for the Borrower
Obligations up to the maximum liability of such Guarantor hereunder until the Borrower Obligations
(other than Obligations in respect of any Specified Hedge Agreement) are paid in full, no letter of
credit shall be outstanding under the Credit Agreement and all commitments to extend credit under
the Credit Agreement shall have been terminated or have expired.




          2.2 Rights of Reimbursement, Contribution and Subrogation. In case any payment is
made on account of the Obligations by any Grantor or is received or collected on account of the
Obligations from any Grantor or its property:




E-11









 






Exhibit E




          (a) If such payment is made by the Borrower or from its property, then, if and to the extent
such payment is made on account of Obligations arising from or relating to a Loan or other
extension of credit made to the Borrower or a letter of credit issued for the account of the
Borrower, the Borrower shall not be entitled (i) to demand or enforce reimbursement or contribution
in respect of such payment from any other Grantor or (ii) to be subrogated to any claim, interest,
right or remedy of any Secured Party against any other person, including any other Grantor or its
property.




          (b) If such payment is made by a Guarantor or from its property, such Guarantor shall be
entitled, subject to and upon payment in full of the Obligations, (i) to demand and enforce
reimbursement for the full amount of such payment from the Borrower and (ii) to demand and enforce
contribution in respect of such payment from each other Guarantor that has not paid its fair share
of such payment, as necessary to ensure that (after giving effect to any enforcement of
reimbursement rights provided hereby) each Guarantor pays its fair share of the unreimbursed
portion of such payment. For this purpose, the fair share of each Guarantor as to any unreimbursed
payment shall be determined based on an equitable apportionment of such unreimbursed payment among
all Guarantors based on the relative value of their assets and any other equitable considerations
deemed appropriate by a court of competent jurisdiction.




          (c) If and whenever (after payment in full of the Obligations) any right of reimbursement or
contribution becomes enforceable by any Grantor against any other Grantor under Sections 2.2(a) and
2.2(b), such Grantor shall be entitled, subject to and upon payment in full of the Obligations, to
be subrogated (equally and ratably with all other Grantors entitled to reimbursement or
contribution from any other Grantor as set forth in this Section 2.2) to any security interest that
may then be held by the Collateral Agent upon any Pledged Collateral granted to it in this
Agreement. Such right of subrogation shall be enforceable solely against the Grantors, and not
against the Secured Parties, and neither the Collateral Agent nor any other Secured Party shall
have any duty whatsoever to warrant, ensure or protect any such right of subrogation or to obtain,
perfect, maintain, hold, enforce or retain any Pledged Collateral for any purpose related to any
such right of subrogation. If subrogation is demanded by any Grantor, then (after payment in full
of the Obligations) the Collateral Agent shall deliver to the Grantors making such demand, or to a
representative of such Grantors or of the Grantors generally, an instrument satisfactory to the
Collateral Agent transferring, on a quitclaim basis without any recourse, representation, warranty
or obligation whatsoever, whatever security interest the Collateral Agent then may hold in whatever
Pledged Collateral may then exist that was not previously released or disposed of by the Collateral
Agent.




          (d) All rights and claims arising under this Section 2.2 or based upon or relating to any
other right of reimbursement, indemnification, contribution or subrogation that may at any time
arise or exist in favor of any Grantor as to any payment on account of the Obligations made by it
or received or collected from its property shall be fully subordinated in all respects to the prior
payment in full of all of the Obligations. Until payment in full of the Obligations, no Grantor
shall demand or receive any collateral security, payment or distribution whatsoever (whether in
cash, property or securities or otherwise) on account of any such right or claim. If any such
payment or distribution is made or becomes available to any Grantor in any bankruptcy case or
receivership, insolvency or liquidation proceeding, such payment or distribution shall be delivered
by the person making such payment or distribution directly to the Collateral Agent, for




E-12









 





Exhibit E




application to the payment of the Obligations. If any such payment or distribution is
received by any Grantor, it shall be held by such Grantor in trust, as trustee of an express trust
for the benefit of the Secured Parties, and shall forthwith be transferred and delivered by such
Grantor to the Collateral Agent, in the exact form received and, if necessary, duly endorsed.




          (e) The obligations of the Grantors under the Loan Documents, including their liability for
the Obligations and the enforceability of the security interests granted thereby, are not
contingent upon the validity, legality, enforceability, collectibility or sufficiency of any right
of reimbursement, contribution or subrogation arising under this Section 2.2. The invalidity,
insufficiency, unenforceability or uncollectibility of any such right shall not in any respect
diminish, affect or impair any such obligation or any other claim, interest, right or remedy at any
time held by any Secured Party against any Guarantor or its property. The Secured Parties make no
representations or warranties in respect of any such right and shall have no duty to assure,
protect, enforce or ensure any such right or otherwise relating to any such right.




          (f) Each Grantor reserves any and all other rights of reimbursement, contribution or
subrogation at any time available to it as against any other Grantor, but (i) the exercise and
enforcement of such rights shall be subject to Section 2.2(d) and (ii) neither the Collateral Agent
nor any other Secured Party shall ever have any duty or liability whatsoever in respect of any such
right, except as provided in Section 2.2(c).




          2.3 Amendments, etc. with respect to the Borrower Obligations. Each Guarantor shall
remain obligated hereunder notwithstanding that, without any reservation of rights against any
Guarantor and without notice to or further assent by any Guarantor, any demand for payment of any
of the Borrower Obligations made by any Secured Party may be rescinded by such Secured Party and
any of the Borrower Obligations continued, and the Borrower Obligations, or the liability of any
other person upon or for any part thereof, or any collateral security or guarantee therefor or
right of offset with respect thereto, may, from time to time, in whole or in part, be renewed,
increased, extended, amended, modified, accelerated, compromised, waived, surrendered or released
by any Secured Party, and the Credit Agreement and the other Loan Documents and any other documents
executed and delivered in connection therewith may be amended, modified, supplemented or
terminated, in whole or in part, as the parties thereto may deem advisable from time to time, and
any collateral security, guarantee or right of offset at any time held by any Secured Party for the
payment of the Borrower Obligations may be sold, exchanged, waived, surrendered or released in each
case, pursuant to and in accordance with the terms set forth in Section 9.08 of the Credit
Agreement. No Secured Party shall have any obligation to protect, secure, perfect or insure any
Lien at any time held by it as security for the Borrower Obligations or for the guarantee contained
in this Section 2 or any property subject thereto.




          2.4 Guarantee Absolute and Unconditional. Each Guarantor waives any and all notice of
the creation, renewal, extension or accrual of any of the Borrower Obligations and notice of or
proof of reliance by any Secured Party upon the guarantee contained in this Section 2 or acceptance
of the guarantee contained in this Section 2; the Borrower Obligations, and any of them, shall
conclusively be deemed to have been created, contracted or incurred, or renewed, extended, amended
or waived, in reliance upon the guarantee contained in this Section 2; and all dealings between the
Borrower and any of the Guarantors, on the one hand, and the Secured





E-13









 





Exhibit E



Parties, on the other hand, likewise shall be conclusively presumed to have been had or
consummated in reliance upon the guarantee contained in this Section 2. Each Guarantor waives
diligence, presentment, protest, demand for payment and notice of default or nonpayment to or upon
the Borrower or any of the Guarantors with respect to the Borrower Obligations. Each Guarantor
understands and agrees that the guarantee contained in this Section 2 shall be construed as a
continuing, absolute and unconditional guarantee of payment and performance without regard to (a)
the validity or enforceability of the Credit Agreement or any other Loan Document, any of the
Borrower Obligations or any other collateral security therefor or guarantee or right of offset with
respect thereto at any time or from time to time held by any Secured Party, (b) any defense,
set-off or counterclaim (other than a defense of payment or performance hereunder) which may at any
time be available to or be asserted by the Borrower or any other person against any Secured Party,
or (c) any other circumstance whatsoever (with or without notice to or knowledge of the Borrower or
such Guarantor) which constitutes, or might be construed to constitute, an equitable or legal
discharge of the Borrower for the Borrower Obligations, or of such Guarantor under the guarantee
contained in this Section 2, in bankruptcy or in any other instance. When making any demand
hereunder or otherwise pursuing its rights and remedies hereunder against any Guarantor, any
Secured Party may, but shall be under no obligation to, make a similar demand on or otherwise
pursue such rights and remedies as it may have against the Borrower, any other Guarantor or any
other person or against any collateral security or guarantee for the Borrower Obligations or any
right of offset with respect thereto, and any failure by any Secured Party to make any such demand,
to pursue such other rights or remedies or to collect any payments from the Borrower, any other
Guarantor or any other person or to realize upon any such collateral security or guarantee or to
exercise any such right of offset, or any release of the Borrower, any other Guarantor or any other
person or any such collateral security, guarantee or right of offset, shall not relieve any
Guarantor of any obligation or liability hereunder, and shall not impair or affect the rights and
remedies, whether express, implied or available as a matter of law, of any Secured Party against
any Guarantor. For the purposes hereof “demand” shall include the commencement and continuance of
any legal proceedings.




          2.5 Reinstatement. The guarantee contained in this Section 2 shall continue to be
effective, or be reinstated, as the case may be, if at any time payment, or any part thereof, of
any of the Borrower Obligations is rescinded or must otherwise be restored or returned by any
Secured Party upon the insolvency, bankruptcy, dissolution, liquidation or reorganization of the
Borrower or any Guarantor, or upon or as a result of the appointment of a receiver, intervenor or
conservator of, or trustee or similar officer for, the Borrower or any Guarantor or any substantial
part of its property, or otherwise, all as though such payments had not been made.




          2.6 Payments. Each Guarantor hereby guarantees that payments hereunder will be paid
to the Collateral Agent without set-off or counterclaim in Dollars in immediately available funds
at the office of the Collateral Agent as specified in the Credit Agreement.




SECTION 3. GRANT OF SECURITY INTEREST;



CONTINUING LIABILITY UNDER PLEDGED COLLATERAL




          (a) Each Grantor hereby assigns and transfers to the Collateral Agent, and hereby grants to
the Collateral Agent, for the ratable benefit of the Secured Parties, a security interest in all of
the personal property of such Grantor, including the following property, in each case,




E-14









 








Exhibit E



wherever located and now owned or at any time hereafter acquired by such Grantor or in which
such Grantor now has or at any time in the future may acquire any right, title or interest
(collectively, the “Pledged Collateral”), as collateral security for the prompt and
complete payment and performance when due (whether at the stated maturity, by acceleration or
otherwise) of such Grantor’s Obligations:





                    (i) all Accounts;




                    (ii) all As-Extracted Collateral




                    (iii) all Chattel Paper;




                    (iv) all Collateral Accounts and all Collateral Account Funds;




                    (v) all Commercial Tort Claims from time specifically described on Schedule 4.11;




                    (vi) all Contracts;




                    (vii) all Deposit Accounts;




                    (viii) all Documents;




                    (ix) all Equipment;




                    (x) all Fixtures;




                    (xi) all General Intangibles;




                    (xii) all Goods;




                    (xiii) all Instruments;




                    (xiv) all Insurance;




                    (xv) all Intellectual Property;




                    (xvi) all Inventory;




                    (xvii) all Investment Property;




                    (xviii) all Letters of Credit and Letter of Credit Rights;




                    (xix) all Money;




                    (xx) all Securities Accounts;




                    (xxi) all books, records, ledger cards, files, correspondence, customer lists,
blueprints, technical specifications, manuals, computer software, computer



E-15









 





Exhibit E




printouts, tapes, disks and other electronic storage media and related data processing
software and similar items that at any time pertain to or evidence or contain information
relating to any of the Pledged Collateral or are otherwise necessary or helpful in the
collection thereof or realization thereupon; and




          (xxii) to the extent not otherwise included, all other property, whether tangible or
intangible, of the Grantor and all Proceeds, products, accessions, rents and profits of any
and all of the foregoing and all collateral security, Supporting Obligations and guarantees
given by any person with respect to any of the foregoing;


provided that, notwithstanding any other provision set forth in this Section 3, (x) this
Agreement shall not, at any time, constitute a grant of a security interest in any property that
is, at such time, an Excluded Asset, and (y) the Equity Interests of a Regulated Insurance
Subsidiary, a Qualified Insurance Holding Company, LIFCO or any Premium Finance Co. (collectively,
the “Applicable Subsidiaries”) owned directly by a Grantor shall remain limited by and
subject to the requirements of any and all applicable Requirements of Law, including notice of or
prior approval of (A) a merger, an acquisition or any other change in control of an Applicable
Subsidiary’s Equity Interests, and (B) the transfer to a Collateral Agent of a Grantor’s right to
vote, to give consents, ratifications or waivers or to take any other action with respect to the
Equity Interests of any Applicable Subsidiary.




          (b) Notwithstanding anything herein to the contrary, (i) each Grantor shall remain liable for
all obligations under and in respect of the Pledged Collateral and nothing contained herein is
intended or shall be a delegation of duties to the Collateral Agent or any other Secured Party,
(ii) each Grantor shall remain liable under and each of the agreements included in the Pledged
Collateral, including any Receivables, any Contracts and any agreements relating to Pledged
Partnership Interests or Pledged LLC Interests, to perform all of the obligations undertaken by it
thereunder all in accordance with and pursuant to the terms and provisions thereof and neither the
Collateral Agent nor any other Secured Party shall have any obligation or liability under any of
such agreements by reason of or arising out of this Agreement or any other document related hereto
nor shall the Collateral Agent nor any other Secured Party have any obligation to make any inquiry
as to the nature or sufficiency of any payment received by it or have any obligation to take any
action to collect or enforce any rights under any agreement included in the Pledged Collateral,
including any agreements relating to any Receivables, any Contracts or any agreements relating to
Pledged Partnership Interests or Pledged LLC Interests and (iii) the exercise by the Collateral
Agent of any of its rights hereunder shall not release any Grantor from any of its duties or
obligations under the contracts and agreements included in the Pledged Collateral, including any
agreements relating to any Receivables, any Contracts and any agreements relating to Pledged
Partnership Interests or Pledged LLC Interests.




SECTION 4. REPRESENTATIONS AND WARRANTIES




     To induce the Administrative Agent, the Collateral Agent and the Lenders to enter into the
Credit Agreement and to induce the Lenders to make their respective extensions of credit to the
Borrower thereunder, each Grantor hereby represents and warrants to the Secured Parties that:



E-16









 





Exhibit E




          4.1 Representations in Credit Agreement. In the case of each Guarantor, the
representations and warranties set forth in Article III of the Credit Agreement as they relate to
such Guarantor or to the Loan Documents to which such Guarantor is a party, each of which is hereby
incorporated herein by reference, are true and correct, in all material respects, except for
representations and warranties expressly stated to relate to a specific earlier date, in which case
such representations and warranties shall be true and correct in all material respects as of such
earlier date, and the Secured Parties shall be entitled to rely on each of them as if they were
fully set forth herein, provided that each reference in each such representation and
warranty to the Borrower’s knowledge shall, for the purposes of this Section 4.l, be deemed to be a
reference to such Guarantor’s knowledge.




          4.2 Title; No Other Liens. Such Grantor owns each item of the Pledged Collateral free
and clear of any and all Liens or claims, including Liens arising as a result of such Grantor
becoming bound (as a result of merger or otherwise) as grantor under a security agreement entered
into by another person, except for Liens expressly permitted by Section 6.02 of the Credit
Agreement. No financing statement, mortgage or other public notice with respect to all or any part
of the Pledged Collateral is on file or of record in any public office, except such as have been
filed in favor of the Collateral Agent, for the ratable benefit of the Secured Parties, pursuant to
this Agreement or as are expressly permitted by the Credit Agreement.




          4.3 Perfected First Priority Liens. The security interests granted pursuant to this
Agreement (a) upon completion of the filings and other actions specified on Schedule 4.3 (all of
which, in the case of all filings and other documents referred to on said Schedule, have been
delivered to the Collateral Agent in duly completed and duly executed form (which shall include
real estate descriptions sufficient to enable the Collateral Agent to record financing statements
in the county records, in such counties identified on Schedule 4.3), as applicable, and may be
filed by the Collateral Agent at any time) and payment of all filing fees, will constitute valid
fully perfected security interests in all of the Pledged Collateral in favor of the Collateral
Agent, for the ratable benefit of the Secured Parties, as collateral security for such Grantor’s
Obligations, enforceable in accordance with the terms hereof and (b) are prior to all other Liens
on the Pledged Collateral, except for Liens expressly permitted by Section 6.02 of the Credit
Agreement. Without limiting the foregoing, each Grantor has taken and will take all actions that
the Collateral Agent deems necessary or desirable, including those specified in Section 5.2 to (i)
establish the Collateral Agent’s “control” (within the meanings of Sections 8-106 and 9-106 of the
New York UCC) over any portion of the Investment Property constituting Certificated Securities,
Uncertificated Securities, Securities Accounts, Securities Entitlements or Commodity Accounts (each
as defined in the New York UCC), (ii) establish the Collateral Agent’s “control” (within the
meaning of Section 9-104 of the New York UCC) over all Deposit Accounts, (iii) establish the
Collateral Agent’s “control” (within the meaning of Section 9-107 of the New York UCC) over all
Letter of Credit Rights, (iv) establish the Collateral Agent’s control (within the meaning of
Section 9-105 of the New York UCC) over all Electronic Chattel Paper and (v) establish the
Collateral Agent’s “control” (within the meaning of Section 16 of the Uniform Electronic
Transaction Act as in effect in the applicable jurisdiction “UETA”) over all “transferable records”
(as defined in UETA).




          4.4 Name; Jurisdiction of Organization, etc. On the date hereof, such Grantor’s exact
legal name (as indicated on the public record of such Grantor’s jurisdiction of




E-17









 





Exhibit E



formation or organization), jurisdiction of organization, organizational identification
number, if any, and the location of such Grantor’s chief executive office or sole place of business
are specified on Schedule 4.4. Each Grantor is organized solely under the law of the jurisdiction
so specified and has not filed any certificates of domestication, transfer or continuance in any
other jurisdiction. Except as otherwise indicated on Schedule 4.4, the jurisdiction of each such
Grantor’s organization of formation is required to maintain a public record showing the Grantor to
have been organized or formed. Except as specified on Schedule 4.4, no such Grantor has changed
its name, jurisdiction of organization, chief executive office or sole place of business or its
corporate structure in any way (e.g. by merger, consolidation, change in corporate form or
otherwise) within the past year and has not within the last five years become bound (whether as a
result of merger or otherwise) as a grantor under a security agreement entered into by another
person, which has not heretofore been terminated.




          4.5 Inventory and Equipment. (a) On the date hereof, the Inventory and the Equipment
(other than mobile goods) that is included in the Pledged Collateral are kept at the locations
listed on Schedule 4.5(a). Within the five years preceding execution of this agreement, such
Grantor has not changed the location of a material portion of its Equipment and Inventory that is
included in the Pledged Collateral except as otherwise disclosed on Schedule 4.5(a).




          (b) Any Inventory now or hereafter produced by any Grantor included in the Pledged Collateral
have been and will be produced in material compliance with the requirements of all applicable laws
and regulations, including the Fair Labor Standards Act, as amended.




          (c) none of the Inventory or Equipment that is included in the Pledged Collateral is in the
possession of an issuer of a negotiable document (as defined in Section 7-104 of the New York UCC)
therefor or is otherwise in the possession of any bailee or warehouseman.




          4.6 Farm Products. None of the Pledged Collateral constitutes, or is the Proceeds of,
Farm Products.




          4.7 Investment Property. (a) Schedule 4.7(a) hereto (as such schedule may be amended
or supplemented from time to time) sets forth under the headings “Pledged Stock,” “Pledged LLC
Interests,” “Pledged Partnership Interests” and “Pledged Trust Interests,” respectively, all of the
Pledged Stock, Pledged LLC Interests, Pledged Partnership Interests and Pledged Trust Interests
owned by any Grantor and such Pledged Equity Interests constitute the percentage of issued and
outstanding shares of stock, percentage of membership interests, percentage of partnership
interests or percentage of beneficial interest of the respective issuers thereof indicated on such
schedule. Schedule 4.7(b) (as such schedule may be amended or supplemented from time to time) sets
forth under the heading “Pledged Debt Securities” or “Pledged Notes” all of the Pledged Debt
Securities and Pledged Notes owned by any Grantor and all of such Pledged Debt Securities and
Pledged Notes have been duly authorized, authenticated or issued, and delivered and are the legal,
valid and binding obligation of the issuers thereof enforceable in accordance with their terms,
subject to applicable bankruptcy, insolvency, reorganization, moratorium or other laws affecting
creditors’ rights generally and subject to general principals of equity, regardless of whether
considered in a proceeding in equity or at law, and are not in default and constitute all of the
issued and outstanding inter-company indebtedness evidenced by an instrument or certificated
security of the respective issuers thereof




E-18









 





Exhibit E



owing to such Grantor. Schedule 4.7(c) hereto (as such schedule may be amended from time to
time) sets forth under the headings “Securities Accounts,” “Commodities Accounts,” and “Deposit
Accounts” respectively, all of the Securities Accounts, Commodities Accounts and Deposit Accounts
in which each Grantor has an interest and in which the value of each such account is in excess of
$100,000. Each Grantor is the sole entitlement holder or customer of each such account and no
Grantor has consented to or is otherwise aware of any person having “control” (within the meanings
of Sections 8-106, 9-106 and 9-104 of the New York UCC) over, or any other interest in, any
Securities Account, Commodity Account, Deposit Account, in each case in which such Grantor has an
interest, or any securities, commodities or other property credited thereto.




     (b) The shares of Pledged Equity Interests pledged by such Grantor hereunder constitute all of
the issued and outstanding shares of all classes of Equity Interests in each Issuer owned by such
Grantor or, in the case of Excluded Foreign Subsidiary Voting Stock, if less, 65% of the
outstanding Excluded Foreign Subsidiary Voting Stock of each relevant Issuer.



     (c) The Pledged Equity Interests have been duly and validly issued and are fully paid and
nonassessable.



     (d) The terms of any uncertificated Pledged LLC Interests and Pledged Partnership Interests
expressly provide that they are securities governed by Article 8 of the Uniform Commercial Code in
effect from time to time in the “issuer’s jurisdiction” of each Issuer thereof (as such term is
defined in the Uniform Commercial Code in effect in such jurisdiction).



     (e) The terms of any certificated Pledged LLC Interests and Pledged Partnership Interests
expressly provide that they are securities governed by Article 8 of the New York UCC.



     (f) Such Grantor is the record and beneficial owner of, and has good and marketable title to,
the Investment Property and Deposit Accounts pledged by it hereunder, free of any and all Liens or
options in favor of, or claims of, any other person, except Liens expressly permitted by Section
6.02 of the Credit Agreement, and there are no outstanding warrants, options or other rights to
purchase, or shareholder, voting trust or similar agreements outstanding with respect to, or
property that is convertible into, or that requires the issuance or sale of, any Pledged Equity
Interests.



     (g) Each Issuer that is not a Grantor hereunder has executed and delivered to the Collateral
Agent an Acknowledgment and Consent, in substantially the form of Exhibit A, to the pledge of the
Pledged Securities pursuant to this Agreement.



     4.8 Receivables. (a) No amount payable to such Grantor under or in connection with
any Receivable that is included in the Pledged Collateral is evidenced by any Instrument or
Tangible Chattel Paper which has not been delivered to the Collateral Agent or constitutes
Electronic Chattel Paper that has not been subjected to the control (within the meaning of Section
9-105 of the New York UCC) of the Collateral Agent to the extent required by, and in accordance
with, Section 5.2 hereof.



E-19









 





Exhibit E




     (b) None of the obligors on any Receivables in excess of $50,000 individually or $100,000 in
the aggregate that are included in the Pledged Collateral is a Governmental Authority.



     (c) Each Receivable that is included in the Pledged Collateral (i) is and will be the legal,
valid and binding obligation of the Account Debtor in respect thereof, representing an unsatisfied
obligation of such Account Debtor, (ii) is and will be enforceable in accordance with its terms,
subject to applicable bankruptcy, insolvency, reorganization, moratorium or other laws affecting
creditors’ rights generally and subject to general principals of equity, regardless of whether
considered in a proceeding in equity or at law, (iii) is not and will not be subject to any
setoffs, defenses, taxes, counterclaims (except with respect to refunds, returns and allowances in
the ordinary course of business with respect to damaged merchandise) and (iv) is and will be in
compliance with all applicable laws and regulations.



     4.9 Intellectual Property. (a) Schedule 4.9(a) lists all Intellectual Property which
is registered with a Governmental Authority or is the subject of an application for registration
and all material unregistered Intellectual Property, in each case which is owned by such Grantor in
its own name on the date hereof (collectively, the “Owned Intellectual Property”). Except
as set forth in Schedule 4.9(a), such Grantor is the exclusive owner of the entire and unencumbered
right, title and interest in and to all such Owned Intellectual Property and is otherwise entitled
to use, and grant to others the right to use, all such Owned Intellectual Property subject only to
the license terms of the licensing or franchise agreements referred to in paragraph (c) below.
Such Grantor has a valid and enforceable right to use all Intellectual Property which it uses in
its business, but does not own (collectively, the “Licensed Intellectual Property”).



     (b) On the date hereof, all Owned Intellectual Property and, to such Grantor’s knowledge, all
Licensed Intellectual Property, in each case, which is material to such Grantor’s business
(collectively, the “Material Intellectual Property”), is valid, subsisting, unexpired and
enforceable and has not been abandoned. Neither the operation of such Grantor’s business as
currently conducted or as contemplated to be conducted nor the use of the Intellectual Property in
connection therewith conflicts with, infringes, misappropriates, dilutes, misuses or otherwise
violates the intellectual property rights of any other person.



     (c) Except as set forth in Schedule 4.9(c), on the date hereof (i) none of the Material
Intellectual Property is the subject of any licensing or franchise agreement pursuant to which such
Grantor is the licensor or franchisor and (ii) there are no other agreements, obligations, orders
or judgments which affect the use of any Material Intellectual Property.



     (d) The rights of such Grantor in or to the Material Intellectual Property do not conflict
with or infringe upon the rights of any third party, and no claim has been asserted that the use of
such Intellectual Property does or may infringe upon the rights of any third party.



     (e) To such Grantor’s knowledge, no holding, decision or judgment has been rendered by any
Governmental Authority or arbitrator in the United States or outside the United States which would
limit, cancel or question the validity or enforceability of, or such Grantor’s rights in, any
Material Intellectual Property. Such Grantor is not aware of any uses of any item



E-20









 





Exhibit E



of Material Intellectual Property that could reasonably be expected to lead to such item
becoming invalid or unenforceable including unauthorized uses by third parties and uses which were
not supported by the goodwill of the business connected with Trademarks and Trademark Licenses.




     (f) No action or proceeding is pending, or, to such Grantor’s knowledge, threatened, on the
date hereof (i) seeking to limit, cancel or question the validity of any Owned Intellectual
Property, (ii) alleging that any services provided by, processes used by, or products manufactured
or sold by such Grantor infringe any patent, trademark, copyright, or any other right of any other
person, (iii) alleging that any Material Intellectual Property is being licensed, sublicensed or
used in violation of any intellectual property or any other right of any other person, or (iv)
which, if adversely determined, would have a Material Adverse Effect on the value of any Material
Intellectual Property. To such Grantor’s knowledge, no person is engaging in any activity that
infringes upon, or is otherwise an unauthorized use of, any Material Intellectual Property or upon
the rights of such Grantor therein. Except as set forth in Schedule 4.9(f), such Grantor has not
granted any license, release, covenant not to sue, non-assertion assurance, or other right to any
person with respect to any part of the Material Intellectual Property. The consummation of the
transactions contemplated by this Agreement (including the enforcement of remedies) will not result
in the termination or impairment of any of the Material Intellectual Property.



     (g) With respect to each Copyright License, Trademark License, Trade Secret License and Patent
License which relates to Material Intellectual Property or the loss of which could otherwise have a
Material Adverse Effect: (i) such license is valid and binding and in full force and effect and
represents the entire agreement between the respective licensor and licensee with respect to the
subject matter of such license; (ii) such license will not cease to be valid and binding and in
full force and effect on terms identical to those currently in effect as a result of the rights and
interests granted herein, nor will the grant of such rights and interests constitute a breach or
default under such license or otherwise give the licensor or licensee a right to terminate such
license; (iii) such Grantor has not received any notice of termination or cancellation under such
license; (iv) such Grantor has not received any notice of a breach or default under such license,
which breach or default has not been cured; (v) such Grantor has not granted to any other person
any rights, adverse or otherwise, under such license; and (vi) such Grantor is not in breach or
default in any material respect, and no event has occurred that, with notice and/or lapse of time,
would constitute such a breach or default or permit termination, modification or acceleration under
such license.



     (h) Except as set forth in Schedule 4.9(h), such Grantor has performed all acts and has paid
all required fees and taxes to maintain each and every item of Material Intellectual Property in
full force and effect and to protect and maintain its interest therein. Such Grantor has used
proper statutory notice in connection with its use of each Patent, Trademark and Copyright that is
material to its business included in the Intellectual Property. 



     (i) None of the Trade Secrets of such Grantor that are material to its business have been
used, divulged, disclosed or appropriated to the detriment of such Grantor for the benefit of any
other person; (ii) no employee, independent contractor or agent of such Grantor has misappropriated
any trade secrets of any other person in the course of the performance of his or her duties as an
employee, independent contractor or agent of such Grantor; and (iii) no



E-21









 





Exhibit E



employee, independent contractor or agent of such Grantor is in default or breach of any term
of any employment agreement, non-disclosure agreement, assignment of inventions agreement or
similar agreement or contract relating in any way to the protection, ownership, development, use or
transfer of such Grantor’s Intellectual Property.




     (j) Such Grantor has made all filings and recordations necessary to adequately protect its
interest in its Material Intellectual Property, including recordation of its interests in the
Patents and Trademarks with the United States Patent and Trademark Office and in corresponding
national and international patent offices, and recordation of any of its interests in the
Copyrights with the United States Copyright Office and in corresponding national and international
copyright offices.



     (k) Such Grantor has taken all commercially reasonable steps to use consistent standards of
quality in the manufacture, distribution and sale of all products sold and provision of all
services provided under or in connection with any item of Intellectual Property and has taken all
steps to ensure that all licensed users of any kind of Intellectual Property use such consistent
standards of quality.



     (l) No Grantor is subject to any settlement or consents, judgment, injunction, order, decree,
covenants not to sue, non-assertion assurances or releases that would impair the validity or
enforceability of, or such Grantor’s rights in, any Material Intellectual Property.



     4.10 Letters of Credit and Letter of Credit Rights. No Grantor is a beneficiary or
assignee under any Letter of Credit other than the Letters of Credit described on Schedule 4.10 (as
such schedule may be amended or supplemented from time to time). With respect to any Letters of
Credit that are by their terms transferable, each Grantor has caused (or, in the case of the
Letters of Credit that are specified on Schedule 4.10 on the date hereof, will use commercially
reasonable efforts to cause) all issuers and nominated persons under Letters of Credit in which the
Grantor is the beneficiary or assignee to consent to the assignment of such Letter of Credit to the
Collateral Agent and has agreed that upon the occurrence and during the continuance of an Event of
Default it shall cause all payments thereunder to be made to the Collateral Account. With respect
to any Letters of Credit that are not transferable, each Grantor shall obtain (or, in the case of
the Letters of Credit that are specified on Schedule 4.10 on the date hereof, use commercially
reasonable efforts to obtain) the consent of the issuer thereof and any nominated person thereon to
the assignment of the proceeds of the released Letter of Credit to the Collateral Agent in
accordance with Section 5-114(c) of the New York UCC.



     4.11 Commercial Tort Claims. No Grantor has any Commercial Tort Claims as of the date
hereof individually or in the aggregate in excess of $100,000 and, except as specifically described
on Schedule 4.11 (as such schedule may be amended or supplemented from time to time), no Grantor
has any Commercial Tort Claims after the date hereof individually or in the aggregate in excess of
$100,000.



     4.12 Contracts.



E-22









 





Exhibit E




     (a) Schedule 4.12(a) (as such schedule may be amended or supplemented form time to time) sets
forth all of the Material Contracts in which such Grantor has any right or interest.



     (b) Except as set forth on Schedule 4.12(b) and provided in Sections 4.13 and 4.14 below, no
Material Contract prohibits assignment or encumbrance by such Grantor or requires or purports to
require consent of, or notice to, any party (other than such Grantor) to any Material Contract in
connection with the execution, delivery and performance of this Agreement, including the exercise
of remedies by the Collateral Agent with respect to such Material Contract, except for such
consents that have been obtained and such notices that have been given.



     (c) Each Material Contract is in full force and effect and constitutes a valid and legally
enforceable obligation of the Grantor party thereto and (to the best of such Grantor’s knowledge)
each other party thereto, subject to the effects of bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws relating to or affecting creditors’ rights
generally, general equitable principles (whether considered in a proceeding in equity or at law)
and an implied covenant of good faith and fair dealing.



     (d) The right, title and interest of such Grantor in, to and under the Material Contracts are
not subject to any defenses, rights of recoupment or claims.



     (e) Neither such Grantor nor (to the best of such Grantor’s knowledge) any of the other
parties to the Material Contracts is in default in the performance or observance of any of the
terms thereof.



     (f) The right, title and interest of such Grantor in, to and under the Material Contracts are
not subject to any defenses or claims.



     (g) Such Grantor has delivered to the Collateral Agent a complete and correct copy of each
Material Contract, including all amendments, supplements and other modifications thereto.



     (h) No amount payable to such Grantor under or in connection with any Contract which has a
value in excess of $100,000 individually or $100,000 in the aggregate is evidenced by any
Instrument or Tangible Chattel Paper which has not been delivered to the Collateral Agent or
constitutes Electronic Chattel Paper that is not under the control (within the meaning of Section
9-105 of the New York UCC) of the Collateral Agent.



     (i) None of the parties to any Material Contract is a Governmental Authority.



     4.13 Insurance. Subject to the provisions of 215 Ill. Comp. Stat. 5/131.4
(West 2006), La. Rev. Stat. Ann. § 22:1004 (West 2006), Mich. Comp. Laws §
500.1311 (West 2006), and N.Y. Ins. Law § 1506 (McKinney 2006), and state insurance pre-acquisition
antitrust laws and regulations, and similar statutes in each of the states in which any Regulated
Insurance Subsidiary is domiciled or writes business, pertaining to the notifications to and
approvals by the Illinois Department of Financial and Professional Regulation, Division of
Insurance, the Louisiana Department of Insurance, the Michigan Office of Financial and



E-23









 





Exhibit E



Insurance Services or the New York State Insurance Department (which are the insurance
regulatory authorities of the domiciliary jurisdictions of the Regulated Insurance Subsidiaries,
collectively, the “Insurance Regulatory Authorities”), and similar regulatory authorities in each
state in which any of the Regulated Insurance Subsidiaries writes business, required in the case of
mergers, acquisitions and changes of control of insurance companies, held either directly or
indirectly, and to prescribed waiting periods in connection therewith, the exercise by the
Collateral Agent of its rights and remedies hereunder shall not, to the knowledge of any Grantor,
contravene any Insurance Law or any contractual restriction binding on or affecting any Grantor or
any of the Grantor’s properties and will not result in or require the creation of any lien,
security interest or other charge or encumbrance upon or with respect to any of the Grantor’s
properties.




     4.14 Governmental Approval; Filings. To the knowledge of each Grantor, no
authorization or approval or other action by, and no notice to or filing with, any Governmental
Authority is required either (i) for the pledge hereunder by each Grantor of, or the grant by any
Grantor of the security interest created hereby in, the Pledged Collateral or (ii) except for the
approval of the Insurance Regulatory Authorities under 215 Ill. Comp. Stat. 5/131.4 (West
2006), La. Rev. Stat. Ann. § 22:1004 (West 2006), Mich. Comp. Laws § 500.1311
(West 2006), and N.Y. Ins. Law § 1506 (McKinney 2006), and state insurance pre-acquisition
antitrust laws and regulations, and of similar regulatory authorities under applicable statutes of
each state in which any Regulated Insurance Subsidiary is domiciled or writes business, and the
approval of the Louisiana Office of Financial Institutions under La. Rev. Stat. Ann. §
9:3561 (West 2006), and except as may be required by laws affecting the offering and sale of
securities generally, for the exercise by the Collateral Agent of its rights and remedies
hereunder.



SECTION 5. COVENANTS




     Each Grantor covenants and agrees with the Secured Parties that, from and after the date of
this Agreement until the Obligations (other than Obligations in respect of any Specified Hedge
Agreement) shall have been paid in full, no letter of credit issued under the Credit Agreement
shall be outstanding and all commitments to extend credit under the Credit Agreement shall have
expired or been terminated:



     5.1 Covenants in Credit Agreement. Each Grantor shall take, or shall refrain from
taking, as the case may be, each action that is necessary to be taken or not taken, as the case may
be, so that no Default or Event of Default is caused by the failure to take such action or to
refrain from taking such action by such Grantor or any of its Subsidiaries.



     5.2 Delivery and Control of Instruments, Chattel Paper, Negotiable Documents, Investment
Property and Deposit Accounts. (a) If any of the Pledged Collateral is or shall become
evidenced or represented by any Instrument, Certificated Security, Negotiable Document or Tangible
Chattel Paper, such Instrument (other than checks received in the ordinary course of business),
Certificated Security, Negotiable Documents or Tangible Chattel Paper shall be, subject to any and
all Requirements of Law, immediately delivered to the Collateral Agent, duly endorsed in a manner
satisfactory to the Collateral Agent, to be held as Pledged Collateral pursuant to this Agreement,
and all of such property owned by any Grantor as of the Closing Date shall be delivered on the
Closing Date; provided, however, that, notwithstanding any



E-24









 





Exhibit E



provision to the contrary contained above, for any Receivable comprising the Pledged
Collateral in excess of $50,000 individually or $100,000 in the aggregate that is evidenced by, or
constitutes, Chattel Paper or Instruments, such Grantor shall cause each originally executed copy
thereof to be delivered to the Collateral Agent (or its agent or designee) appropriately indorsed
to the Collateral Agent or indorsed in blank: (i) with respect to any such Receivable in existence
on or prior to the date hereof, and (ii) with respect to any such Receivables hereafter arising,
within ten (10) Business Days of such Grantor acquiring rights therein.




     (b) If any Receivable comprising the Pledged Collateral in excess of $50,000 individually or
$100,000 in the aggregate is or shall become “Electronic Chattel Paper” such Grantor shall, subject
to any and all Requirements of Law, ensure that (i) a single authoritative copy exists which is
unique, identifiable, unalterable (except as provided in clauses (iii), (iv) and (v) of this
paragraph), (ii) such authoritative copy identifies the Collateral Agent as the assignee and is
communicated to and maintained by the Collateral Agent or its designee, (iii) copies or revisions
that add or change the assignee of the authoritative copy can only be made with the participation
of the Collateral Agent, (iv) each copy of the authoritative copy and any copy of a copy is readily
identifiable as a copy and not the authoritative copy and (v) any revision of the authoritative
copy is readily identifiable as an authorized or unauthorized revision.



     (c) If any Pledged Collateral is or shall become evidenced or represented by an Uncertificated
Security, such Grantor shall, subject to any and all Requirements of Law, cause the Issuer thereof
either (i) to register the Collateral Agent as the registered owner of such Uncertificated
Security, upon original issue or registration of transfer or (ii) to agree in writing with such
Grantor and the Collateral Agent that such Issuer will comply with instructions with respect to
such Uncertificated Security originated by the Collateral Agent without further consent of such
Grantor, such agreement to be in substantially the form of Exhibit A, and such actions shall be
taken on or prior to the Closing Date with respect to any Uncertificated Securities owned as of the
Closing Date by any Grantor.



     (d) Each Grantor shall maintain Securities Entitlements, Securities Accounts and Deposit
Accounts with values in excess of $550,000 in the aggregate, only with financial institutions that
have agreed to comply with entitlement orders and instructions issued or originated by the
Collateral Agent without further consent of such Grantor, such agreement to be substantially in the
form of Exhibit D or E as applicable, or in such other form as is reasonably satisfactory to the
Collateral Agent; provided that notwithstanding any other provision herein or in any such agreement
to the contrary, only upon and during the continuation of an Event of Default may the Collateral
Agent issue entitlement orders and instructions with respect to such accounts (or otherwise apply
the balance from any such accounts or instruct the bank or securities intermediary at which any
account is maintained to pay the balance of any such account to or for the benefit of the
Collateral Agent). Notwithstanding the foregoing, no Grantor shall hold cash in an aggregate
amount greater than $50,000 in any Deposit Account unless such Deposit Account is subject to an
agreement described in the foregoing sentence or is otherwise subject to customary standing
instructions by such Grantor to sweep the cash balance of such account into another Deposit Account
subject to such an agreement on no less frequently than a weekly basis.



     (e) Reserved.



E-25









 





Exhibit E




     (f) In addition to and not in lieu of the foregoing, if any Issuer of any Investment Property
is organized under the law of, or has its chief executive office in, a jurisdiction outside of the
United States, each Grantor shall take such additional actions, including causing the issuer to
register the pledge on its books and records, as may be necessary or advisable or as may be
reasonably requested by the Collateral Agent, under the laws of such jurisdiction to insure the
validity, perfection and priority of the security interest of the Collateral Agent.



     (g) In the case of any transferable Letters of Credit in excess of $100,000 individually or in
the aggregate, each Grantor shall use commercially reasonable efforts to obtain the consent of any
issuer thereof to the transfer of such Letter of Credit to the Collateral Agent. In the case of
any other Letter of Credit Rights in excess of $100,000 individually or in the aggregate each
Grantor shall use commercially reasonable efforts to obtain the consent of the issuer thereof and
any nominated person thereon to the assignment of the proceeds of the related Letter of Credit in
accordance with Section 5-114(c) of the New York UCC.



     5.3 Maintenance of Insurance. (a) Such Grantor will maintain, with financially sound
and reputable insurance companies, insurance on all its property (including all Inventory,
Equipment and Vehicles) as further set forth in the Credit Agreement; provided that in any
event such Grantor will maintain, to the extent obtainable on commercially reasonable terms, (i)
property and casualty insurance on all real and personal property on an all risks basis (including
the perils of flood and quake and loss by fire, explosion and theft), covering the repair or
replacement cost of all such property and consequential loss coverage for business interruption and
extra expense (which shall include construction expenses and such other business interruption
expenses as are otherwise generally available to similar businesses), and (ii) public liability
insurance. All such insurance with respect to such Grantor shall be provided by insurers or
reinsurers which (x) in the case of United States insurers and reinsurers, have an A.M. Best
policyholders rating of not less than A- with respect to primary insurance and B+ with respect to
excess insurance and (y) in the case of non-United States insurers or reinsurers, the providers of
at least 80% of such insurance have either an ISI policyholders rating of not less than A, an A.M.
Best policyholders rating of not less than A- or a surplus of not less than $500,000,000 with
respect to primary insurance, and an ISI policyholders rating of not less than BBB with respect to
excess insurance, or, if the relevant insurance is not available from such insurers, such other
insurers as the Collateral Agent may approve in writing. All insurance shall (i) provide that no
cancellation, material reduction in amount or material change in coverage thereof shall be
effective until at least 30 days after receipt by the Collateral Agent of written notice thereof,
(ii) if reasonably requested by the Collateral Agent, include a breach of warranty clause and (iii)
be reasonably satisfactory in all other respects to the Collateral Agent.



     (b) Such Grantor will deliver to the Collateral Agent on behalf of the Secured Parties, (i) on
the Closing Date, a certificate dated such date showing the amount and types of insurance coverage
as of such date, (ii) upon request of any Secured Party from time to time, full information as to
the insurance carried, (iii) promptly following receipt of notice from any insurer, a copy of any
notice of cancellation or material change in coverage from that existing on the Closing Date, (iv)
forthwith, notice of any cancellation or nonrenewal of coverage by such Grantor and (v) promptly
after such information is available to such Grantor, full information as to any claim for an amount
in excess of $250,000 with respect to any property and casualty insurance policy maintained by such
Grantor. The Collateral Agent shall be named as additional



E-26









 





Exhibit E



insured on all such liability insurance policies of such Grantor and the Collateral Agent
shall be named as loss payee on all property and casualty insurance policies of such Grantor.




     (c) Upon the request of the Collateral Agent, the Borrower shall deliver to the Secured
Parties a report of a reputable insurance broker with respect to such insurance and such
supplemental reports with respect thereto as the Collateral Agent may from time to time reasonably
request.



     5.4 Payment of Obligations. Such Grantor shall pay and discharge or otherwise satisfy
at or before maturity or before they become delinquent, as the case may be, all taxes, assessments
and governmental charges or levies imposed upon the Pledged Collateral or in respect of income or
profits therefrom, as well as all claims of any kind (including claims for labor, materials and
supplies) against or with respect to the Pledged Collateral, except that no such charge need be
paid if the amount or validity thereof is currently being contested in good faith by appropriate
proceedings, reserves in conformity with GAAP with respect thereto have been provided on the books
of such Grantor and such proceedings could not reasonably be expected to result in the sale,
forfeiture or loss of any material portion of the Pledged Collateral or any interest therein.



     5.5 Maintenance of Perfected Security Interest; Further Documentation. (a) Such
Grantor shall maintain each of the security interests created by this Agreement as a perfected
security interest having at least the priority described in Section 4.3 and shall defend such
security interest against the claims and demands of all persons whomsoever, subject to the
provisions of Section 8.15.



     (b) Such Grantor shall furnish to the Secured Parties from time to time statements and
schedules further identifying and describing the Pledged Collateral and such other reports in
connection with the assets and property of such Grantor as the Collateral Agent may reasonably
request, all in reasonable detail.



     (c) At any time and from time to time, upon the written request of the Collateral Agent, and
at the sole expense of such Grantor, such Grantor shall promptly and duly authorize, execute and
deliver, and have recorded, such further instruments and documents and take such further actions as
the Collateral Agent may reasonably request for the purpose of obtaining or preserving the full
benefits of this Agreement and of the rights and powers herein granted, including, the filing of
any financing or continuation statements under the Uniform Commercial Code (or other similar laws)
in effect in any jurisdiction with respect to the security interests created hereby and in the case
of Investment Property, Deposit Accounts and any other relevant Pledged Collateral, taking any
actions necessary to enable the Collateral Agent to obtain “control” (within the meaning of the
applicable Uniform Commercial Code) with respect thereto, including without limitation, executing
and delivering and causing the relevant depositary bank or securities intermediary to execute and
deliver a Control Agreement in the form attached hereto as C or D, as applicable.



     5.6 Changes in Locations, Name, Jurisdiction of Incorporation, etc. Such Grantor
shall not, except upon, in the case of clause (i) below, 60 days’ prior written notice and, in the
case of clause (ii), or (iii) below, 10 days’ prior written notice, in each case, to the



E-27









 





Exhibit E



Collateral Agent and delivery to the Collateral Agent of duly authorized and, where required,
executed copies of (a) all additional financing statements and other documents reasonably requested
by the Collateral Agent to maintain the validity, perfection and priority of the security interests
provided for herein and (b) if applicable, a written supplement to Schedule 4.5(a) showing any
additional location at which Inventory or Equipment (other than mobile goods) with a value in
excess of $100,000 that is included in the Pledged Collateral shall be kept:





               (i) permit any of the Inventory or Equipment (other than mobile goods) to be kept at a
location other than those listed on Schedule 4.5(a);




               (ii) change its legal name, jurisdiction of organization or the location of its chief
executive office or sole place of business from that referred to in Section 4.4; or




               (iii) change its legal name, identity or structure to such an extent that any financing
statement filed by the Collateral Agent in connection with this Agreement would become
misleading.



          5.7 Notices. Such Grantor shall advise the Collateral Agent promptly, in reasonable
detail, of:




          (a) any Lien (other than any Lien expressly permitted by Section 6.02 of the Credit Agreement)
on any of the Pledged Collateral which would adversely affect the ability of the Collateral Agent
to exercise any of its remedies hereunder; and




          (b) of the occurrence of any other event which could reasonably be expected to have a material
adverse effect on the aggregate value of the Pledged Collateral or on the security interests
created hereby.




          5.8 Investment Property. (a) If such Grantor shall become entitled to receive or
shall receive any stock or other ownership certificate (including any certificate representing a
stock dividend or a distribution in connection with any reclassification, increase or reduction of
capital or any certificate issued in connection with any reorganization), option or rights in
respect of the Equity Interests in any Issuer, whether in addition to, in substitution of, as a
conversion of, or in exchange for, any shares of or other ownership interests in the Pledged
Securities, or otherwise in respect thereof, such Grantor shall accept the same as the agent of the
Secured Parties, hold the same in trust for the Secured Parties and deliver the same forthwith to
the Collateral Agent in the exact form received, duly endorsed by such Grantor to the Collateral
Agent, if required, together with an undated stock power or similar instrument of transfer covering
such certificate duly executed in blank by such Grantor and with, if the Collateral Agent so
requests, signature guaranteed, to be held by the Collateral Agent, subject to the terms hereof, as
additional collateral security for the Obligations. Any sums paid upon or in respect of the
Pledged Securities upon the liquidation or dissolution of any Issuer shall be paid over to the
Collateral Agent to be applied by the Collateral Agent in accordance with the provisions of
Section 6.5.




          (b) Without the prior written consent of the Collateral Agent, such Grantor shall not (i) vote
to enable, or take any other action to permit, any Issuer to issue any stock,




E-28









 





Exhibit E



partnership interests, limited liability company interests or other equity securities of any
nature or to issue any other securities convertible into or granting the right to purchase or
exchange for any stock, partnership interests, limited liability company interests or other equity
securities of any nature of any Issuer (except, in each case, pursuant to a transaction expressly
permitted by the Credit Agreement), (ii) sell, assign, transfer, exchange, or otherwise dispose of,
or grant any option with respect to, any of the Investment Property or Proceeds thereof or any
interest therein (except, in each case, pursuant to a transaction expressly permitted by the Credit
Agreement), (iii) create, incur or permit to exist any Lien or option in favor of, or any claim of
any person with respect to, any of the Investment Property or Proceeds thereof, or any interest
therein, except for the security interests created by this Agreement or any Lien expressly
permitted thereon pursuant to Section 6.02 of the Credit Agreement, (iv) enter into any agreement
or undertaking restricting the right or ability of such Grantor or the Collateral Agent to sell,
assign or transfer any of the Investment Property or Proceeds thereof or any interest therein or
(v) without the prior written consent of the Collateral Agent, cause or permit any Issuer of any
Pledged Partnership Interests or Pledged LLC Interests which are not securities (for purposes of
the New York UCC) on the date hereof to elect or otherwise take any action to cause such Pledged
Partnership Interests or Pledged LLC Interests to be treated as securities for purposes of the New
York UCC; provided, however, notwithstanding the foregoing, if any issuer of any
Pledged Partnership Interests or Pledged LLC Interests takes any such action in violation of the
provisions in this clause (v), such Grantor shall promptly notify the Collateral Agent in writing
of any such election or action and, in such event, shall take all steps necessary or advisable to
establish the Collateral Agent’s “control” thereof.




     (c) In the case of each Grantor which is an Issuer, such Issuer agrees that (i) it shall be
bound by the terms of this Agreement relating to the Pledged Securities issued by it and shall
comply with such terms insofar as such terms are applicable to it, (ii) it shall notify the
Collateral Agent promptly in writing of the occurrence of any of the events described in Section
5.8(a) with respect to the Pledged Securities issued by it and (iii) the terms of Sections 6.3(c)
and 6.7 shall apply to it, mutatis mutandis, with respect to all actions that may
be required of it pursuant to Section 6.3(c) or 6.7 with respect to the Pledged Securities issued
by it. In addition, subject to any Requirements of Law, each Grantor which is either an Issuer or
an owner of any Pledged Security hereby consents to the grant by each other Grantor of the security
interest hereunder in favor of the Collateral Agent and to the transfer of any Pledged Security to
the Collateral Agent or its nominee following an Event of Default and to the substitution of the
Collateral Agent or its nominee as a partner, member or shareholder of the Issuer of the related
Pledged Security.



     5.9 Receivables. (a) Other than in the ordinary course of business consistent with
its past practice, such Grantor shall not (i) grant any extension of the time of payment of any
Receivable, (ii) compromise or settle any Receivable for less than the full amount thereof, (iii)
release, wholly or partially, any person liable for the payment of any Receivable, (iv) allow any
credit or discount whatsoever on any Receivable or (v) amend, supplement or modify any Receivable
in any manner that could adversely affect the value thereof.



     (b) Such Grantor shall deliver to the Collateral Agent a copy of each material demand, notice
or document received by it that questions or calls into doubt the validity or



E-29









 





Exhibit E



enforceability of more than 5% of the aggregate amount of the then outstanding Receivables
that are included in the Pledged Collateral.




     (c) Each Grantor shall perform and comply in all material respects with all of its obligations
with respect to the Receivables.



     5.10 Intellectual Property. (a) Such Grantor (either itself or through licensees)
shall (i) continue to use each Trademark material to its business on each and every trademark class
of goods applicable to its current line as reflected in its current catalogs, brochures and price
lists in order to maintain such Trademark in full force free from any claim of abandonment for
non-use, (ii) maintain as in the past the quality of products and services offered under such
Trademark and take all necessary steps to ensure that all licensed users of such Trademark maintain
as in the past such quality, (iii) use such Trademark with the appropriate notice of registration
and all other notices and legends required by applicable Requirements of Law, (iv) not adopt or use
any mark which is confusingly similar or a colorable imitation of such Trademark unless the
Collateral Agent, for the ratable benefit of the Secured Parties, shall obtain a perfected security
interest in such mark pursuant to this Agreement and the Intellectual Property Security Agreement,
and (v) not (and not permit any licensee or sublicensee thereof to) do any act or knowingly omit to
do any act whereby such Trademark may become invalidated or impaired in any way.



     (b) Such Grantor (either itself or through licensees) shall not do any act, or omit to do any
act, whereby any Patent owned by such Grantor material to its business may become forfeited,
abandoned or dedicated to the public.



     (c) Such Grantor (either itself or through licensees) (i) shall employ each Copyright material
to its business and (ii) shall not (and shall not permit any licensee or sublicensee thereof to) do
any act or knowingly omit to do any act whereby any material portion of such Copyrights may become
invalidated or otherwise impaired. Such Grantor shall not (either itself or through licensees) do
any act whereby any material portion of such Copyrights may fall into the public domain.



     (d) Such Grantor (either itself or through licensees) shall not do any act that uses any
Material Intellectual Property to infringe, misappropriate or violate the intellectual property
rights of any other person.



     (e) Such Grantor (either itself or through licensees) shall use proper statutory notice in
connection with the use of the Material Intellectual Property.



     (f) Such Grantor shall notify the Collateral Agent immediately if it knows, or has reason to
know, that any application or registration relating to any Material Intellectual Property may
become forfeited, abandoned or dedicated to the public, or of any adverse determination or
development (including the institution of, or any such determination or development in, any
proceeding in the United States Patent and Trademark Office, the United States Copyright Office or
any court or tribunal in any country) regarding such Grantor’s ownership of, or the validity of,
any Material Intellectual Property or such Grantor’s right to register the same or to own and
maintain the same.



E-30









 





Exhibit E




     (g) Promptly upon such Grantor’s acquisition or creation of any copyrightable work, invention,
trademark or other similar property that is material to the business of such Grantor, apply for
registration thereof with the United states Copyright Office, the United States Patent and
Trademark Office and any other appropriate office. Whenever such Grantor, either by itself or
through any agent, employee, licensee or designee, shall file an application for the registration
of any Intellectual Property that is material to the business of such Grantor with the United
States Patent and Trademark Office, the United States Copyright Office or any similar office or
agency in any other country or any political subdivision thereof, such Grantor shall report such
filing to the Collateral Agent within five Business Days after the last day of the fiscal quarter
in which such filing occurs. Upon request of the Collateral Agent, such Grantor shall execute and
deliver, and have recorded, any and all agreements, instruments, documents, and papers as the
Collateral Agent may request to evidence the Secured Parties’ security interest in any Copyright,
Patent, Trademark or other Intellectual Property of such Grantor and the goodwill and general
intangibles of such Grantor relating thereto or represented thereby.



     (h) Such Grantor shall take all reasonable and necessary steps, including in any proceeding
before the United States Patent and Trademark Office, the United States Copyright Office or any
similar office or agency in any other country or any political subdivision thereof, to maintain and
pursue each application (and to obtain the relevant registration) and to maintain each registration
of Intellectual Property material to its business, including the payment of required fees and
taxes, the filing of responses to office actions issued by the United States Patent and Trademark
Office and the United States Copyright Office, the filing of applications for renewal or extension,
the filing of affidavits of use and affidavits of incontestability, the filing of divisional,
continuation, continuation-in-part, reissue, and renewal applications or extensions, the payment of
maintenance fees, and the participation in interference, reexamination, opposition, cancellation,
infringement and misappropriation proceedings.



     (i) Such Grantor (either itself or through licensees) shall not, without the prior written
consent of the Collateral Agent, discontinue use of or otherwise abandon any of its Intellectual
Property, or abandon any application or any right to file an application for letters patent,
trademark, or copyright, unless such Grantor shall have previously determined that such use or the
pursuit or maintenance of such Intellectual Property is no longer desirable in the conduct of such
Grantor’s business and that the loss thereof could not reasonably be expected to have a Material
Adverse Effect and, in which case, such Grantor shall give prompt notice of any such abandonment to
the Collateral Agent in accordance herewith.



     (j) In the event that any Intellectual Property material to its business is infringed,
misappropriated or diluted by a third party, such Grantor shall (i) take such actions as such
Grantor shall reasonably deem appropriate under the circumstances to protect such Intellectual
Property and (ii) if such Intellectual Property is of material economic value, promptly notify the
Collateral Agent after it learns thereof and sue for infringement, misappropriation or dilution, to
seek injunctive relief where appropriate and to recover any and all damages for such infringement,
misappropriation or dilution.



     (k) Such Grantor agrees that, should it obtain an ownership interest in any item of
intellectual property which is not, as of the Closing Date, a part of the Intellectual Property
Collateral (the “After-Acquired Intellectual Property”), (i) the provisions of Section 3 shall



E-31









 





Exhibit E



automatically apply thereto, (ii) any such After-Acquired Intellectual Property, and in the
case of trademarks, the goodwill of the business connected therewith or symbolized thereby, shall
automatically become part of the Intellectual Property Collateral, (iii) it shall give prompt (and,
in any event within five Business Days after the last day of the fiscal quarter in which such
Grantor acquires such ownership interest) written notice thereof to the Collateral Agent in
accordance herewith, and (iv) it shall provide the Collateral Agent promptly (and, in any event
within five Business Days after the last day of the fiscal quarter in which such Grantor acquires
such ownership interest) with an amended Schedule 4.9(a) and take the actions specified in 5.9(m).




     (l) Such Grantor agrees to execute an Intellectual Property Security Agreement with respect to
its Intellectual Property in substantially the form of Exhibit B-1 in order to record the security
interest granted herein to the Collateral Agent for the ratable benefit of the Secured Parties with
the United States Patent and Trademark Office, the United States Copyright Office, and any other
applicable Governmental Authority.



     (m) Such Grantor agrees to execute an After-Acquired Intellectual Property Security Agreement
with respect to its After-Acquired Intellectual Property in substantially the form of Exhibit B-2
in order to record the security interest granted herein to the Collateral Agent for the ratable
benefit of the Secured Parties with the United States Patent and Trademark Office, the United
States Copyright Office and any other applicable Governmental Authority.



     (n) Such Grantor shall take all steps reasonably necessary to protect the secrecy of all Trade
Secrets material to its business, including entering into confidentiality agreements with employees
and labeling and restricting access to secret information and documents.



     5.11 Contracts. (a) Such Grantor shall perform and comply in all material respects
with all its obligations under the Contracts.



     (b) Such Grantor shall not amend, modify, terminate, waive or fail to enforce any provision of
any Contract in any manner which could reasonably be expected to materially adversely affect the
value of the Pledged Collateral or otherwise have a Material Adverse Effect.



     (c) Such Grantor shall exercise promptly and diligently each and every material right which it
may have under each Material Contract (other than any right of termination).



     (d) Such Grantor shall deliver to the Collateral Agent a copy of each material demand, notice
or document received by it relating in any way to any Material Contract and shall also deliver to
the Collateral Agent a copy of all new Material Contracts entered into after the date hereof.



     (e) With respect to any Non-Assignable Contract that is a Material Contract as of the date
hereof, each Grantor shall, within ten days of the date hereof, request in writing the consent of
the counterparty or counterparties to such Non-Assignable Contract pursuant to the terms of such
Non-Assignable Contract or applicable law to the assignment or granting of a security interest in
such Non-Assignable Contract to the Collateral Agent for the ratable benefit of the Secured Parties
and use its commercially reasonable efforts to obtain such consent as soon as practicable
thereafter. No Grantor shall after the Closing Date enter into any Non-Assignable



E-32










 





Exhibit E



Contract that is a Material Contract unless, within 30 days, counterparties to such
Non-Assignable Contract consent in writing pursuant to the terms of such Non-Assignable Contract to
the assignment and granting of a security interest in such Non-Assignable Contract to the
Collateral Agent for the ratable benefit of the Secured Parties.




     (f) Such Grantor shall not permit to become effective in any document creating, governing or
providing for any permit, lease, license or Material Contract, a provision that would prohibit the
creation or perfection of, or exercise of remedies in connection with, a Lien on such permit,
lease, license or Material Contract in favor of the of the Collateral Agent for the ratable benefit
of the Secured Parties unless such Grantor believes, in its reasonable judgment, that such
prohibition is usual and customary in transactions of such type.



     5.12 Commercial Tort Claims. Such Grantor shall advise the Collateral Agent promptly
of any Commercial Tort Claim held by such Grantor individually or in the aggregate in excess of
$100,000 and shall promptly execute a supplement to this Agreement in form and substance reasonably
satisfactory to the Collateral Agent to grant a security interest in such Commercial Tort Claim to
the Collateral Agent for the ratable benefit of the Secured Parties.



SECTION 6. REMEDIAL PROVISIONS




     6.1 Certain Matters Relating to Receivables. (a) The Collateral Agent shall have the
right (but shall in no way be obligated) to make test verifications of the Receivables that are
included in the Pledged Collateral in any manner and through any medium that it reasonably
considers advisable, and each Grantor shall furnish all such assistance and information as the
Collateral Agent may reasonably require in connection with such test verifications. At any time
and from time to time, upon the Collateral Agent’s request and at the expense of the relevant
Grantor, such Grantor shall cause independent public accountants or others satisfactory to the
Collateral Agent to furnish to the Collateral Agent reports showing reconciliations, aging and test
verifications of, and trial balances for, the Receivables.



     (b) The Collateral Agent hereby authorizes each Grantor to collect such Grantor’s Receivables,
subject to the Collateral Agent’s direction and control, and each Grantor hereby agrees to continue
to collect all amounts due or to become due to such Grantor under the Receivables and any
Supporting Obligation and diligently exercise each material right it may have under any Receivable
and any Supporting Obligation, in each case, at its own expense; provided, however,
that the Collateral Agent may curtail or terminate said authority at any time after the occurrence
and during the continuance of an Event of Default. If required by the Collateral Agent at any time
after the occurrence and during the continuance of an Event of Default, any payments of
Receivables, when collected by any Grantor, (i) shall be forthwith (and, in any event, within two
Business Days) deposited by such Grantor in the exact form received, duly endorsed by such Grantor
to the Collateral Agent if required, in a Collateral Account maintained under the sole dominion and
control of the Collateral Agent, subject to withdrawal by the Collateral Agent for the account of
the Secured Parties only as provided in Section 6.5, and (ii) until so turned over, shall be held
by such Grantor in trust for the Secured Parties, segregated from other funds of such Grantor.
Each such deposit of Proceeds of Receivables shall be accompanied by a report identifying in
reasonable detail the nature and source of the payments included in the deposit.



E-33









 





Exhibit E




     (c) At the Collateral Agent’s request, each Grantor shall deliver to the Collateral Agent all
original and other documents evidencing, and relating to, the agreements and transactions which
gave rise to the Receivables that are included in the Pledged Collateral, including all original
orders, invoices and shipping receipts.



     6.2 Communications with Obligors; Grantors Remain Liable.



     (a) The Collateral Agent in its own name or in the name of others may at any time after the
occurrence and during the continuance of an Event of Default communicate with obligors under the
Receivables and parties to the Contracts to verify with them to the Collateral Agent’s satisfaction
the existence, amount and terms of any Receivables or Contracts.



     (b) After the occurrence and during the continuance of an Event of Default, the Collateral
Agent may at any time notify, or require any Grantor to so notify, the Account Debtor or
counterparty on any Receivable or Contract of the security interest of the Collateral Agent
therein. In addition, after the occurrence and during the continuance of an Event of Default, the
Collateral Agent may upon written notice to the applicable Grantor, notify, or require any Grantor
to notify, the Account Debtor or counterparty to make all payments under the Receivables and/or
Contracts directly to the Collateral Agent;



     (c) Anything herein to the contrary notwithstanding, each Grantor shall remain liable under
each of the Receivables and Contracts to observe and perform all the conditions and obligations to
be observed and performed by it thereunder, all in accordance with the terms of any agreement
giving rise thereto. No Secured Party shall have any obligation or liability under any Receivable
(or any agreement giving rise thereto) or Contract by reason of or arising out of this Agreement or
the receipt by any Secured Party of any payment relating thereto, nor shall any Secured Party be
obligated in any manner to perform any of the obligations of any Grantor under or pursuant to any
Receivable (or any agreement giving rise thereto) or Contract, to make any payment, to make any
inquiry as to the nature or the sufficiency of any payment received by it or as to the sufficiency
of any performance by any party thereunder, to present or file any claim, to take any action to
enforce any performance or to collect the payment of any amounts which may have been assigned to it
or to which it may be entitled at any time or times.



     6.3 Pledged Securities. (a) Unless an Event of Default shall have occurred and be
continuing and the Collateral Agent shall have given notice to the relevant Grantor of the
Collateral Agent’s intent to exercise its corresponding rights pursuant to Section 6.3(b), each
Grantor shall be permitted to receive all cash dividends paid in respect of the Pledged Equity
Interests and all payments made in respect of the Pledged Notes, in each case paid in the normal
course of business of the relevant Issuer and consistent with past practice, to the extent
permitted in the Credit Agreement, and to exercise all voting and corporate rights with
respect to the Pledged Securities; provided, however, that no vote shall be cast or
corporate or other ownership right exercised or other action taken which, in the Collateral Agent’s
reasonable judgment, would impair the Pledged Collateral or which would be inconsistent with or
result in any violation of any provision of the Credit Agreement, this Agreement or any other Loan
Document.



E-34









 





Exhibit E




     (b) If an Event of Default shall occur and be continuing: (i) all rights of each Grantor to
exercise or refrain from exercising the voting and other consensual rights which it would otherwise
be entitled to exercise pursuant hereto shall cease and all such rights shall thereupon become
vested in the Collateral Agent who shall thereupon have the sole right, but shall be under no
obligation, to exercise or refrain from exercising such voting and other consensual rights and (ii)
the Collateral Agent shall have the right, without notice to any Grantor, to transfer all or any
portion of the Investment Property to its name or the name of its nominee or agent; provided,
however, that the Collateral Agent will not have the right to vote, to give consents, ratifications
or waivers or to take any other action with respect to the Equity Interests of any Applicable
Subsidiary to the extent that such action would require prior regulatory approval under the
applicable Requirements of Law, unless such approval shall have been granted, and, provided,
further, that the right of the Collateral Agent to sell or otherwise dispose of the Equity
Interests of any Applicable Subsidiary shall be subject to the Collateral Agent or the relevant
Grantor obtaining, to the extent necessary under applicable Requirements of Law, the prior approval
of such sale or other disposition by the Governmental Authority having jurisdiction with respect to
such Applicable Subsidiary. In addition, the Collateral Agent shall have the right at any time,
without notice to any Grantor, to exchange any certificates or instruments representing any
Investment Property for certificates or instruments of smaller or larger denominations. In order
to permit the Collateral Agent to exercise the voting and other consensual rights which it may be
entitled to exercise pursuant hereto and to receive all dividends and other distributions which it
may be entitled to receive hereunder each Grantor shall promptly execute and deliver (or cause to
be executed and delivered) to the Collateral Agent all proxies, dividend payment orders and other
instruments as the Collateral Agent may from time to time reasonably request and each Grantor
acknowledges that the Collateral Agent may utilize the power of attorney set forth herein.



     (c) Each Grantor hereby authorizes and instructs each Issuer of any Pledged Securities pledged
by such Grantor hereunder to (i) comply with any instruction received by it from the Collateral
Agent in writing that (x) states that an Event of Default has occurred and is continuing and (y) is
otherwise in accordance with the terms of this Agreement, without any other or further instructions
from such Grantor, and each Grantor agrees that each Issuer shall be fully protected in so
complying, and (ii) upon any such instruction following the occurrence and during the continuance
of an Event of Default, pay any dividends or other payments with respect to the Investment
Property, including Pledged Securities, directly to the Collateral Agent.



     6.4 Proceeds to be Turned Over To Collateral Agent. In addition to the rights of the
Secured Parties specified in Section 6.1 with respect to payments of Receivables, if an Event of
Default shall occur and be continuing, all Proceeds received by any Grantor consisting of cash,
cash equivalents, checks and other near-cash items shall be held by such Grantor in trust for the
Secured Parties, segregated from other funds of such Grantor, and shall, forthwith upon receipt by
such Grantor, be turned over to the Collateral Agent in the exact form received by such Grantor
(duly endorsed by such Grantor to the Collateral Agent, if required). All Proceeds received by the
Collateral Agent hereunder shall be held by the Collateral Agent in a Collateral Account maintained
under its sole dominion and control. All Proceeds while held by the Collateral Agent in a
Collateral Account (or by such Grantor in trust for the Secured Parties) shall continue to be held
as collateral security for all the Obligations and shall not constitute payment thereof until
applied as provided in Section 6.5.



E-35









 





Exhibit E




          6.5 Application of Proceeds. At such intervals as may be agreed upon by the Borrower
and the Collateral Agent, or, if an Event of Default shall have occurred and be continuing, at any
time at the Collateral Agent’s election, the Collateral Agent may apply all or any part of the net
Proceeds (after deducting fees and expenses as provided in Section 6.6) constituting Pledged
Collateral realized through the exercise by the Collateral Agent of its remedies hereunder, whether
or not held in any Collateral Account, and any proceeds of the guarantee set forth in Section 2, in
payment of the Obligations in the following order:





          First, to the Collateral Agent, to pay incurred and unpaid fees and expenses of
the Secured Parties under the Loan Documents;




          Second, to the Collateral Agent, for application by it towards payment of
amounts then due and owing and remaining unpaid in respect of the Obligations, pro
rata among the Secured Parties according to the amounts of the Obligations then due
and owing and remaining unpaid to the Secured Parties;




          Third, to the Collateral Agent, for application by it towards prepayment of the
Obligations, pro rata among the Lenders according to the amounts of the
Obligations then held by the Lenders; and




          Fourth, any balance of such Proceeds remaining after the Obligations shall have
been paid in full, no letters of credit issued under the Credit Agreement shall be
outstanding and the Commitments under the Credit Agreement shall have terminated or expired
shall be paid over to the Borrower or to whomsoever may be lawfully entitled to receive the
same.



          6.6 Code and Other Remedies. (a) If an Event of Default shall occur and be
continuing, the Collateral Agent, on behalf of the Secured Parties, may exercise, in addition to
all other rights and remedies granted to them in this Agreement and in any other instrument or
agreement securing, evidencing or relating to the Obligations, all rights and remedies of a secured
party under the New York UCC (whether or not the New York UCC applies to the affected Pledged
Collateral) or its rights under any other applicable law or in equity. Without limiting the
generality of the foregoing, the Collateral Agent, without demand of performance or other demand,
presentment, protest, advertisement or notice of any kind (except any notice required by law
referred to below) to or upon any Grantor or any other person (all and each of which demands,
defenses, advertisements and notices are hereby waived), may in such circumstances forthwith
collect, receive, appropriate and realize upon the Pledged Collateral, or any part thereof, and/or
may forthwith sell, lease, license, assign, give option or options to purchase, or otherwise
dispose of and deliver the Pledged Collateral or any part thereof (or contract to do any of the
foregoing), in one or more parcels at public or private sale or sales, at any exchange, broker’s
board or office of any Secured Party or elsewhere upon such terms and conditions as it may deem
advisable and at such prices as it may deem best, for cash or on credit or for future delivery
without assumption of any credit risk. Each Secured Party shall have the right upon any such
public sale or sales, and, to the extent permitted by law, upon any such private sale or sales, to
purchase the whole or any part of the Pledged Collateral so sold, free of any right or equity of
redemption in any Grantor, which right or equity is hereby waived and released. Each purchaser at
any such sale shall hold the property sold absolutely free from any



E-36









 








Exhibit E



claim or right on the part of any Grantor, and each Grantor hereby waives (to the extent
permitted by applicable law) all rights of redemption, stay and/or appraisal which it now has or
may at any time in the future have under any rule of law or statute now existing or hereafter
enacted. Each Grantor agrees that, to the extent notice of sale shall be required by law, at least
ten days notice to such Grantor of the time and place of any public sale or the time after which
any private sale is to be made shall constitute reasonable notification. The Collateral Agent
shall not be obligated to make any sale of Pledged Collateral regardless of notice of sale having
been given. The Collateral Agent may adjourn any public or private sale from time to time by
announcement at the time and place fixed therefor, and such sale may, without further notice, be
made at the time and place to which it was so adjourned. The Collateral Agent may sell the Pledged
Collateral without giving any warranties as to the Pledged Collateral. The Collateral Agent may
specifically disclaim or modify any warranties of title or the like. This procedure will not be
considered to adversely affect the commercial reasonableness of any sale of the Pledged Collateral.
Each Grantor agrees that it would not be commercially unreasonable for the Collateral Agent to
dispose of the Pledged Collateral or any portion thereof by using Internet sites that provide for
the auction of assets of the types included in the Pledged Collateral or that have the reasonable
capability of doing so, or that match buyers and sellers of assets. Each Grantor hereby waives any
claims against the Collateral Agent arising by reason of the fact that the price at which any
Pledged Collateral may have been sold at such a private sale was less than the price which might
have been obtained at a public sale, even if the Collateral Agent accepts the first offer received
and does not offer such Pledged Collateral to more than one offeree. Each Grantor further agrees,
at the Collateral Agent’s request, to assemble the Pledged Collateral and make it available to the
Collateral Agent at places which the Collateral Agent shall reasonably select, whether at such
Grantor’s premises or elsewhere. The Collateral Agent shall have the right to enter onto the
property where any Pledged Collateral is located and take possession thereof with or without
judicial process.




     (b) The Collateral Agent shall apply the net proceeds of any action taken by it pursuant to
this Section 6.6, after deducting all reasonable costs and expenses of every kind incurred in
connection therewith or incidental to the care or safekeeping of any of the Pledged Collateral or
in any way relating to the Pledged Collateral or the rights of the Secured Parties hereunder,
including reasonable attorneys’ fees and disbursements, to the payment in whole or in part of the
Obligations and only after such application and after the payment by the Collateral Agent of any
other amount required by any provision of law, including Section 9-615(a) of the New York UCC, need
the Collateral Agent account for the surplus, if any, to any Grantor. If the Collateral Agent
sells any of the Pledged Collateral upon credit, the Grantor will be credited only with payments
actually made by the purchaser and received by the Collateral Agent and applied to indebtedness of
the purchaser. In the event the purchaser fails to pay for the Pledged Collateral, the Collateral
Agent may resell the Pledged Collateral and the Grantor shall be credited with proceeds of the
sale. To the extent permitted by applicable law, each Grantor waives all claims, damages and
demands it may acquire against any Secured Party arising out of the exercise by them of any rights
hereunder.



     (c) In the event of any disposition of any of the Intellectual Property, the goodwill of the
business connected with and symbolized by any Trademarks subject to such Disposition shall be
included, and the applicable Grantor shall supply the Collateral Agent or its designee with such
Grantor’s know-how and expertise, and with documents and things



E-37









 





Exhibit E



embodying the same, relating to the manufacture, distribution, advertising and sale of
products or the provision of services relating to any Intellectual Property subject to such
disposition, and such Grantor’s customer lists and other records and documents relating to such
Intellectual Property and to the manufacture, distribution, advertising and sale of such products
and services.




     6.7 Registration Rights. (a) If the Collateral Agent shall determine to exercise its
right to sell any or all of the Pledged Equity Interests or the Pledged Debt Securities pursuant to
Section 6.6, and if in the opinion of the Collateral Agent it is necessary or advisable to have the
Pledged Equity Interests or the Pledged Debt Securities, or that portion thereof to be sold,
registered under the provisions of the Securities Act, the relevant Grantor shall cause the Issuer
thereof to (i) execute and deliver, and cause the directors and officers of such Issuer to execute
and deliver, all such instruments and documents, and do or cause to be done all such other acts as
may be, in the opinion of the Collateral Agent, necessary or advisable to register the Pledged
Equity Interests or the Pledged Debt Securities, or that portion thereof to be sold, under the
provisions of the Securities Act, (ii) use commercially reasonable efforts to cause the
registration statement relating thereto to become effective and to remain effective for a period of
one year from the date of the first public offering of the Pledged Equity Interests or the Pledged
Debt Securities, or that portion thereof to be sold, and (iii) make all amendments thereto and/or
to the related prospectus which, in the opinion of the Collateral Agent, are reasonably necessary
or advisable, all in conformity with the requirements of the Securities Act and the rules and
regulations of the SEC applicable thereto. Each Grantor agrees to use commercially reasonable
efforts to cause such Issuer to comply with the provisions of the securities or “Blue Sky” laws of
any and all jurisdictions which the Collateral Agent shall designate and to make available to its
security holders, as soon as practicable, an earnings statement (which need not be audited) which
will satisfy the provisions of Section 11(a) of the Securities Act.



     (b) Each Grantor recognizes that the Collateral Agent may be unable to effect a public sale of
any or all the Pledged Equity Interests or the Pledged Debt Securities, by reason of certain
prohibitions contained in the Securities Act and applicable state securities laws or otherwise, and
may be compelled to resort to one or more private sales thereof to a restricted group of purchasers
which will be obliged to agree, among other things, to acquire such securities for their own
account for investment and not with a view to the distribution or resale thereof. Each Grantor
acknowledges and agrees that any such private sale may result in prices and other terms less
favorable than if such sale were a public sale and, notwithstanding such circumstances, agrees that
any such private sale shall be deemed to have been made in a commercially reasonable manner. The
Collateral Agent shall be under no obligation to delay a sale of any of the Pledged Equity
Interests or the Pledged Debt Securities for the period of time necessary to permit the Issuer
thereof to register such securities for public sale under the Securities Act, or under applicable
state securities laws, even if such Issuer would agree to do so.



     (c) Each Grantor agrees to use its best efforts to do or cause to be done all such other acts
as may be necessary to make such sale or sales of all or any portion of the Pledged Equity
Interests or the Pledged Debt Securities pursuant to this Section 6.7 valid and binding and in
compliance with any and all other applicable Requirements of Law. Each Grantor further agrees that
a breach of any of the covenants contained in this Section 6.7 will cause irreparable injury to the
Secured Parties, that the Secured Parties have no adequate remedy at law in respect of such breach
and, as a consequence, that each and every covenant contained in this Section 6.7



E-38









 





Exhibit E



shall be specifically enforceable against such Grantor, and such Grantor hereby waives and
agrees not to assert any defenses against an action for specific performance of such covenants
except for a defense that no Event of Default has occurred and is continuing under the Credit
Agreement or a defense of payment.




          6.8 Deficiency. Each Grantor shall remain liable for any deficiency if the proceeds
of any sale or other disposition of the Pledged Collateral are insufficient to pay its Obligations
and the fees and disbursements of any attorneys employed by any Secured Party to collect such
deficiency.




          6.9 Executory Process.




          (a) For purposes of executory process under applicable Louisiana law, each Grantor hereby
acknowledges the Grantor’s Obligations, confesses judgment thereon and consents that judgment be
rendered and signed, whether during the court’s term or during vacation, in favor of the Collateral
Agent, for the ratable benefit of the Secured Parties, for the full amount of the Grantor’s
Obligations, in principal, interest and attorneys’ fees, together with all charges and expenses
whatsoever pursuant to this Agreement and any other related documents. Upon the occurrence of an
Event of Default, and in addition to all of its rights, powers and remedies under this Agreement,
the other related documents and applicable law, the Collateral Agent may, at its option, cause all
or any part of the Collateral to be seized and sold under executory process, or under writ of fieri
facias issued in execution of an ordinary judgment obtained upon the Grantor’s Obligations, without
appraisement to the highest bidder, for cash or under such terms as the Collateral Agent deems
acceptable. Each Grantor hereby waives all and every appraisement of the Collateral and waives and
renounces the benefit of appraisement and the benefit of all laws relative to the appraisement of
the Collateral seized and sold under executory or other legal process. Each Grantor agrees to
waive and does hereby specifically waive:





               (i) the benefit of appraisement provided for in Articles 2332, 2336, 2723, and 2724,
Louisiana Code of Civil Procedure, and all other laws conferring such benefits;




               (ii) the demand and three (3) days delay accorded by Articles 2639 and 2721, Louisiana
Code of Civil Procedure;




               (iii) the notice of seizure required by Articles 2293 and 2721, Louisiana Code of Civil
Procedure;




               (iv) the three (3) days delay provided by Articles 2331 and 2722, Louisiana Code of
Civil Procedure;




               (v) the benefit of the other provisions of Articles 2331, 2722, and 2723, Louisiana
Code of Civil Procedure;




               (vi) the benefit of the provisions of any other articles of the Louisiana Code of Civil
Procedure not specifically mentioned above; and



E-39









 





Exhibit E





          (vii) all pleas of division and discussion with respect to the Grantor’s Obligations.



          (b) In the event the Collateral Agent elects, at its option, to enter suit via ordinaria on
the Grantor’s Obligations, in addition to the foregoing confession of judgment and waivers, each
Grantor hereby waives citation, other legal process and legal delays and hereby consents that
judgment for the unpaid principal due on the Grantor’s Obligations, together with interest,
reasonable attorneys’ fees, costs and other charges that may be due on the Grantor’s Obligations,
be rendered and signed immediately.




          (c) Pursuant to the authority contained in Louisiana Revised Statutes 9:5136 through 9:5140.2,
each Grantor and the Collateral Agent do hereby expressly designate the Collateral Agent or its
designee to be keeper or receiver (“Keeper”) for the benefit of the Secured Parties or any assignee
of the Secured Parties, such designation to take effect immediately upon any seizure of any of the
Collateral under writ of executory process or under writ of sequestration or fieri facias as an
incident to an action brought by the Collateral Agent. The fees of the Keeper are hereby fixed at
five percent (5%) of the amount due or sued for or claimed or sought to be protected, preserved or
enforced in the proceeding for the recognition of the security interest created hereby, and the
payment of such fees shall be secured by the security interest in the Collateral granted in this
Agreement.




SECTION 7. THE COLLATERAL AGENT




          7.1 Collateral Agent’s Appointment as Attorney-in-Fact, etc. (a) Each Grantor hereby
irrevocably constitutes and appoints the Collateral Agent and any officer or agent thereof, with
full power of substitution, as its true and lawful attorney-in-fact with full irrevocable power and
authority in the place and stead of such Grantor and in the name of such Grantor or in its own
name, for the purpose of carrying out the terms of this Agreement, to take any and all appropriate
action and to execute any and all documents and instruments which may be necessary or desirable to
accomplish the purposes of this Agreement, and, without limiting the generality of the foregoing,
each Grantor hereby gives the Collateral Agent the power and right, on behalf of such Grantor,
without notice to or assent by such Grantor, to do any or all of the following after the occurrence
and during the continuance of an Event of Default:





          (i) in the name of such Grantor or its own name, or otherwise, take possession of and
endorse and collect any checks, drafts, notes, acceptances or other instruments for the
payment of moneys due under any Receivable or Contract or with respect to any other Pledged
Collateral and file any claim or take any other action or proceeding in any court of law or
equity or otherwise deemed appropriate by the Collateral Agent for the purpose of collecting
any and all such moneys due under any Receivable or Contract or with respect to any other
Pledged Collateral whenever payable;




          (ii) in the case of any Intellectual Property, execute and deliver, and have recorded,
any and all agreements, instruments, documents and papers as the Collateral Agent may
request to evidence the Secured Parties’ security interest in such



E-40









 





Exhibit E





Intellectual Property and the goodwill and general intangibles of such Grantor relating
thereto or represented thereby;




               (iii) pay or discharge taxes and Liens levied or placed on or threatened against the
Pledged Collateral, effect any repairs or any insurance called for by the terms of this
Agreement and pay all or any part of the premiums therefor and the costs thereof;




               (iv) execute, in connection with any sale provided for in Section 6.7 or 6.8, any
endorsements, assignments or other instruments of conveyance or transfer with respect to the
Pledged Collateral; and




               (v) (1) direct any party liable for any payment under any of the Pledged Collateral to
make payment of any and all moneys due or to become due thereunder directly to the
Collateral Agent or as the Collateral Agent shall direct; (2) ask or demand for, collect,
and receive payment of and receipt for, any and all moneys, claims and other amounts due or
to become due at any time in respect of or arising out of any Pledged Collateral; (3) sign
and endorse any invoices, freight or express bills, bills of lading, storage or warehouse
receipts, drafts against debtors, assignments, verifications, notices and other documents in
connection with any of the Pledged Collateral; (4) commence and prosecute any suits, actions
or proceedings at law or in equity in any court of competent jurisdiction to collect the
Pledged Collateral or any portion thereof and to enforce any other right in respect of any
Pledged Collateral; (5) defend any suit, action or proceeding brought against such Grantor
with respect to any Pledged Collateral; (6) settle, compromise or adjust any such suit,
action or proceeding and, in connection therewith, give such discharges or releases as the
Collateral Agent may deem appropriate; (7) assign any Copyright, Patent or Trademark (along
with the goodwill of the business to which any such Copyright, Patent or Trademark
pertains), throughout the world for such term or terms, on such conditions, and in such
manner, as the Collateral Agent shall in its sole discretion determine; and (8) generally,
sell, transfer, pledge and make any agreement with respect to or otherwise deal with any of
the Pledged Collateral as fully and completely as though the Collateral Agent were the
absolute owner thereof for all purposes, and do, at the Collateral Agent’s option and such
Grantor’s expense, at any time, or from time to time, all acts and things which the
Collateral Agent deems necessary to protect, preserve or realize upon the Pledged Collateral
and the Secured Parties’ security interests therein and to effect the intent of this
Agreement, all as fully and effectively as such Grantor might do.



          Anything in this Section 7.1(a) to the contrary notwithstanding, the Collateral Agent agrees
that, except as provided in Section 7.1(b), it will not exercise any rights under the power of
attorney provided for in this Section 7.1(a) unless an Event of Default shall have occurred and be
continuing.




          (b) If any Grantor fails to perform or comply with any of its agreements contained herein, the
Collateral Agent, at its option, but without any obligation so to do, may perform or comply, or
otherwise cause performance or compliance, with such agreement; provided, however,
that unless and Event of Default has occurred and is continuing or time is of



E-41









 








Exhibit E



the essence, the Collateral Agent shall not exercise this power without first making demand on
the Grantor and the Grantor failing to immediately comply therewith.




          (c) The expenses of the Collateral Agent incurred in connection with actions undertaken as
provided in this Section 7.1, together with interest thereon at a rate per annum equal to the rate
per annum at which interest would then be payable on past due Revolving Loans that are ABR Loans
under the Credit Agreement, from the date of payment by the Collateral Agent to the date reimbursed
by the relevant Grantor, shall be payable by such Grantor to the Collateral Agent on demand.




          (d) Each Grantor hereby ratifies all that said attorneys shall lawfully do or cause to be done
by virtue hereof. All powers, authorizations and agencies contained in this Agreement are coupled
with an interest and are irrevocable until this Agreement is terminated and the security interests
created hereby are released.




          7.2 Duty of Collateral Agent. The Collateral Agent’s sole duty with respect to the
custody, safekeeping and physical preservation of the Pledged Collateral in its possession, under
Section 9-207 of the New York UCC or otherwise, shall be to deal with it in the same manner as the
Collateral Agent deals with similar property for its own account. Neither the Collateral Agent,
nor any other Secured Party nor any of their respective officers, directors, partners, employees,
agents, attorneys and other advisors, attorneys-in-fact or affiliates shall be liable for failure
to demand, collect or realize upon any of the Pledged Collateral or for any delay in doing so or
shall be under any obligation to sell or otherwise dispose of any Pledged Collateral upon the
request of any Grantor or any other person or to take any other action whatsoever with regard to
the Pledged Collateral or any part thereof. The powers conferred on the Secured Parties hereunder
are solely to protect the Secured Parties’ interests in the Pledged Collateral and shall not impose
any duty upon any Secured Party to exercise any such powers. The Secured Parties shall be
accountable only for amounts that they actually receive as a result of the exercise of such powers,
and neither they nor any of their officers, directors, partners, employees, agents, attorneys and
other advisors, attorneys-in-fact or affiliates shall be responsible to any Grantor for any act or
failure to act hereunder, except to the extent that any such act or failure to act is found by a
final and nonappealable decision of a court of competent jurisdiction to have resulted primarily
from their own gross negligence or willful misconduct in breach of a duty owed to such Grantor.




          7.3 Execution of Financing Statements. Each Grantor acknowledges that pursuant to
Section 9-509(b) of the New York UCC and any other applicable law, each Grantor authorizes the
Collateral Agent to file or record financing or continuation statements, and amendments thereto,
and other filing or recording documents or instruments with respect to the Pledged Collateral,
without the signature of such Grantor, in such form and in such offices as the Collateral Agent
reasonably determines appropriate to perfect or maintain the perfection of the security interests
of the Collateral Agent under this Agreement. Each Grantor agrees that such financing statements
may describe the collateral in the same manner as described in the Security documents or as “all
assets” or “all personal property,” whether now owned or hereafter existing or acquired or such
other description as the Collateral Agent, in its sole judgment, determines is necessary or
advisable. A photographic or other reproduction of this Agreement shall be




E-42









 





Exhibit E



sufficient as a financing statement or other filing or recording document or instrument for
filing or recording in any jurisdiction.




     7.4 Authority of Collateral Agent. Each Grantor acknowledges that the rights and
responsibilities of the Collateral Agent under this Agreement with respect to any action taken by
the Collateral Agent or the exercise or non-exercise by the Collateral Agent of any option, voting
right, request, judgment or other right or remedy provided for herein or resulting or arising out
of this Agreement shall, as between the Collateral Agent and the other Secured Parties, be governed
by the Credit Agreement and by such other agreements with respect thereto as may exist from time to
time among them, but, as between the Collateral Agent and the Grantors, the Collateral Agent shall
be conclusively presumed to be acting as agent for the Secured Parties with full and valid
authority so to act or refrain from acting, and no Grantor shall be under any obligation, or
entitlement, to make any inquiry respecting such authority.



     7.5 Appointment of Co-Collateral Agents. At any time or from time to time, in order
to comply with any applicable requirement of law, the Collateral Agent may appoint another bank or
trust company or one of more other persons, either to act as co-agent or agents on behalf of the
Secured Parties with such power and authority as may be necessary for the effectual operation of
the provisions hereof and which may be specified in the instrument of appointment (which may, in
the discretion of the Collateral Agent, include provisions for indemnification and similar
protections of such co-agent or separate agent).



SECTION 8. MISCELLANEOUS




     8.1 Amendments in Writing. None of the terms or provisions of this Agreement may be
waived, amended, supplemented or otherwise modified except by a written instrument executed by each
affected Grantor and the Collateral Agent, subject to any consents required under Section 9.08 of
the Credit Agreement; provided that any provision of this Agreement imposing obligations on
any Grantor may be waived by the Collateral Agent in a written instrument executed by the
Collateral Agent.



     8.2 Notices. All notices, requests and demands to or upon the Collateral Agent or any
Grantor hereunder shall be effected in the manner provided for in Section 9.01 of the Credit
Agreement; provided that any such notice, request or demand to or upon any Guarantor shall
be addressed to such Guarantor at its notice address set forth on Schedule 8.2.



     8.3 No Waiver by Course of Conduct; Cumulative Remedies. No Secured Party shall by
any act (except by a written instrument pursuant to Section 8.1), delay, indulgence, omission or
otherwise be deemed to have waived any right or remedy hereunder or to have acquiesced in any
Default or Event of Default. No failure to exercise, nor any delay in exercising, on the part of
any Secured Party, any right, power or privilege hereunder shall operate as a waiver thereof. No
single or partial exercise of any right, power or privilege hereunder shall preclude any other or
further exercise thereof or the exercise of any other right, power or privilege. A waiver by any
Secured Party of any right or remedy hereunder on any one occasion shall not be construed as a bar
to any right or remedy which such Secured Party would otherwise have on any future occasion. The
rights and remedies herein provided are cumulative,



E-43









 





Exhibit E



may be exercised singly or concurrently and are not exclusive of any other rights or remedies
provided by law.




     8.4 Enforcement Expenses; Indemnification. (a) Each Grantor agrees to pay or
reimburse each Secured Party for all its costs and expenses incurred in collecting against such
Grantor under the guarantee contained in Section 2 or otherwise enforcing or preserving any rights
under this Agreement and the other Loan Documents to which such Grantor is a party, including the
fees and disbursements of counsel to each Secured Party and of counsel to the Collateral Agent.



     (b) Each Grantor agrees to pay, and to hold the Secured Parties harmless from, any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind or nature whatsoever with respect to, or resulting from any delay in
paying, any and all stamp, excise, sales or other taxes which may be payable or determined to be
payable with respect to any of the Pledged Collateral or in connection with any of the transactions
contemplated by this Agreement.



     (c) Each Grantor agrees to pay, and to hold the Secured Parties harmless from, any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind or nature whatsoever with respect to the execution, delivery,
enforcement, performance and administration of this Agreement to the extent the Borrower would be
required to do so pursuant to Section 9.05 of the Credit Agreement.



     (d) The agreements in this Section shall survive repayment of the Obligations and all other
amounts payable under the Credit Agreement and the other Loan Documents.



     8.5 Successors and Assigns. This Agreement shall be binding upon the successors and
assigns of each Grantor and shall inure to the benefit of the Secured Parties and their successors
and assigns; provided that no Grantor may assign, transfer or delegate any of its rights or
obligations under this Agreement without the prior written consent of the Collateral Agent, and any
attempted assignment without such consent shall be null and void.



     8.6 Set-Off. Each Grantor hereby irrevocably authorizes each Secured Party at any
time and from time to time, while an Event of Default shall have occurred and be continuing,
without notice to such Grantor or any other Grantor, any such notice being expressly waived by each
Grantor, to set-off and appropriate and apply any and all deposits (general or special, time or
demand, provisional or final), in any currency, and any other credits, indebtedness or claims, in
any currency, in each case whether direct or indirect, absolute or contingent, matured or
unmatured, at any time held or owing by such Secured Party to or for the credit or the account of
such Grantor, or any part thereof in such amounts as such Secured Party may elect, against and on
account of the obligations and liabilities of such Grantor to such Secured Party hereunder and
claims of every nature and description of such Secured Party against such Grantor, in any currency,
whether arising hereunder, under the Credit Agreement, any other Loan Document or otherwise, as
such Secured Party may elect, whether or not any Secured Party has made any demand for payment and
although such obligations, liabilities and claims may be contingent or unmatured. Each Secured
Party shall notify such Grantor promptly of any such set-off and the application made by such
Secured Party of the proceeds thereof,



E-44









 





Exhibit E



provided that the failure to give such notice shall not affect the validity of such
set-off and application. The rights of each Secured Party under this Section are in addition to
other rights and remedies (including other rights of set-off) which such Secured Party may have.




     8.7 Counterparts. This Agreement may be executed by one or more of the parties to
this Agreement on any number of separate counterparts (including by facsimile), and all of said
counterparts taken together shall be deemed to constitute one and the same instrument.



     8.8 Severability. Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.



     8.9 Section Headings. The Section headings used in this Agreement are for convenience
of reference only and are not to affect the construction hereof or be taken into consideration in
the interpretation hereof.



     8.10 Integration. This Agreement and the other Loan Documents represent the agreement
of the Grantors, the Collateral Agent and the other Secured Parties with respect to the subject
matter hereof and thereof, and there are no promises, undertakings, representations or warranties
by any Secured Party relative to subject matter hereof and thereof not expressly set forth or
referred to herein or in the other Loan Documents.



     8.11 APPLICABLE LAW. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND
GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.



     8.12 Submission to Jurisdiction; Waivers. Each Grantor hereby irrevocably and
unconditionally:



     (a) submits for itself and its property in any legal action or proceeding relating to this
Agreement and the other Loan Documents to which it is a party, or for recognition and enforcement
of any judgment in respect thereof, to the non-exclusive general jurisdiction of the Courts of the
State of New York, the courts of the United States of America for the Southern District of New
York, and appellate courts from any thereof;



     (b) consents that any such action or proceeding may be brought in such courts and waives any
objection that it may now or hereafter have to the venue of any such action or proceeding in any
such court or that such action or proceeding was brought in an inconvenient court and agrees not to
plead or claim the same;



     (c) agrees that service of process in any such action or proceeding may be effected by mailing
a copy thereof by registered or certified mail (or any substantially similar form of mail), postage
prepaid, to such Grantor at its address referred to in Section 8.2 or at such other address of
which the Collateral Agent shall have been notified pursuant thereto;



E-45









 





Exhibit E




     (d) agrees that nothing herein shall affect the right to effect service of process in any
other manner permitted by law or shall limit the right to sue in any other jurisdiction; and



     (e) waives, to the maximum extent not prohibited by law, any right it may have to claim or
recover in any legal action or proceeding referred to in this Section any special, exemplary,
punitive or consequential damages.



     8.13 Acknowledgments. Each Grantor hereby acknowledges that:



     (a) it has been advised by counsel in the negotiation, execution and delivery of this
Agreement and the other Loan Documents to which it is a party;



     (b) no Secured Party has any fiduciary relationship with or duty to any Grantor arising out of
or in connection with this Agreement or any of the other Loan Documents, and the relationship
between the Grantors, on the one hand, and the Secured Parties, on the other hand, in connection
herewith or therewith is solely that of debtor and creditor; and



     (c) no joint venture is created hereby or by the other Loan Documents or otherwise exists by
virtue of the transactions contemplated hereby among the Secured Parties or among the Grantors and
the Secured Parties.



     8.14 Additional Grantors. Each Subsidiary of the Borrower that is required to become
a party to this Agreement pursuant to Section 5.09 of the Credit Agreement shall become a Grantor
for all purposes of this Agreement upon execution and delivery by such Subsidiary of an Assumption
Agreement in the form of Annex 1 hereto.



     8.15 Releases. (a) At such time as the Loans and the other Obligations (other than
Obligations in respect of any Specified Hedge Agreement) shall have been paid in full, the
commitments under the Credit Agreement have been terminated or expired and no letter of credit
issued under the Credit Agreement shall be outstanding, the Pledged Collateral shall be released
from the Liens created hereby, and this Agreement and all obligations (other than those expressly
stated to survive such termination) of the Collateral Agent and each Grantor hereunder shall
terminate, all without delivery of any instrument or performance of any act by any party, and all
rights to the Pledged Collateral shall revert to the Grantors. At the request and sole expense of
any Grantor following any such termination, the Collateral Agent shall deliver to such Grantor any
Pledged Collateral held by the Collateral Agent hereunder, and execute and deliver to such Grantor
such documents as such Grantor shall reasonably request to evidence such termination.



     (b) If any of the Pledged Collateral shall be sold or otherwise disposed of by any Grantor in
a transaction permitted by the Credit Agreement, then the Collateral Agent, at the request and sole
expense of such Grantor, shall execute and deliver to such Grantor all releases or other documents
reasonably necessary or desirable for the release of the Liens created hereby on such Pledged
Collateral. At the request and sole expense of the Borrower, a Guarantor shall be released from
its obligations hereunder in the event that all the Equity Interests in such Guarantor shall be
sold or otherwise disposed of in a transaction permitted by the Credit Agreement; provided
that the Borrower shall have delivered to the Collateral Agent, at least ten Business Days prior to
the date of the proposed release, a written request for such release identifying the relevant
Guarantor and the terms of the relevant sale or other disposition in



E-46









 





Exhibit E



reasonable detail, including the price thereof and any expenses incurred in connection
therewith, together with a certification by the Borrower stating that such transaction is in
compliance with the Credit Agreement and the other Loan Documents.




     (b) Each Grantor acknowledges that it is not authorized to file any financing statement or
amendment or termination statement with respect to any financing statement originally filed in
connection herewith without the prior written consent of the Collateral Agent, subject to such
Grantor’s rights under Section 9-509(d)(2) of the New York UCC.



     8.16 WAIVER OF JURY TRIAL. EACH GRANTOR AND THE COLLATERAL AGENT HEREBY IRREVOCABLY
AND UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.



E-47









 





Exhibit E




     IN WITNESS WHEREOF, each of the undersigned has caused this Guarantee and Collateral Agreement
to be duly executed and delivered as of the date first above written.


[INSERT GRANTORS]



By:                                        



Name:



Title:




E-48









 





Exhibit E



CREDIT SUISSE, CAYMAN ISLANDS BRANCH,



as Administrative Agent and Collateral Agent



By:                                                            

Name:

Title:



By:                                                            

Name:

Title:





E-49









 








Exhibit F




[INSERT LENDER NAME]




LENDER ADDENDUM




     Reference is made to the Credit Agreement dated as of January 31, 2007 the “Credit
Agreement”), among Affirmative Insurance Holdings, Inc., the Borrower, the Lenders from time to
time party thereto, Credit Suisse, Cayman Islands Branch, as administrative agent (in such
capacity, the “Administrative Agent”) and as collateral agent (in such capacity, the
“Collateral Agent”), and the other parties thereto. Terms used herein and not otherwise
defined herein shall have the meanings assigned to such terms in the Credit Agreement.



     Upon execution and delivery of this Lender Addendum by the parties hereto as provided in
Section 9.17 of the Credit Agreement, the undersigned hereby becomes a Lender thereunder having the
Commitments set forth in Schedule 1 hereto, effective as of the Closing Date.



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



     This Lender Addendum may be executed by one or more of the parties hereto on any number of
separate counterparts, and all of said counterparts taken together shall be deemed to constitute
one and the same instrument. Delivery of an executed signature page hereof by facsimile
transmission shall be effective as delivery of a manually executed counterpart hereof.



[Remainder of page intentionally left blank]




F-1









 





     IN WITNESS WHEREOF, the parties hereto have caused this Lender Addendum to be duly executed
and delivered by their proper and duly authorized officers as of this ǵ Ƿ day of ǵ Ƿ,
200ǹǹǹ.


                                                            

Name of Lender



By:

   Name:

   Title:




F-2









 





Accepted and agreed:




AFFIRMATIVE INSURANCE HOLDINGS, INC.,




By:                                        

      Name:

      Title:




CREDIT SUISSE, CAYMAN ISLANDS BRANCH

as Administrative Agent,




By:                                        

      Name:

      Title:





F-3









 








Schedule 1 to

Lender Addendum




COMMITMENTS AND NOTICE ADDRESS





	1.	 	Name of Lender:

Notice Address:
	 
	 	 	Attention:

Telephone:

Facsimile:
	 
	2.	 	Revolving Credit Commitment:






F-4









 








EXHIBIT G — FORM OF MARTGAGE




PREPARED BY, AND WHEN

RECORDED RETURN TO:




Latham & Watkins LLP

633 W. Fifth Street, Suite 4000

Los Angeles, California 90071

Attn: Kim N. A. Boras, Esq.



 



(above for recorder’s use only)




Mortgage




 









 





EXHIBIT G — FORM OF MARTGAGE




	 	 	 	 	 
	FEE AND LEASEHOLD MORTGAGE,

	 	*
	 	UNITED STATES OF AMERICA
	SECURITY AGREEMENT, ASSIGNMENT OF RENTS AND

	 	*	 	 
	LEASES AND FIXTURE FILING (this “Mortgage”)

	 	*
	 	STATE OF TEXAS
	 

	 	*	 	 
	 

	 	*	 	 
	BY

	 	*
	 	PARISH/COUNTY OF DALLAS
	 

	 	*	 	 
	 

	 	*	 	 
	USAGENGIES, L.L.C.

	 	*

*	 	 
	 

	 	*	 	 
	IN FAVOR OF

	 	*	 	 
	 

	 	*	 	 
	 

	 	*	 	 
	CREDIT SUISSE, CAYMAN ISLANDS BRANCH

	 	*
	 	COUNTY
	 

	 	*	 	 
	 

	 	*	 	 
	* * * * * * * * * * * * * * * * * * * * * *
	 	 	 	 






     BE IT KNOWN, that on the date set forth below, before me the undersigned Notary Public, duly
commissioned and qualified, and in the presence of the undersigned competent witnesses, personally
came and appeared:




     USAGENCIES, L.L.C., a Louisiana limited liability company (last four digits of
Taxpayer Identification Number 2445 and Organizational No. 35192344K), whose
address is 8550 United Plaza Boulevard, Suite 805, Baton Rouge, Louisiana 70809,
represented herein by Mark E. Pape, its Executive Vice President, duly authorized by
written consent of the holders of a majority of the Units of said limited liability
company certified by a manager of the limited liability company which certified
unanimous written consent is attached hereto as Exhibit A (hereinafter
referred to as “Mortgagor”)




who declared as follows:



     This Mortgage is made and entered into as of January 31, 2007, by Mortgagor, in favor of
CREDIT SUISSE, CAYMAN ISLANDS BRANCH whose address is Eleven Madison Avenue, New York, NY 10010, as
the Collateral Agent (“Mortgagee”).



RECITALS




     A. Mortgagor is a subsidiary of Affirmative Insurance Holdings, Inc., a Delaware corporation
(“Borrower”). Borrower is a party to that certain Credit Agreement, dated as of the date
hereof (as may be amended, supplemented, extended, restated or otherwise modified from time to
time, the “Credit Agreement”), among Borrower, Mortgagee as the Administrative Agent and
Collateral Agent, each Lender from time to time a party thereto (collectively, the
“Lenders”), and the other parties thereto. Unless otherwise defined, capitalized terms are
used in this Mortgage as they are defined in the Credit Agreement.



Mortgage




1









 





     B. Pursuant to the terms of the Credit Agreement, the Lenders have made loans available to
Borrower in the aggregate principal amount of $220,000,000.



     C. Mortgagor is the 100% fee simple owner of Parcels A through E and G of certain real
property more particularly described on Exhibit B attached hereto (all of the real property
described on Exhibit B being hereinafter referred to as the “Property”). Pursuant
to that certain Lease of Air Space dated May 28, 1986 from the City of Baton Rouge and the Parish
of East Baton Rouge to Goudchaux/Maison Blanche, Inc., which was recorded as Original 858, Bundle
9837 of the records of the East Baton Rouge Parish Clerk of Court (the “Clerk’s Records”), as
assigned to Renaissance Park, LLC pursuant to a certain Assignment and Assumption of Air Space
Leases dated September 20, 2004 and recorded as Original 797, Bundle 11655 of the Clerk’s Records,
and as further assigned to Mortgagor pursuant to a certain Assignment and Assumption of City/Parish
Air Space Lease dated November 10, 2005 and recorded as Original 440, Bundle 11784 of the Clerk’s
Records (as it has heretofore been assigned and may heretofore have been or hereafter be amended,
supplemented, extended, restated or otherwise modified from time to time, the “Subject Lease”),
Mortgagor holds leasehold title in and to Parcel F of the Property (the “Leased Property”).



     D. The Credit Agreement requires that the obligations of Borrower under the Credit Agreement
and the other Loan Documents be secured by liens and security interests covering, among other
things, Mortgagor’s interest in the Property and the Subject Lease. In connection therewith,
Mortgagor is executing and delivering this Mortgage in accordance with the Credit Agreement.



AGREEMENT




     NOW, THEREFORE, in consideration of the foregoing premises and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, Mortgagor hereby
agrees as follows:



     All of the following property constitutes and is collectively called herein the
“Collateral”:



     All of MORTGAGOR’S RIGHT, TITLE AND INTEREST in the Property, including the leasehold estate
in the Leased Property created by the Subject Lease, whether now owned or hereafter acquired;



     TOGETHER WITH any greater or additional estate in the Leased Property as hereafter may be
acquired by Mortgagor;



     TOGETHER WITH all right, title and interest of Mortgagor in and to the following, whether now
owned or hereafter acquired: (a) all improvements (including, without limitation, all
infrastructure improvements and public improvements) now or hereafter attached to or placed,
erected, constructed or developed on the Property or otherwise affixed thereto in such manner that
such items are not deemed to be personal property under the laws of the State of Louisiana
(collectively, the “Improvements”); (b) any and all fixtures, furnishings, equipment,
machinery, furniture, and other items of tangible personal property now or hereafter located on the
Property or in the Improvements or used in connection with the development, construction,



Mortgage




2









 





use, occupancy, operation and maintenance of all or any part of the Property or the
Improvements, including construction equipment, machinery, signs, artwork, furnishings, specialized
fixtures, furnishings and equipment relating to Mortgagor’s ownership, operation and/or development
of the Property, and all renewals of or replacements or substitutions for any of the foregoing,
whether or not the same are or shall be attached to the Property or Improvements (the
“FF&E” and together with the Property, and Improvements, the “Project”); (c) all
water and water rights, timber, crops, and mineral interests pertaining to the Property; (d) all
building materials and equipment now or hereafter delivered to and intended to be installed in or
on the Property or the Improvements; and all plans and specifications for the Improvements; (e) any
contracts relating to the Property, the Improvements or the FF&E (including all construction
related agreements, license agreements, service agreements, maintenance agreements, management
agreements and other agreements relating to the development of the Property); (f) all deposits,
bank accounts, financial assets, funds, instruments, investment property, notes or chattel paper
arising from or by virtue of any transactions related to the Property, the Improvements or the
FF&E; (g) to the extent assignable, all community facilities districts or any similar public
financing vehicles which related to the Property or the Improvements (or future Improvements) and
any reimbursement rights of Mortgagor relating thereto; (h) to the extent assignable, any
documents, contract rights, accounts, commitments, construction contracts, architectural
agreements, and general intangibles (including trademarks, trade names and symbols) arising from or
by virtue of any transactions related to the Property, the Improvements or FF&E; (i) to the extent
assignable, all permits, approvals (including, without limitation, approved preliminary and final
subdivision plats), licenses, franchises, certificates and all other rights, privileges and
entitlements (“Permits”) obtained now or in the future in connection with the Property, the
Improvements and the FF&E; (j) all proceeds arising from or by virtue of the sale, lease or other
disposition of the Property, the Improvements or the FF&E; (k) all proceeds (including premium
refunds) of each policy of insurance relating to the Property, the Improvements or the FF&E; (l)
all proceeds from the taking or condemnation of any of the Property, the Improvements, the FF&E or
any rights appurtenant thereto by right of eminent domain or by private or other purchase in lieu
thereof, including change of grade of streets, curb cuts or other rights of access, for any public
or quasi-public use under any law; (m) all streets, roads, public places, servitudes, easements and
rights-of-way, existing or proposed, public or private, adjacent to or used in connection with,
belonging or pertaining to the Property; (n) all of the leases, rents, royalties, bonuses, issues,
profits, revenues or other benefits of the Property, the Improvements or the FF&E, including cash
or securities deposited pursuant to leases to secure performance by the lessees of their
obligations thereunder; (o) all fees, charges, accounts and/or other payments for the use or
occupancy of any portion of the Improvements; (p) all rights, hereditaments and appurtenances
pertaining to the foregoing; (q) all patents, trademarks, tradenames, copyrights and other
intellectual property rights and privileges obtained or hereafter acquired in connection with the
Property, the Improvements and the FF&E and, with respect to trademark and service mark
applications that are so called “intent-to-use” applications, together with the entire business or
portion thereof to which such applications pertain as required by 15 U.S.C. Section 1060; (r)
all assignments, modifications, extensions and renewals of the Subject Lease and all credits,
deposits, options, privileges and rights of Mortgagor under the Subject Lease, including, but not
limited to, rights of first refusal, if any, and the right, if any, to renew or extend the Subject
Lease for a succeeding term or terms; and (s) other interests of every kind and character that
Mortgagor now has or at any time hereafter acquires in and to the




Mortgage




3









 




Property, Improvements, and FF&E described herein and in and to all other real property,
personal property and other property that is used or useful in connection therewith, including
rights of ingress and egress and all reversionary rights or interests of Mortgagor with respect to
such property.




     With respect to the proceeds referred to in Sections (j), (k) and (l) above (collectively, the
“Proceeds”), this Mortgage is a collateral assignment thereof pursuant to Louisiana Revised
Statutes § 9:5386 et seq., whether such Proceeds or any of them now exist or arise in the
future, and Mortgagor does hereby irrevocably make, constitute, and appoint Mortgagee and the
agents of Mortgagee as the true and lawful mandataries and attorneys-in-fact of Mortgagor to carry
out and enforce all of Mortgagor’s rights, title, and interest in and to any or all of the Proceeds
hereby collaterally assigned. The collateral assignment herein made of the Proceeds shall not be
construed as imposing upon Mortgagee any obligations with respect thereto unless and until
Mortgagee shall become the absolute owner thereof and Mortgagor shall have been wholly dispossessed
thereof.



     Notwithstanding anything herein to the contrary, in no event shall the security interest
granted hereunder attach to (i) any lease, license, contract right, property right or agreement to
which Mortgagor is a party or any of its rights or interests thereunder if and for so long as the
grant of such security interest shall constitute or result in (A) the abandonment, invalidation or
unenforceability of any right, title or interest of Mortgagor therein or (B) in a breach or
termination pursuant to the terms of, or a default under, any such lease, license, contract,
property rights or agreement (other than to the extent that any such term would be rendered
ineffective pursuant to Sections 9-406, 9-407, 9-408 or 9-409 of the UCC (or any successor
provision or provisions) of any relevant jurisdiction or any other Applicable Law or principles of
equity); provided, however, that such security interest shall attach immediately at such time as
the condition causing such abandonment, invalidation, unenforceability, breach, termination, other
restriction or assignment shall be remedied and, to the extent severable, shall attach immediately
to any portion of such lease, license, contract, property rights or agreement that does not result
in any of the consequences specified in (A) or (B) of this clause (i) including any proceeds of
such lease, license, contract, property rights or agreement; or (ii) any Permit, if and for so long
as the grant of such security interest shall constitute or result in (A) the abandonment,
invalidation or unenforceability of any right, title or interest of Mortgagor therein, (B) a
violation of, or termination pursuant to, the terms of such Permit, or (C) a violation of any
applicable law; provided, however, that such security interest shall attach immediately at such
time as the condition causing such abandonment, invalidation, unenforceability, violation,
termination, other restriction or assignment shall be remedied and, to the extent severable, shall
attach immediately to any portion of such Permit that does not result in any of the consequences
specified in (A) or (B) of this clause (ii).



     Mortgagor, in order to secure the Secured Obligations (as defined below) up to the Maximum
Amount (as defined below), does hereby:



     E. Mortgage and collaterally assign and grant a security interest in, and confirm unto
Mortgagee, WITH POWER OF SALE, all of Mortgagor’s right, title and interest in and to the
Collateral that constitutes immovable property under the laws of the State of Louisiana (the
“RP 



Mortgage




4









 




Collateral”), TO HAVE AND TO HOLD the RP Collateral, together with the rights,
privileges and appurtenances thereto belonging, unto Mortgagee and its substitutes or successors,
forever to satisfy payment of the indebtedness as hereinafter set forth.




     F. Grant a security interest to Mortgagee in those portions of the Collateral that either are
fixtures or are not RP Collateral under the laws of the State of Louisiana, including the UCC
Collateral (as defined in Article 3 below), but subject to the rights of Mortgagee under
the assignment made in the immediately following paragraph; and



     G. Absolutely and unconditionally assign and transfer to Mortgagee all of the Leases and the
Rents (each as defined in Article 2 below) and other benefits derived from the Leases,
whether now existing or hereafter created, all subject to the terms and conditions of the revocable
license in favor of Mortgagor granted in Article 2 below:



     IN FURTHERANCE OF THE FOREGOING GRANTS (INCLUDING GRANTS OF SECURITY INTERESTS), ASSIGNMENTS
AND MORTGAGES, AND TO PROTECT THE COLLATERAL AND THE SECURITY GRANTED BY THIS MORTGAGE, MORTGAGOR
HEREBY WARRANTS, REPRESENTS, COVENANTS AND AGREES AS FOLLOWS:



ARTICLE 1




SECURED OBLIGATIONS





          1.1 Credit Agreement. This Mortgage is given for the purpose of securing the
total principal indebtedness of Two Hundred Twenty Million Dollars ($220,000,000) and other
obligations of every type and nature of Borrower and Mortgagor, up to the Maximum Amount
under (i) the Credit Agreement (including the “Obligations” as such term is defined in the
Credit Agreement), (ii) this Mortgage, including, but not limited to, the payment by the
Mortgagor to the Mortgagee of all sums expended or advanced by the Mortgagee pursuant to the
provisions of this Mortgage, and (iii) the other Loan Documents (all such indebtedness and
obligations collectively, for purposes of this Mortgage, the “Secured Obligations”).
Mortgagor shall pay and perform the Secured Obligations at the times and places and in the
manner specified in the Credit Agreement, any Hedge Agreements, this Mortgage and the other
Loan Documents, in each case subject to any applicable grace or cure periods.




          1.2 Term of Mortgage. This Mortgage shall be effective for the period from the
date of this Mortgage through the date upon which all Secured Obligations have been paid or
performed in full (as the case may be) (other than indemnity obligations that survive the
termination of the Loan Documents and the Hedge Agreements). Upon the payment and
performance in full of the Secured Obligations, Mortgagee shall promptly execute a full
satisfaction of this Mortgage in the form appropriate for recording and deliver such
satisfaction to Mortgagor.




          1.3 Maximum Amount. The maximum amount of the Secured Obligations that may be
outstanding at any time and from time to time that this Mortgage secures, including, without
limitation, as a mortgage, as an assignment of leases and rents and as a



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security agreement shall be Four Hundred Forty Million Dollars ($440,000,000) (the
“Maximum Amount”).




ARTICLE 2




ASSIGNMENT OF RENTS AND LEASES




     2.1 Assignment of Rents, Profits, etc. As further security for the Secured
Obligations, all of Mortgagor’s right, title and interest in the rents, royalties, bonuses,
issues, profits, revenue and income derived from the Collateral or arising from the use or
enjoyment of any portion thereof or from any lease or agreement pertaining thereto, and
liquidated damages following default under such leases, and all proceeds payable under any
policy of insurance covering loss of rents resulting from untenantability caused by damage
to any part of the Collateral, together with any and all rights that Mortgagor may have
against any tenant under such leases or any subtenants or occupants of any part of the
Collateral (hereinafter called the “Rents”), are hereby absolutely and unconditionally
assigned to Mortgagee, to be applied by Mortgagee in payment of the Secured Obligations.
Notwithstanding anything to the contrary contained herein, the assignment of Rents, as
described in this Section 2.1, is, and is intended to be, an assignment made in accordance
with and to the fullest extent permitted by La. R.S. §9:4401.



     2.2 Assignment of Leases. As further security for the Secured Obligations,
Mortgagor hereby assigns to Mortgagee all of Mortgagor’s right, title and interest as lessor
in and to all existing and future leases respecting the Property or Improvements, including
subleases thereof, and any and all extensions, renewals, modifications and replacements
thereof, upon any part of the Collateral (the “Leases”). Mortgagor hereby further assigns
to Mortgagee all guaranties of tenants’ performance under the Leases. Notwithstanding
anything to the contrary contained herein, the assignment of Leases, as described in this
Section 2.2, is, and is intended to be, an assignment made in accordance with and to the
fullest extent permitted by La. R.S. §9:4401.



     2.3 License. Notwithstanding the foregoing provisions and subject to the terms
of the Credit Agreement, so long as no Event of Default shall exist and be continuing
hereunder, Mortgagor shall have the right and license to collect, use and enjoy the Rents
and other sums payable under and by virtue of any Lease, and Mortgagor shall have the right
to enforce the covenants of such Leases and other agreements and arrangements, and the right
to enter into, modify and terminate such Leases and other agreements and arrangements in
good faith (subject to the terms of the Credit Agreement). Upon the occurrence of an Event
of Default and during the continuance thereof, such license in favor of Mortgagor shall
automatically and immediately terminate upon notice to Mortgagor, and Mortgagee shall be
entitled thereupon to receive and collect the Rents personally or through an agent or a
receiver so long as any such Event of Default shall exist and during pendency of any
foreclosure proceedings.



     2.4 Representations and Warranties Concerning Leases and Rents. Mortgagor
represents and warrants that:



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               (a) Mortgagor has good and marketable title to the Leases and Rents hereby assigned (except
for such defects in such rights that would not reasonably be expected, alone or in the aggregate,
to have a Material Adverse Effect) and authority to assign them, and no other person or entity has
any right, title or interest therein (other than Permitted Encumbrances);



               (b) the Leases are subordinate to this Mortgage in all respects; and



               (c) no Rents have been or will be assigned, mortgaged or pledged, except to the extent
permitted by the terms of the Credit Agreement.




2.5 Mortgagor’s Covenants of Performance. In addition to the obligations which
Mortgagor has with respect to Leases under the Credit Agreement, Mortgagor covenants and
agrees to:



               (a) defend, at Mortgagor’s expense, any proceeding, legal or otherwise, pertaining to the
Leases, including, if Mortgagee so requests, any such proceeding to which Mortgagee is a party;



               (b) neither create nor permit any encumbrance upon its interest as lessor of the Leases,
except this Mortgage and any other encumbrances permitted by this Mortgage or the Credit Agreement;
and



               (c) cause all Leases hereafter entered into by Mortgagor to expressly provide that if
Mortgagee forecloses under this Mortgage, then the tenant shall attorn to Mortgagee or its assignee
and the Lease will remain in full force and effect in accordance with its terms notwithstanding
such foreclosure.




2.6 Representations and Warranties and Covenants Concerning the Subject Lease.
Mortgagor represents, warrants and covenants that:



               (a) the Subject Lease is unmodified and in full force and effect;



               (b) all rent and other charges in the Subject Lease have been paid to the extent they are
payable to the date hereof;



               (c) Mortgagor enjoys the quiet and peaceful possession of the Leased Property;



               (d) Mortgagor is not in default under any of the terms of the Subject Lease and there are no
circumstances which, with the passage of time or the giving of notice or both, would constitute an
event of default thereunder;



               (e) the lessor under the Subject Lease is not in default under any of the terms or provisions
thereof on the part of the lessor to be observed or performed;



               (f) Mortgagor shall promptly pay, when due and payable, the rent and other charges payable
pursuant to the Subject Lease, and will timely perform and observe all of



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the other terms, covenants and conditions required to be performed and observed by Mortgagor
as lessee under the Subject Lease and shall do all things necessary to preserve and to keep
unimpaired its rights thereunder;




          (g) Mortgagor shall, immediately following the receipt thereof, deliver a copy of any notice
of default, notice claiming a default or notice of lessor’s intention to exercise any remedy
reserved to lessor under the Subject Lease given to Mortgagor by the lessor pursuant to the Subject
Lease and promptly notify Mortgagee in writing of any default by the lessor in the performance or
observance of any of the terms, covenants or conditions on the part of the lessor to be performed
or observed thereunder;




          (h) Mortgagor shall not, without the prior written consent of Mortgagee (which may be granted
or withheld in Mortgagee’s reasonable discretion) (i) terminate or surrender the Subject Lease
other than at its stated termination date or (ii) enter into any modification of the Subject Lease
which materially impairs the practical realization of the security interest granted by this
Mortgage, and any such attempted termination, modification or surrender without Mortgagee’s written
consent shall be void.




          (i) Mortgagor shall, within thirty (30) days after written request from Mortgagee, use
reasonable efforts to obtain from the lessor and deliver to Mortgagee a certificate setting forth
the name of the tenant under the Subject Lease and stating that the Subject Lease is in full force
and effect, is unmodified or, if the Subject Lease has been modified, the date of each modification
(together with copies of each such modification), that no notice of termination thereon has been
served on Mortgagor, stating that to the best of lessor’s knowledge, no default or event which with
notice or lapse of time (or both) would become a default is existing under the Subject Lease,
stating the date to which rent has been paid, and specifying the nature of any defaults, if any,
and containing such other statements and representations as may be reasonably requested by
Mortgagee.




          (j) So long as any of the Secured Obligations remain unpaid or unperformed, the fee title to
and the leasehold estate in the Leased Property shall not merge but shall always be kept separate
and distinct notwithstanding the union of such estates in the lessor or Mortgagor, or in a third
party, by purchase or otherwise;




          (k) If Mortgagor acquires the fee title or any other estate, title or interest in the property
demised by the Subject Lease, or any part thereof, the lien of this Mortgage shall attach to, cover
and be a lien upon such acquired estate, title or interest and the same shall thereupon be and
become a part of the Collateral with the same force and effect as if specifically encumbered
herein. Mortgagor agrees to execute all instruments and documents that Mortgagee may reasonably
require to ratify, confirm and further evidence the lien of this Mortgage on the acquired estate,
title or interest. Furthermore, Mortgagor hereby appoints Mortgagee as its true and lawful
attorneyinfact to execute and deliver, following an Event of Default and during the continuance
thereof, all such instruments and documents in the name and on behalf of Mortgagor. This power,
being coupled with an interest, shall be irrevocable as long as any portion of the Indebtedness
remains unpaid; and




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                         (l) If the Subject Lease shall be terminated prior to the natural expiration of its term due
to default by Mortgagor, and if, pursuant to the provisions of the Subject Lease, Mortgagee or its
designee shall acquire from the lessor a new lease of the premises subject to the Subject Lease,
Mortgagor shall have no right, title or interest in or to such new lease or the leasehold estate
created thereby, or renewal privileges therein contained.




          2.7 Mortgagee in Possession. Mortgagee’s acceptance of this assignment shall
not, prior to entry upon and taking possession of the Collateral by Mortgagee, be deemed to
constitute Mortgagee a “mortgagee in possession,” nor obligate Mortgagee to appear in or
defend any proceeding relating to any of the Leases or to the Collateral, take any action
hereunder, expend any money, incur any expenses, or perform any obligation or liability
under the Leases, or assume any obligation for any deposits delivered to Mortgagor by any
lessee and not delivered to Mortgagee. Mortgagee shall not be liable for any injury or
damage to person or property in or about the Collateral unless caused by the gross
negligence or intentional misconduct of Mortgagee. Notwithstanding anything to the contrary
contained herein, Mortgagee shall have no liability or obligation under the Subject Lease by
reason of its acceptance of this Mortgage. Mortgagee shall be liable for the obligations of
the tenant arising out of any Subject Lease for only that period of time for which Mortgagee
is in possession of the premises demised thereunder or has acquired, by foreclosure or
otherwise, and is holding all of Mortgagor’s right, title and interest therein.




          2.8 Indemnification. Mortgagor hereby indemnifies, agrees to defend, and hold
Mortgagee, all agents for the Lenders, the Lenders, and any persons or entities owned or
controlled by, owning or controlling, or under common control or affiliated with, Mortgagee,
the directors, officers, partners, employees, attorneys, agents and representatives of each
of the foregoing persons and entities, and the heirs, personal representatives, successors
and assignees of each of the foregoing persons and entities (collectively, the “Indemnified
Parties”) harmless from all liability, damage or expense imposed on or incurred by the
Indemnified Parties from any claims under the Leases, including any claims by Mortgagor with
respect to payments of Rents made directly to Mortgagee during the continuation of an Event
of Default and claims by tenants for security deposits or for rental payments more than one
(1) month in advance and not delivered to Mortgagee, but excluding any liability, loss or
damage which may be incurred by the Indemnified Parties by reason of the Indemnified
Parties’ gross negligence or willful misconduct.




          2.9 Records. If requested by Mortgagee, Mortgagor shall deliver to Mortgagee a
copy of the executed originals of all Leases and, after an Event of Default, executed
originals thereof in Mortgagor’s possession or control.




          2.10 Right to Rely. Mortgagor hereby authorizes and directs the tenants under
the Leases to pay Rents to Mortgagee upon written demand by Mortgagee provided such demand
shall be given only if an Event of Default exists and is continuing, without further consent
of Mortgagor, and the tenants may rely upon any such written statement delivered by
Mortgagee to the tenants (including with respect to the existence and



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continuation of an Event of Default). Any such payment to Mortgagee shall constitute
payment to Mortgagor under the applicable Leases.




ARTICLE 3




SECURITY AGREEMENT AND FINANCING STATEMENT




     3.1 Security Interest and Financing Statement. This Mortgage shall also be a
security agreement between Mortgagor and Mortgagee and a financing statement covering the
Collateral constituting personal property or fixtures (hereinafter collectively called “UCC
Collateral”) governed by the Uniform Commercial Code as adopted by the State of New York
(hereinafter called the “Code”) as the same may be more specifically set forth in any
financing statements delivered in connection with this Mortgage, and as further security for
the payment and performance of the Secured Obligations, Mortgagor hereby grants to Mortgagee
a security interest in such portion of the Collateral. In addition to Mortgagee’s other
rights hereunder, Mortgagee shall have all rights of a secured party under the Code.
Mortgagor shall bear all costs of filing financing statements, continuation and change
statements, including all Code searches. If Mortgagee should dispose of any of the
Collateral comprising the UCC Collateral pursuant to the Code after the occurrence and
during the continuation of an Event of Default, ten (10) days’ prior written notice by
Mortgagee to Mortgagor shall be deemed to be reasonable notice; provided, however, Mortgagee
may dispose of such property in accordance with the foreclosure procedures of this Mortgage
in lieu of proceeding under the Code. Mortgagee may from time to time file financing
statements (without the separate authorization or signature of Mortgagor) and may execute
and deliver all continuation statements, termination statements, amendments, partial
releases, or other instruments relating to all financing statements by and between Mortgagor
and Mortgagee.



     3.2 Notice of Changes. Mortgagor shall not, voluntarily or involuntarily,
change its name, identity or legal structure, unless Mortgagor shall have given to Mortgagee
prior written notice of any such proposed change and shall have delivered to Mortgagee,
prior to or concurrently with the occurrence of any such change, all additional financing
statements or other documents that may be required to perfect, protect and preserve
Mortgagee’s security interest with respect to any Collateral described or referred to
herein, all in form and substance reasonably satisfactory to Mortgagee.



     3.3 Fixtures. The Property is specifically described on Exhibit B attached
hereto. Some of the items of the Collateral described herein constitute property that is or
will become fixtures related to the Property, and it is intended that, as to those items,
this Mortgage shall be effective as a financing statement filed as a fixture filing from the
date of its filing for record in the real estate records where this Mortgage is recorded.
For this purpose, the following information is set forth:


Name and address of Mortgagor:




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USAgencies, L.L.C.

8550 United Plaza Boulevard, Suite 805

Baton Rouge, Louisiana 70809

Attn: Mark E. Pape

Facsimile: (972) 728-6491




     Name and address of Mortgagee:


Credit Suisse, Cayman Islands Branch

Eleven Madison Avenue

New York, New York 10010

Attn: Julia Kingsbury

Facsimile: (212) 325-8304




     The record owner of the fee interest in the Property (other than the Leasehold Property), and
the record owner of the leasehold interest in the Leasehold Property, is the Mortgagor.



ARTICLE 4




MORTGAGOR AND AGREEMENTS OF MORTGAGOR




     Mortgagor does hereby covenant and agree for the benefit of Mortgagee, and as expressly
specified, Mortgagor does hereby warrant and represent and covenant to Mortgagee as of the date of
recording this Mortgage as follows:




          4.1 Payment and Performance. Mortgagor shall make all payments on the Secured
Obligations when due and shall punctually and properly perform all of Mortgagor’s covenants,
obligations and liabilities under the Credit Agreement, the Hedge Agreements, this Mortgage,
and the other Loan Documents, subject to any applicable cure or grace periods. Time shall
be of the essence with respect to this Mortgage.




          4.2 Title to Collateral and Lien of this Mortgage. Mortgagor represents and
warrants that Mortgagor holds and will maintain (subject to dispositions permitted by the
Credit Agreement) (i) a good and marketable fee simple interest in the Property, other than
the Leasehold Property, (ii) good and marketable leasehold interest in the Leasehold
Property, (iii) good title to the Improvements thereon, (iv) good and marketable title to
the FF&E. Mortgagor further represents and warrants that this Mortgage shall constitute a
first priority Lien on the Property. Mortgagor will not create or suffer to exist any Lien
on its interest in the Property other than Liens permitted under the Credit Agreement (the
“Permitted Liens”). If the first priority Lien created by this Mortgage or any other
interest of Mortgagee in the Collateral shall be endangered or shall be attacked, directly
or indirectly, Mortgagor, at Mortgagor’s expense, will take all necessary and proper steps
for the defense of such interest, including the employment of counsel satisfactory to
Mortgagee, the prosecution or defense of litigation, and the compromise or discharge of
claims made against such interest.



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          4.3 Taxes on Mortgage. If at any time any law shall be enacted imposing or
authorizing the imposition of any tax, assessment or other fees upon this Mortgage, or upon
any rights, titles, liens or security interests created hereby, Mortgagor shall pay all such
taxes, assessments or other fees prior to delinquency except to the extent any such tax,
assessment or fee is being Properly Contested as permitted by the Credit Agreement. If it
is unlawful for Mortgagor to pay such taxes, assessments or other fees, then Mortgagor
agrees to promptly reimburse Mortgagee for the amounts incurred by Mortgagee to pay such
taxes, assessments or other fees.




          4.4 Statements by Mortgagor. At the request of Mortgagee, Mortgagor shall
furnish promptly a written statement or affidavit, in such form as may be reasonably
required by Mortgagee, to confirm the unpaid principal balance of each of the Loans and that
there are no offsets or defenses against full payment of the alleged Loans and performance
of the terms of the Credit Agreement or, if there are any such offsets or defenses,
specifying them.



                         (a) Repair, Waste, Alterations, etc. Mortgagor shall take all commercially reasonable
actions required to keep the Property, Improvements and FF&E in good operating order, repair and
condition, ordinary wear and tear excepted, and shall not commit or permit any waste thereof.
Mortgagor shall not suffer any lien of mechanics or materialmen to be perfected by the filing of
any lawsuit therefor respecting any part of the Collateral, except for Permitted Encumbrances. If
Mortgagor shall fail to discharge any such lien that has become final by judgment, then, in
addition to any other right or remedy of Mortgagee, Mortgagee may, but shall not be obligated to,
discharge the same, either by paying the amount claimed to be due, or by procuring the discharge of
such lien by depositing in court a bond for the amount claimed, or otherwise giving security for
such claim, or by taking such action as may be prescribed by law. Mortgagor shall have the right
from time to time at its sole cost and expense to make additions, alterations and changes, whether
structural or non-structural (hereinafter collectively referred to as “Alterations”) in or
to the Collateral; provided, however, that in all cases Mortgagor shall comply with the other
provisions of this Mortgage, the Credit Agreement, the Collateral Documents and in all material
respects with applicable law, and all Alterations to any buildings included in the Collateral shall
be located wholly within the boundary lines of the Property. Notwithstanding anything herein to
the contrary, Mortgagor shall have the right to remove and replace FF&E as Mortgagor may deem
appropriate in the ordinary course of Mortgagor’s business and as otherwise permitted under the
Credit Agreement (including Section 6.05 thereof) or, in connection with the Leased Property, under
the Subject Lease.




          4.5 Hold Harmless. Mortgagor shall indemnify Mortgagee hereunder to the extent
set forth in Section 9.2B of the Credit Agreement. The provisions of this Section 4.5 shall
survive the payment in full of the Secured Obligations and the release of this Mortgage as
to events occurring and causes of action arising before such payment and release.




          4.6 Further Assurances. At Mortgagee’s request, Mortgagor shall execute,
acknowledge, deliver, and record such further instruments and do such further acts as



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may be necessary, desirable or proper to carry out the purposes of this Mortgage and to
subject to the liens and security interests created thereby, any property intended by the
terms thereof to be covered thereby, including specifically but without limitation any
renewals, additions, substitutions, replacements, improvements or appurtenances to the
Collateral.




     4.7 Recording and Filing. Mortgagor shall cause this Mortgage and any related
financing statements and all amendments, supplements and extensions thereto and
substitutions therefor to be recorded, filed, re-recorded and refiled, as necessary to carry
out the purpose of this Mortgage and the Credit Agreement, and shall pay all such recording,
filing, re-recording and refiling fees, title insurance premiums and other charges.



     4.8 Payment of Debts. Mortgagor shall promptly pay when due all its
obligations regarding the ownership and operation of the Collateral except any such
obligations which are being Properly Contested in good faith by appropriate proceedings and
as to which Mortgagor shall have set aside adequate reserves in accordance with GAAP and to
the extent required by the terms of the Credit Agreement or the other Collateral Documents.



     4.9 Environmental Compliance. Mortgagor shall promptly take any and all
necessary remedial action in connection with the presence, handling, storage, use, disposal,
transportation or Release or threatened Release of any Hazardous Materials on, under or
affecting any Real Property Asset in order to comply in all material respects with all
applicable Environmental Laws and Governmental Authorizations. In the event the Mortgagor
undertakes any Cleanup action with respect to the presence, Release or threatened Release of
any Hazardous Materials on or affecting any Real Property Asset, Mortgagor shall conduct and
complete such Cleanup action in material compliance with all applicable Environmental Laws,
and in accordance with the policies, orders and directives of all federal, state and local
governmental authorities except when, and only to the extent that, the Mortgagor’s liability
for such presence, handling, storage, use, disposal, transportation or Release or threatened
Release of any Hazardous Materials is being Properly Contested.



     4.10 Enforceability. This Mortgage constitutes a legal, valid and binding
obligation of Mortgagor, enforceable against Mortgagor in accordance with its terms, except
as enforceability may be limited by the effect of applicable bankruptcy, insolvency,
reorganization, moratorium or, other similar laws affecting creditors’ rights generally or
the application of equitable principles.



     4.11 No Violation; No Consents. The execution, delivery and performance of
this Mortgage by Mortgagor will not violate, conflict with or constitute a breach of any of
the terms or provisions of, or a default under (or an event that, with notice or the lapse
of time, or both, would constitute a default), or require consent under, or result in the
imposition of a lien on any properties of Mortgagor or an acceleration of indebtedness
pursuant to: (i) Mortgagor’s operating agreement or other organizational documents, (ii)
any bond, debenture, note, credit agreement, mortgage, Mortgage or other agreement or



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instrument to which Mortgagor is a party or by which Mortgagor or Mortgagor’s property
is or may be bound, (iii) any statute, rule or regulation applicable to Mortgagor, or any of
its assets or properties, or (iv) any judgment, order or decree of any court or governmental
agency or authority having jurisdiction over Mortgagor, or any of its assets or properties
except for those which, in the case of clauses (ii), (iii) and (iv) only, could not
reasonably be expected to have a Material Adverse Effect. No consent, approval,
authorization or other action by, or order of, or filing, registration, qualification,
license or permit of or with, any court or governmental agency, body or administrative
agency is required for the execution, delivery and performance by Mortgagor of this Mortgage
other than those which already have been obtained and delivered to Mortgagee. No consents or
waivers from any other person or entity are required for the execution, delivery and
performance by Mortgagor of this Mortgage, other than those which already have been obtained
and delivered to Mortgagee.





          4.12 Security Interest. The Collateral is owned or, as to the Leased Property,
leased solely by Mortgagor. As of the date hereof, (i) Mortgagee has either filed or caused
to be filed or submitted for filing all financing statements and other instruments necessary
to perfect its security interest in the Collateral (other than the RP Collateral) (ii)
Mortgagee’s security interests in the Collateral (other than the RP Collateral) are valid
first priority Liens and, upon the filings referenced in clause (i) above, will be
perfected, (iii) there are no other liens on the Collateral or any portion thereof except
for the Permitted Encumbrances, and (iv) no effective financing statement or similar
instrument exists or is on file in any public office with respect to the Collateral, except
for financing statements filed in connection with the Credit Agreement.




          4.13 Disposition of Collateral. Mortgagor will not sell, transfer, assign,
pledge, collaterally assign, exchange or otherwise dispose of the Collateral, except as
expressly permitted by the Credit Agreement. If the Collateral, or any part thereof, is
sold, transferred, assigned, exchanged, or otherwise disposed of in violation of these
provisions, the security interests of Mortgagee shall continue in such Collateral or part
thereof notwithstanding such sale, transfer, assignment, exchange or other disposition.



ARTICLE 5




EVENTS OF DEFAULT




     The occurrence of any one of the following shall be a default hereunder (“Event of Default”):




          5.1 Nonperformance of Covenants under this Mortgage. Mortgagor fails to
perform or observe any covenant or agreement contained in this Mortgage and such failure
continues for thirty (30) days after written notice of non-performance thereof from
Mortgagee.




          5.2 False Representation. Any representation or warranty in this Mortgage is
false, misleading or erroneous in any material respect when made.



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          5.3 Events of Default under the Credit Agreement. The occurrence of any Event
of Default under the Credit Agreement, as the term “Event of Default” is defined thereunder.
Mortgagor acknowledges that this provision has the effect of cross-defaulting this Mortgage
with various collateral, guaranty and other documents respecting the Credit Agreement.




          5.4 Transfer of the Property. Any transfer of Mortgagor’s interest with
respect to all or any part of the Property, Improvements or FF&E other than dispositions
expressly permitted under the Loan Documents.




          5.5 Performance of Defaulted Acts. From and after the occurrence and during
the continuance of an Event of Default, Mortgagee may, but need not, make any payment or
perform any act herein required of Mortgagor in any form and manner deemed expedient,
including making full or partial payments of principal or interest on prior encumbrances, if
any, making rental payments and purchasing, discharging, compromising or settling any tax
lien or other prior lien or title or claim thereof, or redeeming from any tax sale or
forfeiture affecting the Collateral or contesting any tax or assessment. All moneys paid
for any of the purposes herein authorized and all expenses paid or incurred in connection
therewith, including reasonable attorneys’ fees, shall be included among the Secured
Obligations and shall be due and payable upon demand and with interest thereon from the date
of such payment or expense at the rate of interest payable after default under the terms of
the Credit Agreement. Inaction of Mortgagee shall never be considered as a waiver of any
right accruing to it hereunder on account of any default on the part of Mortgagor.
Mortgagee, making any payment hereby authorized relating to taxes or assessments, may do so
according to any bill, statement or estimate procured from the appropriate public office
without inquiry into the accuracy of such bill, statement or estimate or into the validity
of any tax, assessment, sale, forfeiture, tax lien or title or claim thereof.



ARTICLE 6




REMEDIES





          6.1 Exercise of Specific Remedies. Upon the occurrence of any of Event of
Default, and during the continuation thereof, Mortgagee shall be entitled to exercise all
rights and remedies of a mortgagee or secured party under the laws of the State of Louisiana
(“Louisiana Law”), including, without limitation, the following rights and remedies:



                         (a) Mortgagee may deem the Secured Obligations immediately due and payable without notice or
declaration to the Mortgagor and without presentment, demand or other notice of any kind, all of
which are hereby waived by Mortgagor.



                         (b) Mortgagee shall have the right to foreclose this Mortgage by judicial procedure as
provided by Louisiana Law, whether ordinary or executory, for the foreclosure of mortgages on real
property. For the purposes of foreclosure under Louisiana executory process procedures, Mortgagor
hereby acknowledges the Secured Obligations and



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confesses judgment in favor of Mortgagee for the full and true sum of the Secured Obligations.
Furthermore, any and all declarations of fact made by authentic act before a notary public in the
presence of two witnesses by a person declaring that such facts lie within his or its knowledge,
shall constitute authentic evidence of such facts for the purpose of executory process. The
Mortgagor specifically agrees that such an affidavit by a representative of Mortgagee as to the
existence, amount, terms and maturity of the secured indebtedness and of a default hereunder shall
constitute authentic evidence of such facts for the purpose of executory process.




          (c) Mortgagee shall, to the extent permitted by Louisiana Law, have the right and power, but
not the obligation, with or without the appointment of a keeper, to enter upon and take immediate
possession of the RP Collateral or any part thereof, to exclude Mortgagor therefrom, to hold, use,
operate, manage and control such real property, to make all such repairs, replacements,
alterations, additions and improvements to the same as Mortgagee may deem proper, and to demand,
collect and retain the Rents as provided in Article 2 hereof.




          (d) Mortgagors agree that, in the event the Collateral, or any part thereof, is seized as an
incident to an action for the recognition or enforcement of this Mortgage by executory process,
ordinary process, sequestration, writ of fieri facias or otherwise, the court issuing any such
order shall, if petitioned for by Mortgagee, direct the applicable sheriff to appoint as a keeper
of the Property, Mortgagee or any agent designated by Mortgagee or any person named by Mortgagee at
the time such seizure is effected. This designation is pursuant to Louisiana Revised Statutes
9:5131 through 9:5135 and 9:5136 through 9:5140.2, as the same may be amended, and Mortgagee shall
be entitled to all the rights and benefits afforded thereunder. It is hereby agreed that the keeper
shall be entitled to receive reasonable compensation in addition to its costs and expenses incurred
in the administration or preservation of said Property, Collateral or RP Collateral. The
designation of keeper made herein shall not be deemed to require Mortgagee to provoke the
appointment of such a keeper.




          (e) Mortgagee shall have all of the rights and remedies of a secured creditor and Mortgagee
granted by New York Law, including the Code, as more particularly provided in Article 3 above and
shall, to the extent permitted by New York Law and, solely with respect to the Leased Property, the
Subject Lease as affected by that certain Landlord Estoppel and Agreement executed by the landlord
under the Subject Lease, have the right and power, but not the obligation, to take possession of
the UCC Collateral, and for that purpose Mortgagee may enter upon the Property on which any or all
of the UCC Collateral is located and take possession of and operate such UCC Collateral or remove
the same therefrom. After the occurrence and during the continuation of an Event of Default,
Mortgagee may require Mortgagor to assemble the UCC Collateral and make it available to Mortgagee
at a place to be designated by Mortgagee which is reasonably convenient to both parties.




          (f) Mortgagee, in its sole discretion, may elect to treat the fixtures constituting a part of
the Improvements as either RP Collateral or UCC Collateral and proceed to exercise such rights and
remedies as apply to such type of collateral, subject, solely with respect to the Leased Property,
to the provisions of the Subject Lease as affected by that certain Landlord Estoppel and Agreement
executed by the landlord under the Subject Lease.




Mortgage




16









 





          (g) Mortgagee may exercise the power of sale granted by this Mortgage and, subject to the
mandatory requirements of Louisiana Law, may sell or have sold the RP Collateral or interests
therein or any part thereof at one or more public sales, as an entirety or in parcels, at such
place or places and otherwise in such manner and upon such notice as may be required by Louisiana
Law, by this Mortgage or, in the absence of any such requirement, as Mortgagee may deem
appropriate. Mortgagor shall make a conveyance to the purchaser or purchasers thereof without, to
the extent permitted by Louisiana Law, any warranties express or implied. Mortgagee may postpone
the sale of such RP Collateral or interests therein or any part thereof by public announcement at
the time and place of such sale, and from time to time thereafter may further postpone such sale by
public announcement made at the time of sale fixed by the preceding postponement. Sale of a part
of the RP Collateral or interests therein or any defective or irregular sale hereunder will not
exhaust the power of sale, and sales may be made from time to time until all such property is sold
without defect or irregularity or the Secured Obligations are paid in full. Mortgagee shall have
the right to appoint one or more attorney(s)-in-fact to act in conducting the foreclosure sale and
executing a deed to the purchaser. It shall not be necessary for any of the Collateral at any such
sale to be physically present or constructively in the possession of Mortgagee and Mortgagor shall
deliver all of the Collateral to the purchaser at such sale. If it should be impossible or
impracticable to take actual delivery of the Collateral, then the title and right of possession to
the Collateral shall pass to the purchaser at such sale as completely as if the same had been
actually present and delivered.




          (h) Mortgagee (or any successor to Mortgagee) shall have the right to become the purchaser at
any sale made pursuant to the provisions of this Article 6 and shall have the right to
credit upon the amount of the bid made therefor the amount payable to it out of the net proceeds of
such sale. All other sales shall be, to the extent permitted by Louisiana Law, on a cash basis.
Mortgagor does hereby ratify and confirm all legal acts that Mortgagee may do in carrying out the
provisions of this Mortgage.




          (i) Any sale of the Collateral or any part thereof pursuant to the provisions of this
Article 6 will operate to divest all right, title, interest, claim and demand of Mortgagor
in and to the property sold and will be a perpetual bar against Mortgagor and all persons claiming
by or through or under Mortgagor, subject to Louisiana Law. Mortgagee is hereby irrevocably
appointed the true and lawful attorney-in-fact of the Mortgagor, in the Mortgagor’s name and stead,
for the purpose of effectuating any such sale, to execute and deliver all necessary deeds,
conveyances, assignments, bills of sale and other instruments with power to substitute one or more
persons with like power. Nevertheless, if requested by Mortgagee so to do, Mortgagor shall join in
the execution, acknowledgment and delivery of all proper conveyances, assignments and transfers of
the property so sold. Any purchaser at a foreclosure sale will receive possession of the property
purchased at the earliest time permitted under the Louisiana Law, and Mortgagor agrees that if
Mortgagor retains possession of the property or any part thereof subsequent to such sale, Mortgagor
will be considered a tenant at sufferance of the purchaser, and will, if Mortgagor remains in
possession after demand to remove, be guilty of forcible detainer and will be subject to eviction
and removal, forcible or otherwise, with or without process of law, and all damages to Mortgagor by
reason thereof are hereby expressly waived by Mortgagor, to the extent permitted by Louisiana Law.




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                         (j) Mortgagee, at its option, is authorized to cause foreclosure of this Mortgage subject to
the rights of any tenants under Leases, and the failure to make any such tenants parties to any
such foreclosure proceedings and to foreclose their rights will not be, nor be asserted to be by
Mortgagor, a defense at any proceedings instituted by Mortgagee to collect the Secured Obligations.




          6.2 Cost and Expenses. All costs and expenses (including reasonable attorneys’
fees and legal expenses, title premiums, title report and work charges, filing fees, and
mortgages, mortgage registration, transfer, stamp and other excise taxes, if any) incurred
by Mortgagee in perfecting, protecting or enforcing its rights hereunder, whether or not an
Event of Default shall have occurred, shall be a demand obligation of Mortgagor to
Mortgagee, as applicable, and shall bear interest if unpaid commencing thirty (30) days
following demand (except if an Event of Default exists and is continuing in which case
interest shall begin to accrue immediately upon the incurrence of such cost or expense) at
the highest rate then applicable under the Credit Agreement with respect to the Secured
Obligations, all of which shall be part of the Secured Obligations.




          6.3 Application of Proceeds. The proceeds of any sale of the Collateral or any
part thereof made pursuant to this Article 6 shall be applied in accordance with the terms
of the Credit Agreement and the Security Documents, including but not limited to Section 6.5
of the Guarantee and Collateral Agreement.




          6.4 Combination of Remedies. From and after the occurrence and during the
continuance of an Event of Default, Mortgagee may, at its option, in such order, and
utilizing such combinations of remedies with respect to the Collateral and the other
property of Mortgagor encumbered by a Collateral Document as Mortgagee shall so elect,
pursue its remedies against (a) the Collateral, individually, or any other property of a
Loan Party encumbered by a Collateral Document, individually, (b) the Collateral and any
combination of the other property of a Loan Party encumbered by a Collateral Document, (c)
the Collateral and all of the other property of Mortgagor and any other Loan Party
encumbered by a Collateral Document, or (d) all or any combination of the other property of
Mortgagor and the other Loan Parties encumbered by a Collateral Document, in separate
proceedings or in one proceeding in any order which Mortgagee deems appropriate, all to the
fullest extent permitted under Louisiana Law.




          6.5 Advice of Counsel; Waivers. Mortgagor acknowledges that it is aware of and
has had the advice of counsel of its choice with respect to its rights, under Louisiana Law,
with respect to this Mortgage, the Secured Obligations and the Collateral. Except to the
extent expressly set forth in the Credit Agreement or any other Loan Document, Mortgagor
hereby agrees that Mortgagor shall not at any time hereafter have or assert, and hereby
waive to the extent permitted under Louisiana Law, any right under any law pertaining to:
marshalling, whether of assets or liens, the sale of property in the inverse order of
alienation, the administration of estates of decedents, valuation, stay, extension,
reinstatement, redemption, subrogation, or abatement, suspension, deferment, diminution or
reduction of any of the Secured Obligations (including setoff), now or hereafter in force.
Mortgagor hereby further waives (i) in favor of Mortgagee any and all homestead



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exemptions and other exemptions of seizure or otherwise to which the Mortgagor is or
may be entitled under the constitution and statutes of the State of Louisiana insofar as the
Collateral is concerned and (ii) (a) the benefit of appraisement as provided in Louisiana
Code of Civil Procedure Articles 2332, 2336, 2723, 2724, and all other laws conferring the
same; (b) the demand and three (3) days’ delay according by Louisiana Code of Civil
Procedure Article 2721; (c) the notice of seizure required by Louisiana Code of Civil
Procedure Articles 2293 and 2721; (d) the three (3) days’ delay provided by Louisiana Code
of Civil Procedure Articles 2331 and 2722; and (e) the benefit of the other provisions of
Louisiana Code of Civil Procedure Articles 2331, 2722 and 2723, not specifically mentioned
above.




ARTICLE 7




GENERAL PROVISIONS




     7.1 Mortgagor. This Mortgage and all provisions hereof shall extend to and be
binding upon Mortgagor and all persons claiming under or through Mortgagor. Whenever in
this Mortgage there is reference made to any of the parties hereto, such reference shall be
deemed to include, wherever applicable, a reference to the heirs, executors and
administrators or successors and assigns (as the case may be) of such party. Mortgagor’s
successors and assigns shall include a receiver, trustee or debtor-in-possession of or for
Mortgagor. Mortgagee’s assigns and successors shall include any successor Collateral Agent
under the Credit Agreement.



     7.2 Cumulative Rights Waiver; Modifications. Each and every right, power and
remedy hereby granted to Mortgagee shall be cumulative and not exclusive, and each and every
right, power and remedy, whether specifically hereby granted or otherwise existing, may be
exercised from time to time and as often and in such order as may be deemed expedient by
Mortgagee and the exercise of any such right, power or remedy will not be deemed a waiver of
the right to exercise, at the same time or thereafter, any other right, power or remedy. No
delay or omission by Mortgagee in the exercise of any right, power or remedy will impair any
such right, power or remedy or operate as a waiver thereof or of any other right, power or
remedy then or thereafter existing. Any and all covenants of Mortgagor in this Mortgage may
from time to time, by instrument in writing signed by Mortgagee, be waived to such extent
and in such manner as Mortgagee may desire, but no such waiver will ever affect or impair
the rights of Mortgagee hereunder, except to the extent specifically stated in such written
instrument. All changes to and modifications of this Mortgage must be in writing and signed
by Mortgagor and Mortgagee.



     7.3 Additional Documents. Mortgagor agrees that upon request of Mortgagee it
will from time to time execute, acknowledge and deliver all such additional instruments and
will do or cause to be done all such further acts and things as may be reasonably necessary
fully to effectuate the intent of this Mortgage.



     7.4 Notices. All notices and other communications under this Mortgage shall be
in writing, except as otherwise provided in this Mortgage. A notice, if in writing, shall



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19









 




be considered as properly given if given in accordance with the provisions of the
Credit Agreement.




     7.5 Choice of Law. Without regard to principles of conflicts of law, this
Mortgage shall be construed under and governed by the laws of the State of New York
applicable to contracts made and to be performed entirely within such state and the laws of
the United States of America. Notwithstanding the foregoing: (i) Louisiana Law shall govern
with respect to procedural and substantive matters relating to the creation, perfection,
priority and enforcement of the liens created by this Mortgage on the RP Collateral and
(ii), if upon judicial foreclosure and sale in accordance with Louisiana Law a deficiency
exists, Mortgagor agrees that Mortgagee shall have the right to seek a deficiency judgment
against Mortgagor. The terms and provisions set forth in Exhibit C attached hereto are
hereby incorporated by reference as though fully set forth herein. In the event of any
conflict between the terms and provisions contained in the body of this Mortgage and terms
and provisions set forth in Exhibit C, the terms and provisions set forth in Exhibit C shall
govern and control.



     7.6 Time of Essence. Time is of the essence of this Mortgage and of every part
hereof of which time is an element.



     7.7 Severability. If any provision hereof or of any of the other documents
constituting, evidencing or creating all or any part of the Secured Obligations is invalid
or unenforceable in any jurisdiction, the other provisions hereof or of said documents shall
remain in full force and effect in such jurisdiction. The invalidity of any provision of
this Mortgage in any jurisdiction will not affect the validity or enforceability of any such
provision in any other jurisdiction. If any lien, encumbrance or security interest
evidenced or created by this Mortgage is invalid or unenforceable, in whole or in part, as
to any part of the Secured Obligations, or is invalid or unenforceable, in whole or in part,
as to any part of the Collateral, such portion, if any, of the Secured Obligations as is not
secured by all of the Collateral hereunder shall be paid prior to the payment of the portion
of the Secured Obligations secured by all of the Collateral, and all payments made on the
Secured Obligations (including cash and/or property received in connection with sales of
Collateral pursuant to Article 3 hereof) shall, unless prohibited by applicable law or
unless Mortgagee, in its sole and absolute discretion, otherwise elects, be deemed and
considered to have been first paid on and applied to payment in full of the unsecured or
partially secured portion of the Secured Obligations, and the remainder to the secured
portion of the Secured Obligations.



     7.8 Mortgagee’s Powers. Without affecting the liability of any other person
liable for the payment of any Obligation herein mentioned, and without affecting the lien or
charge of this Mortgage upon any portion of the Collateral not then or theretofore released
as security for the full amount of all unpaid Secured Obligations, Mortgagee may, from time
to time and without notice, (a) release any persons liable, (b) extend the maturity or alter
any of the terms of any such Obligation, (c) permit the issuance of additional Loans and/or
indebtedness under the Credit Agreement, (d) grant other indulgences, (e) release or
reconvey, or cause to be released or reconveyed at any time at



Mortgage




20









 




Mortgagee’s option any parcel, portion or all of the Collateral, (f) take or release
any other or additional security for any obligation herein mentioned, or (g) make
compositions or other arrangements with Mortgagor in relation thereto.




     7.9 Enforceability of Mortgage. This Mortgage is deemed to be and may be
enforced from time to time as an assignment, chattel mortgage, contract, mortgage, deed to
secure debt, fixture filing, real estate mortgage, or security agreement, and from time to
time as any one or more thereof, as is appropriate and permitted under applicable law. A
carbon, photographic or other reproduction of this Mortgage or any financing statement in
connection herewith shall be sufficient as a financing statement for any and all purposes to
the fullest extent permitted under applicable law.



     7.10 Captions. The captions or headings at the beginning of Articles and
Sections hereof are for the convenience of the parties and are not part of this Mortgage.



     7.11 Attorneys’ Fees. In connection with any enforcement of its rights under
this Mortgage (and in addition to all rights for fees and costs provided for under the
Credit Agreement), Mortgagor promises to pay all costs of enforcement and collection,
including reasonable attorneys’ fees, whether or not such enforcement and collection
includes the filing of a lawsuit.



     7.12 Relationship of Parties. The relationship between Mortgagor and Mortgagee
is that of borrower and lender only and neither Mortgagor nor Mortgagee is, nor shall it
hold itself out to be, the agent, employee, joint venturer or partner of the other.



     7.13 Collateral Agent. The Collateral Agent will hold all items of Collateral
at any time received under this Mortgage or the other Loan Documents in accordance with the
terms of the Credit Agreement. It is expressly understood and agreed that the obligations
of Mortgagee in its capacity as the Collateral Agent (and holder of the Collateral and
interests therein and with respect to the disposition thereof) are only those expressly set
forth in the Credit Agreement.



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



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21









 





     7.15 Credit Agreement Controlling. In the event that any of the terms or
provisions contained herein are inconsistent with the terms and provisions in the Credit
Agreement, the terms and provisions of the Credit Agreement shall govern and control.



 [SIGNATURE PAGE FOLLOWS.]




22









 





Exhibit G



     THUS DONE AND PASSED in                     ,                    ,
on the ___ day of                 
    
2007, in the presence of the undersigned competent witnesses, who hereunto sign their names with
Mortgagor and me, Notary, after due reading of the whole.



	 	 	 	 	 	 	 
	WITNESSES:	 	MORTGAGOR:
	 
	 	 	 	 	 	 
	 	 	 	 	 
	Name:	 	 	 	USAGENGIES, L.L.C., a Louisiana limited
	 	 	 	 	liability company
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	By:	 	 
	 	 	 	 	 
	Name:

	 	 	 	Name:	 	 
	 

	 	 
	 	 	 	 





_____________________________________________

                           NOTARY PUBLIC



Name: __________________________________________

Notary ID/Bar Roll No. ____________________________

My Commission Expires ___________________________




H-1




 









 








EXHIBIT A




Resolutions




Mortgage




2









 





EXHIBIT B




Legal Description of the Real Property




Parcel A




(1) That certain portion of former North 15th Street which lies
between Lots 7, 8, 9 and a portion of Lot 10, Square 17 or 75 of the Suburb
Waller Subdivision on the West and Lots 1, 12 and a portion of Lot 11,
Square 20 or 76 of the Buhler Town subdivision on the East, commencing at
the intersection of the South right-of-way line of Main Street with the
inside face of the curb of the portion of the former North 15th
Street which is 13.15 feet east from the Northeast corner of Lot 7, Square
17 or 75, Suburb Waller; thence southerly a distance of 240 feet; thence
easterly, perpendicular to the South right-of-way line of Main Street, 37.46
feet to a point and corner on the East right-of-way line of former North
15th Street; thence northerly along the East right-of-way line of
former North 15th Street a distance of 240 feet to the
intersection of the South right-of-way line of Main Street with the East
right-of-way line of former North 15th Street; thence westerly
along the South right-of-way line of Main Street, 36.84 feet to the point of
beginning, as more particularly shown by a survey dated October 20, 2005 by
Evans-Graves Engineers, Inc. entitled “Map Showing Survey of All of SQ. 20
or 76, All of SQ. 21 or 77 and Lots 1 Thru 4, A Portion of Lot 5 and Lots 6,
7, 11 & 12, and Lots A & B, SQ. 24 or 78, Buhler Town and Portion of Former
North 15th Street and Former North 16th Street
Right-Of-Ways, Located in the Original City of Baton Rouge, T7S-R1W,
Greensburg Land District, East Baton Rouge Parish, Louisiana for USAgencies,
L.L.C.”



(2) Lots 1 through 12, Square 20 or 76, Buhler Town, Lots 1 through 12,
Square 21 or 77, Buhler Town and an undesignated parcel of ground (which is
a portion of former North 16th Street lying between the South
boundary line of Main Street and the North boundary line of Laurel Street)
situated between the East side of Lots 5, 6, and 7 of Square 20 or 76,
Buhler Town and the West side of Lots 1, 11 and 12 of Square 21 or 77,
Buhler Town, said lots and undesignated parcel being bounded on the North by
Main Street, on the East by 17th Street, on the South by Laurel
Street and on the West by 15th Street (and the portion of the
former North 15th Street) as shown on a survey dated October 20,
2005 by Evans-Graves Engineers, Inc. entitled “Map Showing Survey of All of
SQ. 20 or 76, All of SQ. 21 or 77 and Lots 1 Thru 4, A Portion of Lot 5 and
Lots 6, 7, 11 & 12, and Lots A & B, SQ. 24 or 78, Buhler Town and Portion of
Former North 15th Street and Former North 16th Street
Right-Of-Ways, Located in the Original City of Baton Rouge, T7S-R1W,
Greensburg Land District, East Baton Rouge Parish, Louisiana for USAgencies,
L.L.C.”



Parcel B




Mortgage




3









 








Lots 1, 2, 3, 4, 5, 6, 8, 9, 10, 11 and 12, Square 22 or 90, Buhler Town,
City of Baton Rouge, East Baton Rouge Parish, Louisiana, as shown on a
survey dated October 20, 2005 by Evans-Graves Engineers, Inc. entitled “Map
Showing Survey of Lots 1 Thru 6, and Lots 8 Thru 12, SQ. 22 or 90, Buhler
Town, Located in the Original City of Baton Rouge, T7S-R1W, Greensburg Land
District, East Baton Rouge Parish, Louisiana for USAgencies, L.L.C.”



Parcel C




Lots 1, 2, 3, 4, 6 and 7, Lots A and B of a resubdivision of Lots 8, 9 and
10, Lots 11 and 12, and the West 2 feet, 10 inches of Lot 5, Square 24 or
78, Buhler Town, City of Baton Rouge, East Baton Rouge Parish, Louisiana, as
shown on a Plot Plan and Survey of the Subdivision of Lots 8, 9, 10 of
Square 24 or 78 Buhler Town in the City of Baton Rouge, Louisiana, into Lots
‘A’ & ‘B’” dated March 11, 1958 and recorded as Original 55, Bundle 4148,
official records of East Baton Rouge Parish, Louisiana; and as shown by
Survey dated October 20, 2005 by Evans-Graves Engineers, Inc. entitled, “Map
Showing Survey of All of SQ. 20 or 76, All of SQ. 21 or 77 and Lots 1 Thru
4, A Portion of Lot 5 and Lots 6, 7, 11 & 12, and Lots A & B, SQ. 24 or 78,
Buhler Town and Portion of Former North 15th Street and Former
North 16th Street Right-Of-Ways, Located in the Original City of
Baton Rouge, T7S-R1W, Greensburg Land District, East Baton Rouge Parish,
Louisiana for USAgencies, L.L.C.”



Parcel D




The South 112 feet of Lot 1, the South 112 feet of Lot 2 and the South 112
feet of the West 6 feet of Lot 3, the East 51 feet of Lot 3, and Lots 4, 5
and 6 of Square 3 or 301 of Gusman Town & Lefever Town, City of Baton Rouge,
East Baton Rouge Parish, Louisiana, as shown on a survey dated October 20,
2005 by Evans-Graves Engineers, Inc. entitled “Map Showing Survey of A
Portion of Lots 1 Thru 3 and Lots 4, 5, & 6, SQ. 3 or 301, Lefever Town,
Located in the Original City of Baton Rouge, T7S-R1W, Greensburg Land
District, East Baton Rouge Parish, Louisiana for USAgencies, L.L.C.”



Parcel E




Private Air Space Servitude for Bridge (“Overhead Walk”) connecting the
Buildings situated on Square 20 or 76, Buhler Town and Square 17 or 75
Suburb Waller, over and across a portion (which portion is designated by the
cross-hatched area on the Survey referenced below) of strip of land which
lies between the asphalt paving on former North 15th Street and
the building on Square 17 or 75, Suburb Waller, located on Lots 5, 6, 7, 11
and 12 and the East 150 feet of Lots 8 and 9 and the North 40 feet of Lot
10, square 17 or 75, Suburb Waller, City of Baton Rouge, which strip of
land has a width of approximately 13.30 feet on the south and 13.15 feet on
the North and a length of 240 feet, as more particularly shown by a



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4









 





survey dated October 20, 2005, by Evans-Graves Engineers, Inc. entitled “Map
Showing Survey of All of SQ. 20 or 76, All of SQ. 21 or 77 and Lots 1 Thru
4, A Portion of Lot 5 and Lots 6, 7, 11 & 12, and Lots A & B, SQ. 24 or 78,
Buhler Town and Portion of Former North 15th Street and Former
North 16th Street Right-Of-Ways, Located in the Original City of
Baton Rouge, T7S-R1W, Greensburg Land District, East Baton Rouge Parish,
Louisiana for USAgencies, L.L.C.” created by Agreement of Private Air
Servitude filed in the records of East Baton Rouge Parish, Louisiana as
Original 447, Bundle 11784.



Parcel F




Leasehold Interest under a Lease of Air Space dated May 28, 1986 from the
City of Baton Rouge and the Parish of East Baton Rouge to Goudchaux/Maison
Blanche, Inc. covering the following described property for a term of 99
years commencing on March 1, 1986 and ending on February 28, 2085, which was
recorded as Original 858, Bundle 9837 of the records of East Baton Rouge
Parish Clerk of Court:



A certain portion or envelope of air space (“Space”) hereinafter described,
being immediately contiguous and adjacent to the East line of Lot 5, Square
21 (77) Devall Town, more particularly described as follows:



Commencing in a horizontal plane above North 17th Street at an
elevation of 70.4 feet above mean sea level (determined by a reference to
East Baton Rouge Parish Benchmark PBM Post Office-38, copper disk in front
of City Club Building (Old Post Office), East Baton Rouge elevation — 58.081
feet above mean sea level and extending upward to 74.5 feet above mean sea
level with reference to the same point, and located horizontally as follows:
from the Northeast corner of Lot 5, Square 21 (77) Devall Town, southerly
along the lot line (right of way line), 50 feet, 6 inches to POINT OF
BEGINNING, thence continue southerly along the lot line (right of way line),
42 feet, 6 inches, then almost across the street to a point 51 feet, 6
inches east of the east line of Lot 5 and 78 feet, 0 inches, south of the
South right-of-way line of Main Street; thence Northerly parallel to the
West right-of-way line of North 17th Street, 42 feet, 6 inches,
then return across the street to POINT OF BEGINNING, and extending down from
the air space envelope into the ground below, two supporting columns on the
East side of the street, each not more than 12.56 square feet in area, and
not less than 14 feet 6 inches outside of the presently paved roadway, and
one additional column, of similar dimension and similarly located, but free
standing, all as shown on the plan recorded as Original 858, Bundle 9837 of
the official records of the East Baton Rouge Clerk of Court.



Said Lease of Air Space was assigned to Renaissance Park, LLC by Exchange
Support Services, Inc. pursuant to one certain Assignment and



Mortgage




5









 





Assumption of Air Space Leases dated September 20, 2004 filed and recorded
with the Clerk and Recorder of East Baton Rouge Parish as Original 797,
Bundle 11655 on September 30, 2004; and further assigned to USAgencies,
L.L.C. by Assignment and Assumption of City/Parish Air Space Lease dated
November 10, 2005 filed and recorded with the Clerk and Recorder of East
Baton Rouge Parish as Original 440, Bundle 11784 on November 14, 2005.



Parcel G





Together with all buildings and improvements situated on the lots, parcels
of ground and air space described above, including the enclosed Overhead
Walk that connects the Buildings situated on Square 20 or 76, Buhler Town
and Square 17 or 75, Suburb Waller, excluding, however any rights
appurtenant to the four-story building located on Square 17, Suburb Waller
(“Renaissance Park West”) or appurtenant to the parking areas located on
Square 18, Suburb Waller, and on Lots 2, 3, 4 and 5 of Square 19, Buhler
Town.



Mortgage




6









 





EXHIBIT C




Local Law Provisions




     Section 1.1 Certificates. The production of mortgage, conveyance, tax research or
other certificates is waived by consent, and Mortgagee and Mortgagor agree to hold each of the
above-referenced Notaries Public harmless for any failure to procure and attach same.



     Section 1.2 No Paraph. For purposes of La. R.S. § 9:5556 and other applicable law,
the parties declare that none of the indebtedness secured by this Mortgage and no note or other
written obligation evidencing the same has been “paraphed” for identification with this Mortgage.



     Section 1.3 Multiple Originals. Mortgagor authorizes Mortgagee to file multiple
originals, photocopies, carbon copies, or facsimile copies of this Mortgage or financing statements
with the appropriate filing officer in the State of Louisiana pursuant to the provisions of the
Code.



     Section 1.4 Taxpayer Identification Number. The last four digits of Mortgagor’s
taxpayer identification number is accurately set out in the appearance captions of this Mortgage.
Mortgagor will not change its taxpayer identification number or its name, identity or corporate
structure so that any financing statement filed in connection herewith may become seriously
misleading unless and until it notifies Mortgagee in writing and executes all new appropriate
financing statements or other such documents as Mortgagee may require, with Mortgagor being
required to pay the cost of such documentation and the filing thereof as provided above.



     Section 1.5
Certain Louisiana References. Each reference to a “lien” will include a
reference to a “privilege,” “mortgage,” “collateral assignment” and/or “security interest,” as
appropriate. Each reference to an “easement” or “easements” will include a reference to a
“servitude” or “servitudes.” Each reference to a county will include a reference to a Louisiana
parish. The terms “land,” “real property,” and “real estate” will mean “immovable property” as
that term is used in the Louisiana Civil Code. The term “personal property” will mean “movable
property” as that term is used in the Louisiana Civil Code. The term “intangible” will mean
“incorporeal” as that term is used in the Louisiana Civil Code. Reference to “receiver” shall be
deemed to be a keeper appointed by Mortgagee as provided herein. The term “fee estate” or “fee
simple title” will mean “full ownership interest” as that term is used in the Louisiana Civil Code.
The term “condemnation” will include “expropriation” as that term is used in Louisiana law. The
term “conveyance in lieu of foreclosure” or “action in lieu thereof” will mean “giving in payment”
as that term is used in the Louisiana Civil Code and “dation en paiment.” The term “joint and
several” will mean “solidary” as that term is used in the Louisiana Civil Code.



Mortgage




7









 








Exhibit H

Form of Perfection Certificate




PRE-CLOSING UCC DILIGENCE CERTIFICATE




          In connection with that certain Guarantee and Collateral Agreement, dated as of January ___,
2007 (the “Guarantee and Collateral Agreement”), by and among Affirmative Insurance
Holdings, Inc. (“Borrower”), certain subsidiaries of the Borrower (together with the
Borrower, the “Grantors”) and Credit Suisse, Cayman Islands Branch (“CS”), as
Administrative Agent and Collateral Agent (the “Collateral Agent”), each Grantor hereby
certifies as follows:




I. Current Information




     A. Legal Names, Organizations, Jurisdictions of Organization and Organizational
Identification Numbers. The full and exact legal
name4 (as it appears in each
respective certificate or articles of incorporation, limited liability membership agreement or
similar organizational documents, in each case as amended to date), the type of organization, the
jurisdiction of organization (or formation, as applicable), and the organizational identification
number (not tax i.d. number) of each Grantor are as
follows:5



	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Type of	 	 	 	 	 	 	 	 	 	 
	 	 	Organization (e.g. corporation,	 	 	Jurisdiction of	 	 	Organizational	 	 	Federal Tax	 
	 	 	limited liability company, limited	 	 	Organization/	 	 	Identification	 	 	Identification	 
	Name of Grantor	 	partnership)	 	 	Formation	 	 	Number	 	 	Number	 
	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 








 




			
	1.	 	It is crucial that the full and exact name of
each Grantor is given. Even seemingly minor errors such as substituting
“n.a.” for “national association” or “inc.” for “incorporated” may be
seriously misleading in many states.
	 
	2	 	If a Grantor does not have an
organizational identification number or a federal tax identification number,
please indicate “none.”





H-1




 









 





Exhibit H




     B. Chief Executive Offices and Mailing Addresses. The chief executive office
address and the preferred mailing address (if different than chief executive office or residence)
of each Grantor are as follows:



	 	 	 	 	 	 	 	 	 
	 	 	Address of Chief Executive Office	 	 	Mailing Address (if different than	 
	Name of Grantor	 	(or for natural persons, residence)	 	 	CEO or residence)	 
	
	 	 	 	 	 	 	 	 






     C. Changes in Names, Jurisdiction of Organization or Corporate Structure.



          Except as set forth below, no Grantor has changed its name, jurisdiction of organization or
its corporate structure in any way (e.g. by merger, consolidation, change in corporate form, change
in jurisdiction of organization or otherwise) within the past one (1) year:




	 	 	 	 	 	 	 	 	 
	Grantor	 	Date of Change	 	 	Description of Change	 
	
	 	 	 	 	 	 	 	 






     D. Prior Addresses.



          Except as set forth below, no Grantor has changed its chief executive office, or principal
residence if a particular Grantor is a natural person, within the past one (1) year:




	 	 	 	 	 
	Grantor	 	Prior Address/City/State/Zip Code	 
	
	 	 	 	 






     E. Acquisitions of Equity Interests or Assets.



          Except as set forth below, no Grantor has acquired the equity interests of another entity or
substantially all the assets of another entity within the past one (1) year:




	 	 	 	 	 	 	 	 	 
	Grantor	 	Date of Acquisition	 	 	Description of Acquisition	 
	
	 	 	 	 	 	 	 	 






II. ADDITIONAL INFORMATION.




H-2




 









 





Exhibit H

Form of Perfection Certificate




Tangible Personal Property. Set forth below are all the locations where any Grantor
currently maintains or has maintained any material amount (fair market value of $10,000 or
more) of its tangible personal property (including goods, inventory and equipment) of such
Grantor (whether or not in the possession of such Grantor) within the past one (1) year:



	 	 	 	 	 	 	 	 	 
	Grantor	 	Address/City/State/Zip Code	 	 	County	 
	
	 	 	 	 	 	 	 	 






H-3






 









 








Exhibit H

Form of Perfection Certificate




III. MISCELLANEOUS




     A. Authority to File Financing Statements. Each of the undersigned, hereby authorizes
each of the Collateral Agents to file financing or continuation statements, and amendments thereto,
in all jurisdictions and with all filing offices as each Collateral Agent may determine, in its
sole discretion, are necessary or advisable to perfect the security interest granted or to be
granted to such Collateral Agent under the Guarantee and Collateral Agreements. Such financing
statements may describe the collateral in the same manner as described in the Guarantee and
Collateral Agreements or may contain an indication or description of collateral that describes such
property in any other manner as such Collateral Agent may determine, in its sole discretion, is
necessary, advisable or prudent to ensure the perfection of the security interest in the collateral
granted to such Collateral Agent, including, without limitation, describing such property as “all
assets” or “all personal property.”



H-4




 









 





Exhibit H

Form of Perfection Certificate




     IN WITNESS WHEREOF, the undersigned hereto has caused this Pre-Closing UCC Diligence
Certificate to be executed as of the date first written above by its officer thereunto duly
authorized.


[GRANTOR(S)]



By:                                        

Name:

Title:




H-5




 









 





Exhibit H

Form of Perfection Certificate




Appendix A

to Pre-Closing UCC Diligence Certificate




INVESTMENT RELATED PROPERTY




1. Securities. Set forth below is a list of all equity interests owned by a Grantor
together with the type of organization which issued such equity interests (e.g. corporation,
limited liability company, partnership or trust):



	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Total	 	 	 	 	 	 	Certificate No.	 	 	 	 
	 	 	 	 	 	 	Type of	 	 	# of	 	 	Shares	 	 	% of Interest	 	 	(if uncertificated,	 	 	 	 
	Grantor	 	Issuer	 	 	Organization	 	 	Shares Owned	 	 	Outstanding	 	 	Pledged	 	 	please indicate so)	 	 	Par Value	 
	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 






2. Securities Accounts. Set forth below is a list of all securities accounts
in which any Grantor customarily maintains securities or other assets having an aggregate
value in excess of $10,000:



	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Name & Address of	 
	Grantor	 	Type of Account	 	 	Financial Institutions	 
	
	 	 	 	 	 	 	 	 






H-6




 









 








Exhibit H

Form of Perfection Certificate




3. Deposit Accounts. Set forth below is a list of all bank accounts (checking,
savings, money market or the like) in which any Grantor customarily maintains in excess of
$10,000:



	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Name & Address of	 
	Grantor	 	Type of Account	 	 	Financial Institutions	 
	
	 	 	 	 	 	 	 	 






4. Instruments. Set forth below is a list of all instruments owed to any
Grantor in the principal amount of greater than $10,000:



	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Principal Amount	 	 	 	 
	Grantor	 	Issuer of Instrument	 	 	of Instrument	 	 	Maturity Date	 
	
	 	 	 	 	 	 	 	 	 	 	 	 






H-7




 









 








Exhibit H

Form of Perfection Certificate




Appendix B

to Pre-Closing UCC Diligence Certificate




INTELLECTUAL PROPERTY



1. Set forth below is a list of all copyrights, patents and trademarks and other intellectual
property owned or used, or hereafter adopted, held or used, by a Grantor:




	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Grantor	 	Copyrights	 	 	Filing Date	 	 	Status	 	 	Registration No.	 
	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 






	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Grantor	 	Patents	 	 	Filing Date	 	 	Status	 	 	Registration No.	 
	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 






	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Grantor	 	Trademarks	 	 	Filing Date	 	 	Status	 	 	Registration No.	 
	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 






H-8





 









 





Exhibit H

Form of Perfection Certificate




Appendix C

to Pre-Closing UCC Diligence Certificate




INVENTORY AND EQUIPMENT



1. Inventory and Equipment. Set forth below are all the locations where any Grantor
currently maintains any material amount (aggregate fair market value of $10,000 or more) of
inventory and equipment of such Grantor (whether or not in the possession of such Grantor):




	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	Description of	 
	Grantor	 	Address/City/State/Zip Code	 	 	County	 	 	Assets and Value	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 




2. Warehousemen and bailees. Except as set forth below, no persons (including
warehousemen and bailees) other than a Grantor have possession of any material amount (fair market
value of $10,000 or more) of assets of any Grantor:




	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	Description of	 
	Grantor	 	Address/City/State/Zip Code	 	 	County	 	 	Assets and Value	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 





H-9









 





Exhibit H

Form of Perfection Certificate




Appendix D

to Pre-Closing UCC Diligence Certificate




REAL ESTATE RELATED UCC COLLATERAL



1. Fixtures. Set forth below are all the locations where any Grantor owns or leases any
real property:




	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	Owned	 
	Grantor	 	Address/City/State/Zip Code	 	 	County	 	 	or Leased	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 




2. “As Extracted” Collateral. Set forth below are all the locations where any Grantor
owns, leases or has an interest in any wellhead or minehead:




	 	 	 	 	 	 	 	 	 
	Grantor	 	Address/City/State/Zip Code	 	 	County	 
	 
	 	 	 	 	 	 	 	 




3. Timber to be Cut. Set forth below are all locations where any Grantor owns goods
that are timber to be cut:




	 	 	 	 	 	 	 	 	 
	Grantor	 	Address/City/State/Zip Code	 	 	County	 
	 
	 	 	 	 	 	 	 	 





H-10









 






Exhibit H

Form of Perfection Certificate




Appendix E

to Pre-Closing UCC Diligence Certificate




NAMES




1. Trade Names.




          Current Names. Set forth below is each trade name or assumed name currently used by any
Grantor or by which any Grantor is known or is transacting any business:




	 	 	 	 	 	 	 	 	 
	Grantor	 	 	 	 	 	Trade/Assumed Name	 
	 
	 	 	 	 	 	 	 	 





          Past Names. Set forth below is each trade name or assumed name used by any Grantor
during the past one (1) year or by which any Grantor has been known or has transacted any business
during the past one (1) year other than the names identified in Section I.A. of this Pre-Closing
UCC Diligence Certificate:




	 	 	 	 	 	 	 	 	 
	Grantor	 	 	 	 	 	Trade/Assumed Name	 
	 
	 	 	 	 	 	 	 	 





H-11









 






Exhibit H

Form of Perfection Certificate




Appendix F

to Pre-Closing UCC Diligence Certificate




COMMERCIAL TORT CLAIMS



Set forth below is a true and correct list of all Commercial Tort Claims (as defined in the
Guarantee and Collateral Agreements) held by each Grantor, including a brief description thereof.




H-12









 








Exhibit H

Form of Perfection Certificate




Appendix G

to Pre-Closing UCC Diligence Certificate




LETTER OF CREDIT RIGHTS



Set forth below is a true and correct list of all Letters of Credit issued in favor of each
Grantor, as beneficiary thereunder.





H-13









 









Exhibit H

Form of Perfection Certificate




Appendix H

to Pre-Closing UCC Diligence Certificate




MOTOR VEHICLES




     Set forth below is a true and correct list of all motor vehicles (covered by certificates of
title or ownership) valued at over $50,000 and owned by each Grantor, and the owner and approximate
value of such motor vehicles.



	 	 	 	 	 	 	 	 	 	 	 	 	 
	Motor Vehicle	 	 	 	 	 	Owner	 	 	Approximate Value	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 





H-14









 





Exhibit I




FORM OF NON BANK CERTIFICATE




     Reference is made to the Credit Agreement dated as of January 31, 2007 (the “Credit
Agreement”), among Affirmative Insurance Holdings, Inc., the Borrower, the Lenders from time to
time party thereto, Credit Suisse, Cayman Islands Branch, as administrative agent and as collateral
agent, and the other parties thereto. Pursuant to Section 2.20(d) of the Credit Agreement, the
undersigned hereby certifies that it is not a “bank” or other Person described in Section 881(c)(3)
of the Internal Revenue Code of 1986, as amended.



	 	 	 	 	 
	[NAME OF LENDER]	 	 
	 
	 	 	 	 
	By:
	 	 	 	 
	 

	 	 

Name:
	 	 
	 

	 	Title:	 	 






I-1









 






Exhibit J




FORM OF LEGAL OPINION




     Formation/Requisite Power



     a. Affirmative Insurance Holdings, Inc., and each Subsidiary Guarantor that is a
[corporation][limited liability company][limited partnership] formed or organized under the laws of
the State of Delaware (each, a “Delaware Guarantor”) is a corporation duly formed or
organized and is validly existing under the laws of the State of Delaware with all necessary
[corporate][limited liability company][limited partnership] power and authority to own its
properties and conduct its business as presently conducted and as proposed to be conducted and to
enter into each Loan Document to which it is a party, perform its obligations thereunder, borrow
any amounts specified therein and give any guarantee contemplated thereby. Affirmative Insurance
Holdings, Inc., and each Subsidiary Guarantor is in good standing under the laws of the State of
Delaware and is qualified to do business in each jurisdiction where the nature of its business
requires such qualification.



     b. Each Subsidiary Guarantor that is a [corporation][limited liability company] formed or
organized under the laws of the State of [                    ] (each, a “[
                    
] Guarantor”) is a [corporation][limited liability company] duly formed or organized and is validly existing under
the laws of the State of [                    ] with all necessary [corporate][limited liability company]
power and authority to own its properties and conduct its business as presently conducted and as
proposed to be conducted and enter into each Loan Document to which it is a party, perform its
obligations thereunder, borrow any amounts specified therein and give any guarantee contemplated
thereby. Each [                    ] Guarantor is in good standing under the laws of the State of [                    
] and is qualified to do business in each jurisdiction where the nature of its business requires such
qualification.



     Due Authorization



     The execution, delivery and performance by Affirmative Insurance Holdings, Inc., and each
Subsidiary Guarantor of each Loan Document to which it is a party, including, without limitation,
the borrowings, issuances of letters of credit, guarantees and uses of proceeds thereunder and the
creation of the security interests contemplated thereby have all been duly authorized by all
necessary corporate, limited liability company or limited partnership action, as applicable, and,
if necessary, all stockholder, member or partner action of Affirmative Insurance Holdings, Inc.,
and each Subsidiary Guarantor, as applicable.



     Due Execution and Delivery



     Each Loan Document to which Affirmative Insurance Holdings, Inc., or any Subsidiary
Guarantor is a party has been duly executed and delivered by Affirmative Insurance Holdings, Inc.,
or such Subsidiary Guarantor, as applicable.



     Enforceability



     Each Loan Document to which Affirmative Insurance Holdings, Inc., or any Subsidiary
Guarantor is a party constitutes a legally valid and binding obligation of ANR Affirmative
Insurance Holdings, Inc., or such Subsidiary Guarantor, as applicable, enforceable against
Affirmative Insurance Holdings, Inc., or such Subsidiary Guarantor, as applicable, in accordance
with its terms.



     No Conflicts; Consents



     a. The execution and delivery by Affirmative Insurance Holdings, Inc., and each
Subsidiary Guarantor of each Loan Document to which it is a party and the consummation of the
transactions contemplated thereby, the granting of the Liens under the Security Documents and the
performance by each Affirmative Insurance Holdings, Inc., and each Subsidiary Guarantor of its
respective obligations under the Loan Documents to which such it is a party, the borrowings,
issuances of letters of credit, guarantees and uses of proceeds thereunder and the creation of the
security interests contemplated thereby, do not (a) conflict with, result in a breach of or



J-1









 







violate any of the terms, conditions or provisions of any of Affirmative Insurance Holdings,
Inc., or any Subsidiary Guarantor’s by-laws, limited liability company agreement, partnership
agreement, certificate of incorporation, articles of incorporation or any other governing or
constituent documents (collectively, the “Governing Documents”), (b) result in the breach
of or a default under or result in the ability to terminate or accelerate any outstanding
obligations under any agreement identified to us by Affirmative Insurance Holdings, Inc., as being
material to the conduct of its or its subsidiaries business (each, a “Material Agreement”),
(c) violate any federal or state law, statute, rule or regulation applicable to any of Affirmative
Insurance Holdings, Inc., or any Subsidiary Guarantor or their properties, including, without
limitation, Regulations T, U or X of the Board of Governors of the Federal Reserve System, assuming
Affirmative Insurance Holdings, Inc., complies with the provisions of the Loan Documents relating
to the use of proceeds, (d) contravene any orders, writs, injunctions, decrees or arbitral awards
that are binding upon Affirmative Insurance Holdings, Inc., or any Subsidiary Guarantor or its
properties or assets (each, an “Applicable Order”), (e) result in, or require, the creation
of or imposition of any Lien (other than the lien of the Security Documents), upon or with respect
to any of the properties or assets now owned or hereafter acquired by Affirmative Insurance
Holdings, Inc., or any Subsidiary Guarantor, or (f) require any consents, approvals,
authorizations, registrations, declarations or filings to be obtained by Affirmative Insurance
Holdings, Inc., or any Subsidiary Guarantor under any federal or state law, statute, rule, or
regulation applicable to Affirmative Insurance Holdings, Inc., or any Subsidiary Guarantor or their
properties or under the Governing Documents or under any Material Agreement, in each case, that
have not already been obtained or made.



     Investment Company Act Compliance



     None of Affirmative Insurance Holdings, Inc., or any Subsidiary Guarantor is an
“investment company”, or a company “controlled” by and “investment company” as such terms are
defined in the Investment Company Act of 1940, as amended.



     Validity of Security Interest in Article 9 Collateral



     The provisions of each Security Document are effective to create valid security interests
in favor of the Collateral Agent, for the benefit of the Secured Parties, in that portion of the
Collateral and the Mortgaged Properties described in the Guarantee and Collateral Agreement, each
Mortgage and each Intellectual Property Security Agreement, respectively, in each case to the
extent such Collateral is subject to Article 9 of the UCC (the “Collateral”) as security
for the payment, to the extent set forth in each such Security Document of the Obligations of the
relevant Loan Party to the Secured Parties under the Loan Documents.



     Perfection of Security Interest in Pledged Collateral



     a. Upon delivery of the certificates representing the Pledged Securities to the
Collateral Agent in the State of New York pursuant to the Guarantee and Collateral Agreement with
undated transfer powers duly endorsed in blank by an effective endorsement, the security interests
in such Pledged Securities in favor of the Collateral Agent, for the benefit of the Secured
Parties, will be perfected. No other security interest in the Pledged Securities is equal or prior
to the security interest of the Collateral Agent, for the benefit of the Secured Parties.



     b. Upon delivery of that portion of the Pledged Collateral consisting of the collateral that
constitutes “instruments” within the meaning of Section 9-102(a)(47) of the [___] UCC (the
“Pledged Notes”) to the Collateral Agent in the State of New York pursuant to the Guarantee
and Collateral Agreement, the security interests in favor of the Collateral Agent, for the benefit
of the Secured Parties, will be perfected. No other security interest in the Pledged Notes is
equal or prior to the security interest of the Collateral Agent, for the benefit of the Secured
Parties, assuming the Collateral Agent takes possession of the Pledged Notes in good faith and
without knowledge that its security interest in the Pledged Notes violates the rights of another
secured party.



     [Perfection of Security Interest in Accounts



     a. The provisions of the Control Agreements are effective under the [                    ] UCC to
perfect the security interest in favor of the Collateral Agent, for the benefit of the Secured
Parties, in that portion of the



J-2









 







Pledged Collateral consisting of Deposit Account[s] maintained with                      (the
“Depositary Bank”) described in each such Control Agreement (the “Deposit
Account[s]”).



     b. The provisions of the Securities Account Control Agreements are effective under the
[                    ] to perfect the security interest in favor of the Collateral Agent, for the benefit of
the Secured Parties, in that portion of the Pledged Collateral consisting of Securities Account[s]
maintained with                      (the “Securities Intermediary”) described in such Securities
Account Control Agreement (the “Securities Account[s]”). The Collateral Agent’s security
interest in the Securities Account[s] has priority over any other security interest in the
Securities Account[s] granted by Affirmative Insurance Holdings, Inc., or any Subsidiary Guarantor
assuming no other secured party has control of, and the absence of any other control agreement with
respect to, the Securities Account[s]. We express no opinion as to the priority of any security
interest in the Securities Account as against any other security interest in favor of the
Securities Intermediary.]



     Appropriateness of Financing Statements



     Each Financing Statement is in appropriate form for filing in the office of the
[Secretary of State][relevant central filing authority] of the State of [                    ]. Upon the
proper filing of each such Financing Statement in the office of the [Secretary of State][relevant
central filing authority] of the State of [                    ], the security interest in favor of the
Collateral Agent, for the benefit of the Secured Parties, in the collateral described in each such
Financing Statement will be perfected to the extent a security interest in such collateral can be
perfected under the provisions of the [                    ] UCC by the filing of a financing statement in the
State of [                    ].



     Litigation



     There is no action, suit or proceeding before or by any court, arbitrator or governmental
agency, body or official, now pending or, to the best of our knowledge, threatened, to Affirmative
Insurance Holdings, Inc., or any Subsidiary Guarantor is a party or to which the business, assets
or property of any of them is subject which is not disclosed in the Loan Documents, which (a)
involves the Loan Documents or the transactions contemplated thereby or (b) could reasonably be
expected to cause a Material Adverse Effect.



     Ownership Matters



     There are to the best of our knowledge, no outstanding subscriptions, options, warrants,
calls, rights, repurchase rights, or other agreements or commitments of any nature relating to any
of the Pledged Securities or restricting the transfer thereof or voting thereunder and each of the
shares constituting Pledged Securities have been duly authorized and issued, are fully paid and
non-assessable and are free and clear of all liens.



     Real Estate and Local Permitting Opinions



     [Form opinions for real estate and local permitting matters will be provided under
separate cover.]



     Insurance / Regulatory Matters



     [Form opinions for federal regulatory matters will be provided under separate cover.]




J-3









 









EXHIBIT K-1




CONTRACT INCLUDING INSURANCE PREMIUM FINANCE AGREEMENT




PROMISSORY NOTE, TRUTH IN LENDING DISCLOSURES AND SECURITY AGREEMENT




BORROWER:




ADDRESS:




E-MAIL:




Address for
Notices:



Use this address for all notices required by law. Use this address to communicate with me until I
tell you in writing that I want you to use another address, which I will specify. I promise to
tell you in writing if I change my address, my e-mail address, or my telephone number. In the
event no address is specified, the mailing address shown above will be used as the default. I
understand that you may also use other addresses to communicate with me when formal notice is not
necessary, or if you are unable to contact me at the address, I have provided. However, I
understand that you are not obliged to do so. If I wish to communicate with you about this
Contract, I agree to use the address written after CREDITOR” below.



NO AGENT: USAgencies Casualty Insurance Company, Inc. issued the insurance Policy. The Insurance
Company sells directly to customers and does not use agents.



INSURANCE POLICY DESCRIPTION:            Insurance Company:                USAgencies Direct Insurance Company, Inc.



Policy No.:

Policy Period:      through



TOTAL COST OF OBTAINING THE INSURANCE COVERAGE: The cost of obtaining the insurance coverage is
itemized on the Declarations Page of Policy No. ___, Issued by the Insurance Company. This
Declarations Page is incorporated into and made part of this Contract by reference.




DISCLOSURES REQUIRED UNDER THE FEDERAL TRUTH IN LENDING ACT



CREDITOR: LIFCO, L.L.C., Post Office Drawer 98515, Baton Rouge, Louisiana 70884-8515



ITEMIZATION OF AMOUNT FINANCED:




	 	 	 	 	 	 	 	 	 	 	 
	(1) New Premium and Fees
	 	 	 	 	 	 	 	$	0.00	 
	 
	 	 	 	 	 	 	 	 
	(2) (Less) Premium and Fees Down
	 	 	 	 	 	 	 	$	0.00	 
	 
	 	 	 	 	 	 	 	 
	(3) Amount Paid to Insurance Co.
	 	 	 	 	 	 	 	$	0.00	 
	 
	 	 	 	 	 	 	 	 
	(4) Previous Account Balance
	 	 	 	 	 	 	 	$	0.00	 
	 
	 	 	 	 	 	 	 	 
	(5) Interest Accrued
	 	 	 	 	 	 	 	$	0.00	 
	 
	 	 	 	 	 	 	 	 	 
	(6)  Deferred Fees Collected
	 	 	 	 	 	 	 	$	0.00	 
	 
	 	 	 	 	 	 	 	 
	(7) Origination Fee
	 	 	 	 	 	 	 	$	0.00	 
	 
	 	 	 	 	 	 	 	 
	(8) (Less) Prepaid Origination Fee
	 	 	 	 	 	 	 	$	0.00	 
	 
	 	 	 	 	 	 	 	 
	(9) Amount Financed (3 plus 4-7, minus 8)
	 	 	 	 	 	 	 	$	0.00	 
	 
	 	 	 	 	 	 	 	 





K-1-1









 







	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 	ANNUAL 

PERCENTAGE RATE

	 	 	FINANCE CHARGE
	 	 	AMOUNT FINANCED
	 	 	TOTAL OF PAYMENTS
	 
	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	The cost of my loan as

a yearly rate


	 	 	The dollar amount my

loan will cost me
	 	 	The amount of credit

provided to me or on my

behalf
	 	 	The amount I will have paid
after I have made all

payments as scheduled
	 
	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	0.00%

	 	 	$	0.00	 	 	 	$	0.00	 	 	 	$	0.00	 	 
	 	 	 	 	 	 	 	 	 	 	 	 







Payment Schedule: My loan is repayable as follows: equal monthly installments in the amount of $0.00 beginning on ___, through ___, with 1 final payment
of 0.00, due on ___.




Late Charges: If a payment is more than 10 days late. I will be charged 5% of the delinquent amount or $5.00, whichever is greater. Prepayment: If I pay my loan
off early, I may be entitled to a refund of part of the finance charge.




Security Interest: My loan is secured by the insurance policy purchased with the loan proceeds, as wall as proceeds of the policy.




Contract Reference: I should look to the Contract for further information about non-payment, default, your right to accelerate the maturity of the obligation, and
prepayment rebates and penalties.




PROMISSORY NOTE



Promise to Pay: I promise to pay to your order, at your address, the sum of dollars
($0.00) consisting of principal and precomputed interest at the rate of 0.00% per annum,
payable in equal installments of $0.00, due on the day of each month, commencing on ___, with
one final installment due on.




     Late Charges: If I fail to pay any installment within ten days of its due date, I agree to pay
you a late charge of 5% of the delinquent amount or $5.00 whichever is greater. A late charge will
also be assessed if the policy is canceled due to insufficient funds.



     Default and Acceleration: If I fail to pay one installment and it remains unpaid for ten days
or more after the due date, this Promissory Note will be in default and you may cancel my Insurance
Policy. If two or more installments are in default for ten days or more, you may accelerate the
maturity of this Promissory note, which means that I must pay all outstanding amounts immediately.
After making any rebate required by law, you may then convert this Promissory Note into a simple
interest transaction.



     Additional Interest: If you accelerate the maturity of this Promissory Note or if it remains
unpaid after the final installment is due, then, for a period of one (1) year after maturity, I
agree to pay additional Interest on the unpaid balance (after any applicable rebate) at the
interest rate shown above. After that, I agree to pay interest at the rate of 18% per annum, until
this Promissory Note is paid in full.



     Rebate: I may prepay this Promissory Note in full at any time. If I prepay in full, or if you
accelerate the maturity of this Promissory Note, l may be entitled to a refund of part of the
finance charge as determined by the simple Interest method. The $25.00 Origination Fee I paid when
I first made my loan is earned when my loan is closed and will not be rebated.



     Attorney’s Fees: If you refer this Promissory Note to any attorney for collection, I agree to
pay attorney’s fees in an amount equal to 25% of the unpaid debt owed to you.



     Unpaid Check Charges: If I pay by check and my check is returned because I stopped payment, or
because there were insufficient funds in my account, I will pay you an additional amount, equal to
5% of the amount of my dishonored check, or $15.00, whichever is less.



     Non-negotiable: This Promissory Note is not negotiable.



     Waivers: I waive demand for payment, notice of protest and of non-payment, and all defenses of
division and discussion. My liability under this Promissory Note is “in solido” with the liability
of any other person who may be liable. Discharge or release of any specific right, or of any
security given to secure payment, will not affect the remainder of my obligation.



K-1-2









 





Signature Lines on Second Page



 





SECURITY AGREEMENT




     In order to secure payment of any amounts that I may owe you under this Contract, I give you a
security interest in my Insurance Policy, including (but not limited to) any right to a refund of
premiums or any amount the Insurance Company might otherwise owe me for losses covered by my
insurance Policy. You may apply any money you receive from my Insurance policy to pay any debt owed
to you under this Contract, including any amount due under the Promissory Note, the $25.00
Cancellation Fee described below, attorney fees, or any deferred charges. Even though you have the
right to be paid from proceeds of the Insurance Policy, I remain personally liable to pay you these
amounts until everything is paid.



Signature Lines Below



 





LIENHOLDERS AND OTHERS ENTITLED TO NOTICE OF CANCELLATION:




Signature Lines Below



 





POWER OF ATTORNEY




     I give you a power of attorney. If I fail to pay even one installment on the Promissory Note,
I authorize you to cancel my Insurance Policy and any endorsements listed on this Contract or in
any amendments to this Contract, including amendments you make pursuant to this Power of Attorney.
I give a power of attorney to notify my Insurance Company and any persons entitled to notice and to
tell them that my Insurance Policy is cancelled. After payment of all amounts due to you under this
Contract, I also give you power of attorney to pay to the Insurance Company (or allow the Insurance
Company to retain) any unearned premiums or other amounts which the Insurance Company may otherwise
owe me, in order to purchase as much continued coverage under the Insurance Policy as such funds
permit, until such time as I prove to the Insurance Company that I have purchased replacement
insurance, as required by law or as required by any other person entitled to the benefit of
coverage. I may not revoke this power of attorney while my Promissory Note remains unpaid and until
I have provided such replacement Insurance.



Signature Lines Below



 





ADDITIONAL CONTRACT TERMS




     Pronouns and Headings: This Contract uses the words “I”, “me”, and “my”, which refer to the
Insured who is signing this Contract. The words “you”, “your”, and “yours” refer to the Creditor.
The headings in this Contract are only for convenience and do not completely summarize the
provisions which follow them.



     Changes to Insurance Policy: If in the future I request any change to my Insurance Policy and
if the change is accepted by the Insurance Company and it makes an endorsement to the Insurance
Policy, the new Declaration Page containing the requested endorsement will automatically become a
part of and incorporated into this Contract by reference. I further authorize you to adjust the
balance due you and the related remaining payments under my original Insurance Premium Finance
Contract together with any modifications thereto without obtaining an amended, signed contract from
me.



     No Reliance on Anything Not Written in this Contract: No employee of LIFCO or USAgencies told
me that this Contract includes anything not written in this Contract.



K-1-3









 





     Use of Proceeds: I have borrowed from you the Amount Financed. This money will be used to pay
the premium on the Insurance Policy and for the other purposes stated in the section entitled
“Itemization of Amount Financed.”



     Cancellation Fee: If you cancel the Insurance Policy after my default, I agree to pay you a
cancellation fee of $25.00. This fee is different than the Origination Fee which is described
elsewhere in this Contract.



     Deferred Charges: You, in your absolute discretion, may choose to defer my obligation to pay
late charges, the Cancellation Fee or any other amount which I may owe you under this Contract. I
understand that you are not waiving your right to collect such fees, but only deferring the time
for payment. I understand that you do not waive any such charges or release me from my obligation
to pay them, unless you specifically tell me in writing that you are doing so.



     Louisiana Consumer Credit Law: You and I agree that this Contract is governed by the Louisiana
Consumer Credit Law.



     Receipt of Copy of Contract: I have received a copy of this contract.



     Electronic Collection of Checks: I authorize you to electronically collect any check I give
you. You may at your option electronically collect a check, either the first time you present it
for payment, or if a check is returned because of insufficient funds and you re-present it. in the
case of a returned check, my account may be debited for any applicable fees as stated in the Unpaid
Check Charges section of the Promissory Note. If a check is collected electronically, you will send
the check amount, routing and account numbers to my bank. Because this information is sent
electronically, my bank account can be debited as early as the same day you receive the check. If a
check is collected electronically, I authorize you to destroy the original and maintain an image in
your records. I understand that my bank will not return the canceled check to me, but will show the
transaction on my bank account statement.



     Reading and Understanding: I have read everything in this Contract (which consists of 2
pages). Before signing this Contract, I understood it or I obtained someone’s help so I could
understand.



	 	 	 	 	 
	 

	 	 

Borrower
	 	 
	 
	 	 	 	 
	 

	 	 

Date
	 	 






     Accepted by:                                                             , LIFCO Representative, on:




K-1-4









 





EXHIBIT K-2




INSURANCE PREMIUM FINANCE CONTRACT

COMBINATION PROMISSORY NOTE, TRUTH IN LENDING

DISCLOSURE STATEMENT AND SECURITY AGREEMENT

Illinois Premium Finance Regulation — Precomputed Interest




	 	 	 
	Date:

	 	THIS NOTE IS NON-NEGOTIABLE
	 





	 	 	 	 	 	 	 	 	 	 	 	 	 
	BUYER:
	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 
	 

	 	(Print full Name)
	 	(Street No.)
	 	(City)
	 	(County)
	 	(State)
	 	(Zip)
	Co-BUYER:
	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 
	 

	 	(Print full Name)
	 	(Street No.)
	 	(City)
	 	(County)
	 	(State)
	 	(Zip)
	AGENT:	 	USAgencies Management Services   8550 United Plaza Blvd., Suite 805   Baton Rouge   Baton Rouge LA           70809
	 	 	 
	 

	 	(Print full Name)
	 	(Street No.)
	 	(City)
	 	(County)
	 	(State)
	 	(Zip)






LENDER: LIFCO, L.L.C., 8550 United Plaza Blvd. Suite 804, Baton Rouge, LA 70809



I have obtained a loan from you to finance the purchase of the following insurance policies:




	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 

	 	 	Insurance Co.
	 	 	Coverage
	 	 	Policy Period
	 	 	Premium	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	0

	 	 	USAgencies Direct
	 	 	 	 	 	From:	 	 	 	 
	 	 

	 	 	Insurance Company
	 	 	 	 	 	To:	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 





	 	 	 	 	 	 	 	 	 	 	 
	(1) Previous Amount Financed:
	 	$	0.00	 	 	(5) Principal Paid:	 	$	0.00	 
	 
	 	 	 	 	 	 	 	 
	(2) New Premium:
	 	$	0.00	 	 	(6) Premium Down:	 	$	0.00	 
	 
	 	 	 	 	 	 	 	 
	(3) Interest Accrued:
	 	$	0.00	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 
	(4) Deferred Fees Collected:
	 	$	0.00	 	 	(7) Total (1 through 4 minus 5 through 6 equals 7):	 	$	0.00	 
	 
	 	 	 	 	 	 	 	 






DISCLOSURE REQUIRED UNDER THE FEDERAL TRUTH IN LENDING ACT









	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	ANNUAL PERCENTAGE RATE:

	 	 	FINANCE CHARGE:
	 	 	Amount Financed:
	 	 	Total of Payments:

	The cost of my loan as a
 yearly rate.

	 	 	The dollar amount my loan

will cost me.
	 	 	The amount of credit provided

to me or on my behalf.
	 	 	The amount I will have paid after 

I have made all payments as
 scheduled.

	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	0.00%

	 	 	$	0.00	 	 	 	$	0.00	 	 	 	$	0.00	 
	 	 	 	 	 	 	 	 	 	 





     Payment Schedule: My loan is repayable as follows:



	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	 	Number of Payments
	 	 	Amount	 	 	When Payments Are Due	 
	 	 	 	 	 	 	 	 	 
	 	   0    equal installment payments
	 	 	$	0.00	 	 	 	Monthly beginning on _____	 
	 	 
	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	 	One final payment
	 	 	$	0.00	 	 	 	Due on ____	 
	 	 
	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 





Late Charges: If a payment is more than 5 days late, I will be charged 5% of the delinquent amount, not less than $1.00.




Prepayment: If I pay my loan off early, I will not be entitled to a refund of any part of the finance charges.




Security: My loan is secured by the insurance policies being purchased with the loan proceeds.




Contract Reference: I should look to my Note for additional information about non-payment, default, your right to accelerate payment and prepayment rebates.







Itemization of the Amount Financed




	 	 	 	 	 	 	 	 	 	 	 
	(1) Amount Paid to Insurance Company:
	 	$	0.00	 	 	(3) (less) Prepaid Finance Fee:	 	$	0.00	 
	 
	 	 	 	 	 	 	 	 
	(2) Additional Fee Financed:
	 	$	0.00	 	 	(4) Amount Financed (Sum of 1 and 2, minus 3):	 	$	0.00	 
	 
	 	 	 	 	 	 	 	 






 




PROMISSORY NOTE (“Note”)




Promise to Pay: I promise to pay to the order of the above named Lender at Lender’s address or
at any of the USAgencies sales offices the sum of  (0.00), consisting of principal and
precomputed interest, payable in accordance with the Payment Schedule indicated above.




Late Charges: If I fail to pay any payment under this Note within five days of when due, I agree to
pay you a late charge in an amount equal to no less than $1 nor more than 5% of the installment in
default.




Default and Acceleration: You have the right, at your option, to Insist on immediate payment in
full (to accelerate the maturity) of the Note If I fail to make any payment under this Note when
due.




Additional Promissory Note Terms and Conditions and Security Agreement Continued on Page 2



 










	 	 	 
	Note Rate:
	 	0.00%
	 
	 










I (We) acknowledge
receipt of a completed
copy of this Disclosure
Statement, Promissory
Note (as continued on
page 2) and Security
Agreement (on page 2) and
agree to their terms. I
authorized you to make
disbursements as itemized
above.









 









 





	 	 	 	 	 	 	 
	 

Buyer

	 	 	 	 

Co-Buyer
	 	 






Promissory Note — Additional Terms and Conditions Continued from Page 1




Rebate Upon Prepayment: I may prepay this Note in full at any time. I understand that I am not
entitled to a refund of any part of the finance charge.




Additional Interest: If you accelerate payment under this Note for any reason and file suit
against me, or If the Note remains unpaid after its final payment date, I agree to pay additional
interest on the unpaid balance 0 the Note after applying the amount of unearned premium returned
from the insurance company at the Note Rate shown above.




Attorney’s Fees: If you hove to sue me, or if you refer this Note to an attorney for collection, I
agree to pay reasonable attorney’s fees In an amount equal IC 25% of the unpaid debt owed to you
under this Note.




NSF Check Charges: In the event that I make any payment on this Note by check and my check is
returned to you unpaid due to non-sufficient funds in m deposit account, I agree to pay you an
additional NSF Check Charge of $15 plus any actual expenses Incurred In connection with the
dishonored check.




Reinstatement Charge: I may request you to ask the insurance company to reinstate my policy,
subject to all terms and conditions set forth by the Insurance company. If the insurance company
agrees to reinstate my policy, I agree to pay my original monthly payment, the subsequent late
charge, end the $25.OC reinstatement charge. By my fulfilling all of the conditions set forth in
this paragraph, you can conclude that it Is my intention to have my policy reinstated.




Endorsements: I may request changes to my insurance policy during its term. If the changes ace
accepted by the insurer, I authorize you to adjust this balance due you and the related remaining
payments under my original insurance Premium Finance Contract together with any modifications
thereto without obtaining en amended, signed contract from me.




     If the premium increases, you will loan me the additional premium amount plus the additional
finance charges allowed by Illinois law and Increase my payments equally over the remaining number
of payments. If the premium decreases, you wilt decrease my payments by the amount of the decreased
premium equally over the remaining number of payments. I understand that you will provide me with a
document in the form of the Insurance Premium Finance Contract showing the change in my balance and
the change in the remaining payments. Further, I understand that my debt to you equals the sum of
the remaining payments on the original Contract and all endorsements thereto.



     Your records show that I owe payments of 0 each.


Governing Law: This Note is subject to the Illinois Premium Finance Regulation.





General Provisions: I. as well as all other persons signing this Contract as a Guarantor, waive
demand for payment and notice of protest and non-payment and all pleas of division and discussion,
and agree that our liability under this Note shall be “joint, several and solitary” with each
other. We further agree that discharge or release of any party or collateral securing this Note,
extension of time for payment, or delay in enforcing any rights granted to you, will not cause you
to lone any of your rights.




     This Instrument is non-negotiable In form but may be pledged as collateral security, If so
pledged, any payment made to the Lender either of principal or of interest, upon the debt evidenced
by this obligation, shall be considered and construed as a payment on this instrument, the same as
though it were still in the possession and under the control of the Lender named herein; and the
pledges holding this instrument as collateral security hereby makes said Lender its agent to accept
arid receive payments hereon, whether of principal or of interest.



     Paragraph headings are for convenient reference and are not to be construed as a complete
summary of each paragraph. In this Contract (Note and Security Agreement), the words “I”, “me”,
“my”, “we”, “us”, and “our” mean each person signing this Contract as a buyer, co-buyer or
guarantor. The words “you”, “your”, and “yours” mean the Lender named in the Contract.



Signature Lines on Page 1



 





 





 









 





 




SECURITY AGREEMENT




     To secure repayment of my Note (and other amounts that I may owe you under this Contract), I
am giving you a security interest in my insurance policies described In this Contract, including
but not limited to any rights which I may have to return premiums and payments for losses under my
policies.



     If should default under my Note, I authorize you, or my Agent on your behalf, to cancel my
insurance policies and to notify my insurance company o companies of the cancellation. I am giving
you a power of attorney to do this, which I may not revoke while my Note remains unpaid.



     You may apply any funds which you receive from my insurance company or companies to the
payment of my Note in principal, Interest, and late charge provided above, returning any excess
funds to me. If the amount of funds you receive are not sufficient to satisfy payment under my Note
In full, I will remain personally liable to you for the difference.



Signature Lines on Page 1



 





Guaranty



I (We) jointly, severally, and solidarity unconditionally guarantee payment of the above Note and
all substitutions, refinancings, and renewals thereof and agree to at of the Contract’s terms and
conditions.




	 	 	 	 
	 

Guarantor

	 	 
 Guarantor	 
	 	 





	 	 	 	 	 	 	 
	 

Date

	 	 	 	 

Authorized Representative
	 	 






 









 





EXHIBIT K-3




CONTRACT INCLUDING INSURANCE PREMIUM FINANCE AGREEMENT

PROMISSORY NOTE, TRUTH IN LENDING DISCLOSURES AND SECURITY AGREEMENT




BORROWER:




ADDRESS:




E-MAIL:




Address for

Notices:



Use this address for all notices required by law. Use this address to communicate with me until I
tell you in writing that I want you to use another address, which I will specify. I promise to
tell you in writing if I change my address, my e-mail address, or my telephone number. In the
event no address is specified, the mailing address shown above will be used as the default. I
understand that you may also use other addresses to communicate with me when formal notice is not
necessary, or if you are unable to contact me at the address, I have provided. However, I
understand that you are not obliged to do so. If I wish to communicate with you about this
Contract, I agree to use the address written after CREDITOR” below.



NO AGENT: USAgencies Casualty Insurance Company, Inc. issued the insurance Policy. The Insurance
Company sells directly to customers and does not use agents.



INSURANCE POLICY DESCRIPTION:            Insurance Company:           USAgencies Casualty Insurance Company, Inc.



Policy No.:

Policy Period:      through



TOTAL COST OF OBTAINING THE INSURANCE COVERAGE: The cost of obtaining the insurance coverage is
itemized on the Declarations Page of Policy No. ___, Issued by the Insurance Company. This
Declarations Page is incorporated into and made part of this Contract by reference.




DISCLOSURES REQUIRED UNDER THE FEDERAL TRUTH IN LENDING ACT



CREDITOR: LIFCO, L.L.C., Post Office Drawer 98515, Baton Rouge, Louisiana 70884-8515



ITEMIZATION OF AMOUNT FINANCED:







	 	 	 	 	 	 	 	 	 	 	 
	(1) New Premium and Fees
	 	 	 	 	 	 	 	$	0.00	 
	 
	 	 	 	 	 	 	 	 
	(2) (Less) Premium and Fees Down
	 	 	 	 	 	 	 	$	0.00	 
	 
	 	 	 	 	 	 	 	 
	(3) Amount Paid to Insurance Co.
	 	 	 	 	 	 	 	$	0.00	 
	 
	 	 	 	 	 	 	 	 
	(4) Previous Account Balance
	 	 	 	 	 	 	 	$	0.00	 
	 
	 	 	 	 	 	 	 	 
	(5) Interest Accrued
	 	 	 	 	 	 	 	$	0.00	 
	 
	 	 	 	 	 	 	 	 	 
	(6)  Deferred Fees Collected
	 	 	 	 	 	 	 	$	0.00	 
	 
	 	 	 	 	 	 	 	 
	(7) Origination Fee
	 	 	 	 	 	 	 	$	0.00	 
	 
	 	 	 	 	 	 	 	 
	(8) (Less) Prepaid Origination Fee
	 	 	 	 	 	 	 	$	0.00	 
	 
	 	 	 	 	 	 	 	 
	(9) Amount Financed (3 plus 4-7, minus 8)
	 	 	 	 	 	 	 	$	0.00	 
	 
	 	 	 	 	 	 	 	 




 









 







	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 	ANNUAL 

PERCENTAGE RATE

	 	 	FINANCE CHARGE
	 	 	AMOUNT FINANCED
	 	 	TOTAL OF PAYMENTS
	 
	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	The cost of my loan as

a yearly rate


	 	 	
The dollar amount my

loan will cost me
	 	 	The amount of credit

provided to me or on my

behalf
	 	 	The amount I will have paid
after I have made all

payments as scheduled
	 
	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	0.00%

	 	 	$	0.00	 	 	 	$	0.00	 	 	 	$	0.00	 	 
	 	 	 	 	 	 	 	 	 	 	 	 






Payment Schedule: My loan is repayable as follows: equal monthly installments in the amount of $0.00 beginning on ___, through ___, with 1 final payment
of 0.00, due on                     .




Late Charges: If a payment is more than 10 days late. I will be charged 5% of the delinquent amount or $5.00, whichever is greater. Prepayment: If I pay my loan
off early, I may be entitled to a refund of part of the finance charge.




Security Interest: My loan is secured by the insurance policy purchased with the loan proceeds, as wall as proceeds of the policy.




Contract Reference: I should look to the Contract for further information about non-payment, default, your right to accelerate the maturity of the obligation, and
prepayment rebates and penalties.




PROMISSORY NOTE



Promise to Pay: I promise to pay to your order, at your address, the sum of dollars
($0.00) consisting of principal and precomputed interest at the rate of 0.00% per annum,
payable in equal installments of $0.00, due on the day of each month, commencing on ___, with
one final installment due on.




     Late Charges: If I fail to pay any installment within ten days of its due date, I agree to pay
you a late charge of 5% of the delinquent amount or $5.00 whichever is greater. A late charge will
also be assessed if the policy is canceled due to insufficient funds.



     Default and Acceleration: If I fail to pay one installment and it remains unpaid for ten days
or more after the due date, this Promissory Note will be in default and you may cancel my Insurance
Policy. If two or more installments are in default for ten days or more, you may accelerate the
maturity of this Promissory note, which means that I must pay all outstanding amounts immediately.
After making any rebate required by law, you may then convert this Promissory Note into a simple
interest transaction.



     Additional Interest: If you accelerate the maturity of this Promissory Note or if it remains
unpaid after the final installment is due, then, for a period of one (1) year after maturity, I
agree to pay additional Interest on the unpaid balance (after any applicable rebate) at the
interest rate shown above. After that, I agree to pay interest at the rate of 18% per annum, until
this Promissory Note is paid in full.



     Rebate: I may prepay this Promissory Note in full at any time. If I prepay in full, or if you
accelerate the maturity of this Promissory Note, l may be entitled to a refund of part of the
finance charge as determined by the simple Interest method. The $25.00 Origination Fee I paid when
I first made my loan is earned when my loan is closed and will not be rebated.



     Attorney’s Fees: If you refer this Promissory Note to any attorney for collection, I agree to
pay attorney’s fees in an amount equal to 25% of the unpaid debt owed to you.



     Unpaid Check Charges: If I pay by check and my check is returned because I stopped payment, or
because there were insufficient funds in my account, I will pay you an additional amount, equal to
5% of the amount of my dishonored check, or $15.00, whichever is less.



     Non-negotiable: This Promissory Note is not negotiable.



     Waivers: I waive demand for payment, notice of protest and of non-payment, and all defenses of
division and discussion. My liability under this Promissory Note is “in solido” with the liability
of any other person who may be liable. Discharge or release of any specific right, or of any
security given to secure payment, will not affect the remainder of my obligation.




 









 





Signature Lines on Second Page




SECURITY AGREEMENT




     In order to secure payment of any amounts that I may owe you under this Contract, I give you a
security interest in my Insurance Policy, including (but not limited to) any right to a refund of
premiums or any amount the Insurance Company might otherwise owe me for losses covered by my
insurance Policy. You may apply any money you receive from my Insurance policy to pay any debt owed
to you under this Contract, including any amount due under the Promissory Note, the $25.00
Cancellation Fee described below, attorney fees, or any deferred charges. Even though you have the
right to be paid from proceeds of the Insurance Policy, I remain personally liable to pay you these
amounts until everything is paid.



Signature Lines Below




LIENHOLDERS AND OTHERS ENTITLED TO NOTICE OF CANCELLATION:




Signature Lines Below




POWER OF ATTORNEY




     I give you a power of attorney. If I fail to pay even one installment on the Promissory Note,
I authorize you to cancel my Insurance Policy and any endorsements listed on this Contract or in
any amendments to this Contract, including amendments you make pursuant to this Power of Attorney.
I give a power of attorney to notify my Insurance Company and any persons entitled to notice and to
tell them that my Insurance Policy is cancelled. After payment of all amounts due to you under this
Contract, I also give you power of attorney to pay to the Insurance Company (or allow the Insurance
Company to retain) any unearned premiums or other amounts which the Insurance Company may otherwise
owe me, in order to purchase as much continued coverage under the Insurance Policy as such funds
permit, until such time as I prove to the Insurance Company that I have purchased replacement
insurance, as required by law or as required by any other person entitled to the benefit of
coverage. I may not revoke this power of attorney while my Promissory Note remains unpaid and until
I have provided such replacement Insurance.



Signature Lines Below




ADDITIONAL CONTRACT TERMS




     Pronouns and Headings: This Contract uses the words “I”, “me”, and “my”, which refer to the
Insured who is signing this Contract. The words “you”, “your”, and “yours” refer to the Creditor.
The headings in this Contract are only for convenience and do not completely summarize the
provisions which follow them.



     Changes to Insurance Policy: If in the future I request any change to my Insurance Policy and
if the change is accepted by the Insurance Company and it makes an endorsement to the Insurance
Policy, the new Declaration Page containing the requested endorsement will automatically become a
part of and incorporated into this Contract by reference. I further authorize you to adjust the
balance due you and the related remaining payments under my original Insurance Premium Finance
Contract together with any modifications thereto without obtaining an amended, signed contract from
me.



     No Reliance on Anything Not Written in this Contract: No employee of LIFCO or USAgencies told
me that this Contract includes anything not written in this Contract.



 









 





     Use of Proceeds: I have borrowed from you the Amount Financed. This money will be used to pay
the premium on the Insurance Policy and for the other purposes stated in the section entitled
“Itemization of Amount Financed.”



     Cancellation Fee: If you cancel the Insurance Policy after my default, I agree to pay you a
cancellation fee of $25.00. This fee is different than the Origination Fee which is described
elsewhere in this Contract.



     Deferred Charges: You, in your absolute discretion, may choose to defer my obligation to pay
late charges, the Cancellation Fee or any other amount which I may owe you under this Contract. I
understand that you are not waiving your right to collect such fees, but only deferring the time
for payment. I understand that you do not waive any such charges or release me from my obligation
to pay them, unless you specifically tell me in writing that you are doing so.



     Louisiana Consumer Credit Law: You and I agree that this Contract is governed by the Louisiana
Consumer Credit Law.



     Receipt of Copy of Contract: I have received a copy of this contract.



     Electronic Collection of Checks: I authorize you to electronically collect any check I give
you. You may at your option electronically collect a check, either the first time you present it
for payment, or if a check is returned because of insufficient funds and you re-present it. in the
case of a returned check, my account may be debited for any applicable fees as stated in the Unpaid
Check Charges section of the Promissory Note. If a check is collected electronically, you will send
the check amount, routing and account numbers to my bank. Because this information is sent
electronically, my bank account can be debited as early as the same day you receive the check. If a
check is collected electronically, I authorize you to destroy the original and maintain an image in
your records. I understand that my bank will not return the canceled check to me, but will show the
transaction on my bank account statement.



     Reading and Understanding: I have read everything in this Contract (which consists of 2
pages). Before signing this Contract, I understood it or I obtained someone’s help so I could
understand.



	 	 	 	 	 
	 

	 	 

	 	 
	 

	 	Borrower	 	 
	 
	 	 	 	 
	 

	 	 

	 	 
	 

	 	Date	 	 






Accepted by: ___, LIFCO Representative, on:




 









 








SCHEDULE 1.01(a)




MORTGAGED PROPERTIES




Affirmative Mortgaged Property 




None.



USAgencies Mortgaged Property



Renaissance Park East, 1500 Main Street, Baton Rouge, Louisiana, East Baton Rouge Parish.



 









 








SCHEDULE 1.01(b)




SUBSIDIARY GUARANTORS




Affirmative Subsidiary Guarantors 





	1.	 	Affirmative Management Services, Inc.
	 
	2.	 	Affirmative Property Holdings, Inc.
	 
	3.	 	Affirmative Services Retail, Inc.
	 
	4.	 	Affirmative Services, Inc.
	 
	5.	 	Affirmative Insurance Group, Inc.
	 
	6.	 	Affirmative Underwriting Services, Inc.
	 
	7.	 	A-Affordable Managing General Agency, Inc.
	 
	8.	 	Affirmative Insurance Services of South Carolina, Inc.
	 
	9.	 	Affirmative Insurance Services of Illinois, Inc.
	 
	10.	 	Affirmative Insurance Services of Texas, Inc.
	 
	11.	 	American Agencies Insurance Services of Louisiana, Inc.
	 
	12.	 	American Agencies Investments, Inc.
	 
	13.	 	Space Coast Holdings, Inc.
	 
	14.	 	Affirmative Insurance Services of Pennsylvania, Inc.
	 
	15.	 	Affirmative Insurance Services of Florida, Inc.
	 
	16.	 	Affirmative Retail, Inc.
	 
	17.	 	A-Affordable Insurance Agency, Inc.
	 
	18.	 	Driver’s Choice Insurance Agencies, Inc.
	 
	19.	 	Driver’s Choice Insurance Services, LLC
	 
	20.	 	Fed USA Retail, Inc.
	 
	21.	 	Instant Auto Insurance Agency of Arizona, Inc.
	 
	22.	 	Instant Auto Insurance Agency of Colorado, Inc.
	 
	23.	 	Instant Auto Insurance Agency of Indiana, Inc.
	 
	24.	 	Instant Auto Insurance Agency of New Mexico, Inc.
	 
	25.	 	InsureOne Independent Insurance Agency, LLC
	 
	26.	 	Yellow Key Insurance Agency, Inc.
	 
	27.	 	Affirmative Franchising Group, Inc.
	 
	28.	 	Fed USA Franchising Group, Inc.
	 
	29.	 	Fed USA Franchising, Inc.
	 
	30.	 	Affirmative Alternative Distribution, Inc.
	 
	31.	 	Affirmative Premium Finance Holdings, Inc.





USAgencies Subsidiary Guarantors 





	1.	 	USAgencies, L.L.C.
	 
	2.	 	LIFCO, L.L.C.
	 
	3.	 	USAgencies Management Services, Inc.




 









 











SCHEDULE 3.08(a)




SUBSIDIARIES




	 	 	 	 	 	 	 	 	 
	 	 	 	 	Borrower’s Percentage of Ownership 	 	 
	 	 	Jurisdiction of 	 	Interest in Subsidiary	 	Loan Party 
	Legal Name	 	Incorporation/Formation	 	(direct and indirect)	 	Y/N
	Affirmative Management Services, Inc.

	 	Texas
	 	 	100	%	 	Y
	 
	 	 	 	 	 	 	 	 
	Affirmative Property Holdings, Inc.

	 	Texas
	 	 	100	%	 	Y
	 
	 	 	 	 	 	 	 	 
	Affirmative Services Retail, Inc.

	 	Texas
	 	 	100	%	 	Y
	 
	 	 	 	 	 	 	 	 
	Affirmative Services, Inc.

	 	Texas
	 	 	100	%	 	Y
	 
	 	 	 	 	 	 	 	 
	Affirmative Insurance Group, Inc.

	 	Texas
	 	 	100	%	 	Y
	 
	 	 	 	 	 	 	 	 
	Affirmative Insurance Company

	 	Illinois
	 	 	100	%	 	N
	 
	 	 	 	 	 	 	 	 
	Insura Property and Casualty Insurance Company

	 	Illinois
	 	 	100	%	 	N
	 
	 	 	 	 	 	 	 	 
	Affirmative Insurance Company of Michigan

	 	Michigan
	 	 	100	%	 	N
	 
	 	 	 	 	 	 	 	 
	Affirmative Underwriting Services, Inc.

	 	Texas
	 	 	100	%	 	Y
	 
	 	 	 	 	 	 	 	 
	A-Affordable Managing General Agency, Inc.

	 	Texas
	 	 	100	%	 	Y
	 
	 	 	 	 	 	 	 	 
	Affirmative Insurance Services of South Carolina, Inc.

	 	South Carolina
	 	 	100	%	 	Y
	 
	 	 	 	 	 	 	 	 
	Affirmative Insurance Services of Illinois, Inc.

	 	Illinois
	 	 	100	%	 	Y
	 
	 	 	 	 	 	 	 	 
	Affirmative Insurance Services of Texas, Inc.

	 	Texas
	 	 	100	%	 	Y
	 
	 	 	 	 	 	 	 	 
	American Agencies Insurance Services of Louisiana,Inc.

	 	Louisiana
	 	 	100	%	 	Y
	 
	 	 	 	 	 	 	 	 
	American Agencies Investments, Inc.

	 	Delaware
	 	 	100	%	 	Y
	 
	 	 	 	 	 	 	 	 
	Space Coast Holdings, Inc.

	 	Delaware
	 	 	100	%	 	Y
	 
	 	 	 	 	 	 	 	 
	Affirmative Insurance Services of Pennsylvania, Inc.

	 	Pennsylvania
	 	 	100	%	 	Y
	 
	 	 	 	 	 	 	 	 
	Affirmative Insurance Services of Florida, Inc.

	 	Florida
	 	 	100	%	 	Y






 









 






	 	 	 	 	 	 	 	 	 
	 	 	 	 	Borrower’s Percentage of Ownership 	 	 
	 	 	Jurisdiction of 	 	Interest in Subsidiary	 	Loan Party 
	Legal Name	 	Incorporation/Formation	 	(direct and indirect)	 	Y/N
	Affirmative Retail, Inc.

	 	Texas
	 	 	100	%	 	Y
	 
	 	 	 	 	 	 	 	 
	A-Affordable Insurance Agency, Inc.

	 	Texas
	 	 	100	%	 	Y
	 
	 	 	 	 	 	 	 	 
	Driver’s Choice Insurance Agencies, Inc.

	 	South Carolina
	 	 	100	%	 	Y
	 
	 	 	 	 	 	 	 	 
	Driver’s Choice Insurance Services, LLC

	 	South Carolina
	 	 	100	%	 	Y
	 
	 	 	 	 	 	 	 	 
	Fed USA Retail, Inc.

	 	Florida
	 	 	100	%	 	Y
	 
	 	 	 	 	 	 	 	 
	Instant Auto Insurance Agency of Arizona, Inc.

	 	Arizona
	 	 	100	%	 	Y
	 
	 	 	 	 	 	 	 	 
	Instant Auto Insurance Agency of Colorado, Inc.

	 	Colorado
	 	 	100	%	 	Y
	 
	 	 	 	 	 	 	 	 
	Instant Auto Insurance Agency of Indiana, Inc.

	 	Indiana
	 	 	100	%	 	Y
	 
	 	 	 	 	 	 	 	 
	Instant Auto Insurance Agency of New Mexico, Inc.

	 	New Mexico
	 	 	100	%	 	Y
	 
	 	 	 	 	 	 	 	 
	InsureOne Independent Insurance Agency, LLC

	 	Illinois
	 	 	100	%	 	Y
	 
	 	 	 	 	 	 	 	 
	Yellow Key Insurance Agency, Inc.

	 	Illinois
	 	 	100	%	 	Y
	 
	 	 	 	 	 	 	 	 
	Affirmative Franchising Group, Inc.

	 	Texas
	 	 	100	%	 	Y
	 
	 	 	 	 	 	 	 	 
	Fed USA Franchising Group, Inc.

	 	Delaware
	 	 	100	%	 	Y
	 
	 	 	 	 	 	 	 	 
	Fed USA Franchising, Inc.

	 	Florida
	 	 	100	%	 	Y
	 
	 	 	 	 	 	 	 	 
	Affirmative Alternative Distribution, Inc.

	 	Texas
	 	 	100	%	 	Y
	 
	 	 	 	 	 	 	 	 
	Affirmative Insurance Holdings Statutory Trust I

	 	Delaware
	 	 	100	%	 	Y
	 
	 	 	 	 	 	 	 	 
	Affirmative Insurance Holdings Statutory Trust II

	 	Delaware
	 	 	100	%	 	Y
	 
	 	 	 	 	 	 	 	 
	Affirmative Premium Finance Holdings, Inc.

	 	Delaware
	 	 	100	%	 	Y
	 
	 	 	 	 	 	 	 	 
	USAgencies, L.L.C.

	 	Louisiana
	 	 	100	%	 	Y
	 
	 	 	 	 	 	 	 	 
	USAgencies Casualty Insurance Company, Inc.

	 	Louisiana
	 	 	100	%	 	N






 









 






	 	 	 	 	 	 	 	 	 
	 	 	 	 	Borrower’s Percentage of Ownership 	 	 
	 	 	Jurisdiction of 	 	Interest in Subsidiary	 	Loan Party 
	Legal Name	 	Incorporation/Formation	 	(direct and indirect)	 	Y/N
	USAgencies Direct Insurance Company

	 	New York
	 	 	100	%	 	N
	 
	 	 	 	 	 	 	 	 
	LIFCO, L.L.C.

	 	Louisiana
	 	 	100	%	 	Y
	 
	 	 	 	 	 	 	 	 
	USAgencies Management Services, Inc.

	 	Louisiana
	 	 	100	%	 	Y






 









 






SCHEDULE 3.08(b)




DIVIDEND RESTRICTIONS




None.




 









 








SCHEDULE 3.09




LITIGATION




Affirmative Litigation 




None.



USAgencies Litigation 




None.




 









 








SCHEDULE 3.17




ENVIRONMENTAL MATTERS




Affirmative Environmental Matters 




1. None.



USAgencies Environmental Matters




1. None.




 










 





SCHEDULE 3.18




INSURANCE




Affirmative Insurance




	 	 	 	 	 	 	 	 	 	 	 	 	 
	Policy Type 	 	Insurance Company	 	Coverage Included	 	Expiration Date 	 	Policy Limits 	 	Deductible 	 	Annual Premium
	Commercial Umbrella
	 	Hartford Casualty Ins. Co.
	 	Excess umbrella over

first layer — underlying
	 	July 9, 2007
	 	$15,000,000
	 	Underlying

insurance $10,000

SIR
	 	$24,846

(includes terrorism)
	 	 	 	 	 	 	 	 	 	 	 	 	 
	Excess Liability -

Excess Umbrella
	 	Fireman’s Fund Insurance

Company
	 	Excess over second layer

- umbrella
	 	July 9, 2007
	 	$10,000,000 per

occurrence and in the
aggregate
	 	Underlying Insurance
	 	$13,600

(includes terrorism)
	 	 	 	 	 	 	 	 	 	 	 	 	 
	Mail Loss
	 	Federal Insurance Company
	 	Crime coverage related to

use of mail
	 	July 9, 2007
	 	Registered mail or
U.S. Postal Express

Mail: $2,500,000
	 	 	 	$ 1,500
	 
	 	 	 	 	 	 	 	Custom designed

services: $5,000,000	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	Registered mail only: $250,000	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	Insuring Clause I -
Foreign	 	 	 	 
	 
	 	 	 	 	 	 	 	Registered mail or
overnight
 air couriers
- $10,000,000	 	 	 	 






 









 






	 	 	 	 	 	 	 	 	 	 	 	 	 
	Policy Type 	 	Insurance Company	 	Coverage Included	 	Expiration Date 	 	Policy Limits 	 	Deductible 	 	Annual Premium
	 
	 	 	 	 	 	 	 	Registered mail
 only: $250,000	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	Insuring Clause II -
Domestic
 Only	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	Not exceeding any one

shipping package: $250,000	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	Not exceeding to any

one addressee on any

one day: $2,500,000	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	Overnight air couriers

of U.S. postal express

mail: a)

non-negotiable:	 	 	 	 
	 
	 	 	 	 	 	 	 	$10,000,000; b)

negotiable: $250,000	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 
	Commercial Package
	 	Hartford Casualty Ins. Co.
	 	 	 	July 9, 2007
	 	Property
	 	Property: $5,000
	 	Property:
	 
	 	 	 	 	 	 	 	 	 	Earthquake: $25,000

Wind: $10,000*
	 	$23,616.20

General Liability:
	 
	 	 	 	 	 	 	 	 	 	Flood: $25,000**

GL: none

Employee benefits:
	 	$28,694.56
	 
	 	 	 	 	 	 	 	 	 	$1,000	 	 






 









 






	 	 	 	 	 	 	 	 	 	 	 	 	 
	Policy Type 	 	Insurance Company	 	Coverage Included	 	Expiration Date 	 	Policy Limits 	 	Deductible 	 	Annual Premium
	Commercial
	 	 	 	Commercial Auto Coverage
	 	July 9, 2007
	 	BI/PD liability:	 	 	 	 
	Automobile (TX, IN, 

and IL)
	 	Hartford Accident &

Indemnity
	 	for TX, IN, & IL garaged

vehicles
	 	 
	 	$1,000,000

Physical damage: ACV
	 	Collision — $1,000
	 	$ 57,110
	 	 	 	 	 	 	 	 	 	 	 	 	 
	Commercial 

Automobile (All
	 	Hartford Accident &

Indemnity
	 	Commercial Auto Coverage
	 	July 9, 2007
	 	BI/PD liability:	 	 	 	 
	states other than 

TX, IN, and IL)
	 	 
	 	for vehicles garaged

outside of TX, IN, & IL
	 	 
	 	$1,000,000

Physical damage: ACV
	 	Collision — $1,000
	 	$ 12,500
	 	 	 	 	 	 	 	 	 	 	 	 	 
	Workers Compensation
	 	Hartford Underwriters

Ins. Co.
	 	 	 	July 9, 2007
	 	Part A — statutory

Part B (EL): $1,000,000
	 	$1,000

comprehensive,


$1,000 collision
	 	$148,897.00
	 	 	 	 	 	 	 	 	 	 	 	 	 
	Commercial Crime
	 	Indian Harbor Insurance

Company
	 	Employee dishonesty,

forgery, theft,

disappearance, robbery of

a custodian, computer

fraud, money orders,

counterfeit, securities

forgery, trading loss

Miscellaneous

professional liability

coverage for insurance
	 	July 9, 2007
	 	$ 5,000,000
	 	$ 100,000

$250,000 for each

claim, unless
	 	$40,000, $1,940 -

surplus,

$40 stamping fee
	 	 	 	 	 	 	 	 	 	 	 	 	 
	Errors & Omissions

(Miscellaneous 

Professional)
	 	Indian Harbor Insurance

Company (XL)
	 	company, insurance

agents, employed lawyers,

and franchise services
	 	July 9, 2007
	 	$5,000,000 pending

and prior date 7/9/04
	 	insurance agent or

employed lawyers,

then $10,000
	 	$250,000, $12,125 -

surplus, $250

stamping fee
	 	 	 	 	 	 	 	 	 	 	 	 	 
	Employment Practices 

Liability
	 	Greenwich Insurance

Company (XL)
	 	Employment practices

liability
	 	July 9, 2007
	 	$ 5,000,000
	 	$150,000 per claim
	 	$100,000






 









 






	 	 	 	 	 	 	 	 	 	 	 	 	 
	Policy Type 	 	Insurance Company	 	Coverage Included	 	Expiration Date 	 	Policy Limits 	 	Deductible 	 	Annual Premium
	Fiduciary Liability
	 	Greenwich Insurance

Company (XL)
	 	Fiduciary liability
	 	July 9, 2007
	 	$5,000,000 pending and

prior date 7/9/04
	 	$50,000 per claim
	 	$ 15,000
	 	 	 	 	 	 	 	 	 	 	 	 	 
	Directors & Officers
	 	XL Specialty Insurance

Company
	 	Management liability and

company reimbursement
	 	July 9, 2007
	 	$20,000,000 pending

and prior date 7/9/04

$10,000,000 of
	 	$1,000,000
	 	$400,000
	 	 	 	 	 	 	 	 	 	 	 	 	 
	Directors & Officers

(Side A — DIC)
	 	Illinois National

Insurance Co.
	 	Side A — DIC
	 	July 9, 2007
	 	liability in excess of

$20,000,000
	 	$ 0
	 	$104,125








 




			
	*	 	Applies to Houston, Galveston, Baytown, Pasedena, Beaumont, McAllen,
Edinburg, Mission, Brownsville, Pharr Corpus Christi and Florida, except for
100 Rialto in Melbourne, which has a 2% wind deductible and a $500,000 flood
limit, and a $500,000 flood deductible.
	 
	**	 	100 Rialto in Melbourne has a $500,000 flood limit, and a $500,000 flood
deductible Flood deductible of $25,000 applies to those locations with a
$1,000,000 limit as outlined in policy.





USAgencies Insurance




See attached.



 









 








SCHEDULE 3.19(a)




UCC FILING OFFICES




Affirmative Filing Offices 




	 	 	 
	Grantor	 	Filing Office
	Affirmative Insurance Holdings, Inc.

	 	Secretary of State of Delaware
	 
	 	 
	Affirmative Management Services, Inc.

	 	Secretary of State of Texas
	 
	 	 
	Affirmative Property Holdings, Inc.

	 	Secretary of State of Texas
	 
	 	 
	Affirmative Services Retail, Inc.

	 	Secretary of State of Texas
	 
	 	 
	Affirmative Services, Inc.

	 	Secretary of State of Texas
	 
	 	 
	Affirmative Insurance Group, Inc.

	 	Secretary of State of Texas
	 
	 	 
	Affirmative Underwriting Services, Inc.

	 	Secretary of State of Texas
	 
	 	 
	A-Affordable Managing General Agency, Inc.

	 	Secretary of State of Texas
	 
	 	 
	Affirmative Insurance Services of South Carolina, Inc.

	 	Secretary of State of South Carolina
	 
	 	 
	Affirmative Insurance Services of Illinois, Inc.

	 	Secretary of State of Illinois
	 
	 	 
	Affirmative Insurance Services of Texas, Inc.

	 	Secretary of State of Texas
	 
	 	 
	American Agencies Insurance Services of Louisiana, Inc.

	 	East Baton Rouge Parish Clerk
of Court, Louisiana
	 
	 	 
	American Agencies Investments, Inc.

	 	Secretary of State of Delaware
	 
	 	 
	Space Coast Holdings, Inc.

	 	Secretary of State of Delaware
	 
	 	 
	Affirmative Insurance Services of Pennsylvania, Inc.

	 	Secretary of State of Pennsylvania
	 
	 	 
	Affirmative Insurance Services of Florida, Inc.

	 	Secretary of State of Florida
	 
	 	 
	Affirmative Retail, Inc.

	 	Secretary of State of Texas
	 
	 	 
	A-Affordable Insurance Agency, Inc.

	 	Secretary of State of Texas
	 
	 	 
	Driver’s Choice Insurance Agencies, Inc.

	 	Secretary of State of South Carolina
	 
	 	 
	Driver’s Choice Insurance Services, LLC

	 	Secretary of State of South Carolina
	 
	 	 
	Fed USA Retail, Inc.

	 	Secretary of State of Florida
	 
	 	 
	Instant Auto Insurance Agency of Arizona, Inc.

	 	Secretary of State of Arizona
	 
	 	 
	Instant Auto Insurance Agency of Colorado, Inc.

	 	Secretary of State of Colorado
	 
	 	 
	Instant Auto Insurance Agency of Indiana, Inc.

	 	Secretary of State of Indiana
	 
	 	 
	Instant Auto Insurance Agency of New Mexico, Inc.

	 	Secretary of State of New Mexico
	 
	 	 
	InsureOne Independent Insurance Agency, LLC

	 	Secretary of State of Illinois
	 
	 	 
	Yellow Key Insurance Agency, Inc.

	 	Secretary of State of Illinois
	 
	 	 
	Affirmative Franchising Group, Inc.

	 	Secretary of State of Texas
	 
	 	 
	Fed USA Franchising Group, Inc.

	 	Secretary of State of Delaware






 









 






	 	 	 
	Grantor	 	Filing Office
	Fed USA Franchising, Inc.

	 	Secretary of State of Florida
	 
	 	 
	Affirmative Alternative Distribution, Inc.

	 	Secretary of State of Texas
	 
	 	 
	Affirmative Insurance Holdings Statutory Trust I

	 	Secretary of State of Delaware
	 
	 	 
	Affirmative Insurance Holdings Statutory Trust II

	 	Secretary of State of Delaware
	 
	 	 
	Affirmative Premium Finance Holdings, Inc.

	 	Secretary of State of Delaware






USAgencies Filing Offices




	 	 	 
	Grantor	 	Filing Office
	USAgencies, L.L.C.

	 	East Baton Rouge Parish Clerk of
Court, Louisiana
	 
	 	 
	LIFCO, L.L.C.

	 	East Baton Rouge Parish Clerk of
Court, Louisiana
	 
	 	 
	USAgencies Management Services, Inc.

	 	East Baton Rouge Parish Clerk of
Court, Louisiana






 









 






SCHEDULE 3.19(c)




MORTGAGE FILING OFFICES




Affirmative Mortgage Filing Offices 





	1.	 	Not applicable.





USAgencies Mortgage Filing Offices 





	1.	 	East Baton Rouge Parish Clerk of Court, Louisiana.






 









 





SCHEDULE 3.20




OWNED AND LEASED REAL PROPERTY




Affirmative Owned and Leased Real Property




	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	LEASE	 	LEASE EXPIRATION	 	 	 	 	 	 
	ADDRESS	 	CITY	 	STATE	 	ZIP	 	COMMENCEMENT	 	DATE	 	LANDLORD NAME	 	LANDLORD PHONE	 	LANDLORD ADDRESS
	236 W. Lincoln Hwy.

	 	Schererville
	 	IN
	 	 	46375	 	 	7/1/06
	 	12/31/2006
	 	Lincoln Ridge Plaza LLC
	 	630-924-8401 (Kena Lacy — Asst.)
	 	c/o Pinecrest
Property Management
(Mathew
Vachaparambil) 672 E.
Irving Park Rd. Suite
106 Roselle, IL 60172
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	7755 E. Washington St.

	 	Indianapolis
	 	IN
	 	 	46219	 	 	1/1/04
	 	12/31/2006
	 	East Washington Plaza
	 	317-816-4646; FAX 317-816-4656
	 	P.O. Box 2303-130
Indianapolis, IN
46206
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	1298 N. Kinzie Ave.

	 	Bradley
	 	IL
	 	 	60915	 	 	2/1/04
	 	1/31/2007
	 	William J. Tucker Real
Estate Co.
	 	847-917-2301; fax: 847-839-1925
	 	William J. Tucker
Jr.; William J.
Tucker Real Estate
Co.; A&A Bradley, LP;
c/o WJT Real Estate
Company; 2140 Cat
Tail Run #208,
Gurnee, IL 60031(new
per letter dated
11/1/06) (2300 N.
Barrington Road ~
Suite 457 ~ Hoffman
Estates, IL, 60195)
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	3535 Broadway, Ste. A

	 	Kansas City
	 	MO
	 	 	64111	 	 	2/1/04
	 	1/31/2007
	 	4301 Main, LLC
	 	816-822-7788; fax 816-822-7778
	 	c/o Del Hedgepath
5930 Ward Parkway
Kansas City, MO 64113
(dhedgepath@kc.rr.com)
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	3184 N. Water St.

	 	Decatur
	 	IL
	 	 	62526	 	 	2/1/06
	 	1/31/2007
	 	Brettwood Village LLC
	 	312/795-2210/(217) 877-4600
	 	Brettwood Village c/o
Draper & Kramer,
Retail Property
Services(Joe Kunst)
33 W. Monroe St.
Suite 1900 Chicago,
IL 60603
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	1010 W. Rand Rd.

	 	Arlington Heights
	 	IL
	 	 	60004	 	 	8/14/06
	 	1/31/2007
	 	Rand Management Group

(John Kalyviaris)
	 	847/438-0025
	 	20922 N. Rand Road
Kildeer, IL 60047






 









 






	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	LEASE	 	LEASE EXPIRATION	 	 	 	 	 	 
	ADDRESS	 	CITY	 	STATE	 	ZIP	 	COMMENCEMENT	 	DATE	 	LANDLORD NAME	 	LANDLORD PHONE	 	LANDLORD ADDRESS
	3160 W. 175th St.

	 	Hazel Crest
	 	IL
	 	 	60429	 	 	3/1/02
	 	2/28/2007
	 	Ted Pyrilis
	 	847-470-2366
	 	5515 W. Madison
Street Morton Grove,
IL 60053
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	701 N. Lewis Ave.

	 	Waukegan
	 	IL
	 	 	60085	 	 	3/22/04
	 	3/21/2007
	 	James Wolden
	 	708-623-2695
	 	37562 Holdridge

Avenue, Waukegan, IL

60085
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	2834 N. Harlem

	 	Elmwood Park
	 	IL
	 	 	60707	 	 	4/1/02
	 	3/31/2007
	 	Tops L.L.C.
	 	847-674-4321; fax: 847-674-0230
	 	TOPS, LLC c/o The
Taxman Corporation
5215 Old Orchard Rd,
Suite 130 Skokie, IL
60077
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	153 W. Roosevelt Road

	 	Chicago
	 	IL
	 	 	60185	 	 	6/1/04
	 	5/31/2007
	 	Alfredo Linares
	 	 	 	P.O. Box 1193
Chicago, IL 60690
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	100 W. 87th St.

	 	Chicago
	 	IL
	 	 	60620	 	 	9/1/04
	 	8/31/2007
	 	Inland Commercial
Property Management,
Inc. (Anna Maria
Bartucci)
	 	630-218-5262 (Angela Aeschliman

- Prop Mgr)
	 	2901 Butterfield Rd.
Oakbrook, IL 60523
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	2601 S. Halsted St.

	 	Chicago
	 	IL
	 	 	60608	 	 	9/1/06
	 	8/31/2007
	 	Kam L. Liu Realty *new
payee (no longer SQY)
as of 8-25-06
	 	312-225-0200 or 630-202-9688
	 	3119 S. Halsted
Chicago, IL 60608
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	2423 Independence Ave.

	 	Kansas City
	 	MO
	 	 	64124	 	 	11/1/06
	 	10/31/2007
	 	Melba Ah Mu
	 	913-206-1505
	 	2425 Independence
Ave. Kansas City, MO
64124
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	12255 S. Western Ave.

	 	Chicago
	 	IL
	 	 	60406	 	 	11/1/04
	 	10/31/2007
	 	Mer-Car Corp
	 	773-227-2160
	 	1410 S. Clinton
Street Chicago, IL
60607
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	3413 B Noland Road.

	 	Independence
	 	MO
	 	 	64133	 	 	10/15/02
	 	11/30/2007
	 	Gaslight Square

Shopping Center
	 	816-531-1400 (John Trevor)
	 	c/oBlock & Company,
Inc 605 W. 47th
Street Kansas City,
MO 64112
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	2599 W. Golf Rd.

	 	Hoffman Estates
	 	IL
	 	 	60194	 	 	12/1/04
	 	11/30/2007
	 	Tampa Rinaldi Ranch

Center LLC	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	1612 Mishawaka Ave.

	 	South Bend
	 	IN
	 	 	46615	 	 	12/1/06
	 	11/30/2007
	 	Dan and Doris Weninger
	 	219-633-4603
	 	11073 Dragoon Trail

Mishawaka, IN 46544
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	531 Roosevelt Rd.

	 	Glen Ellyn
	 	IL
	 	 	60137	 	 	12/1/05
	 	11/30/2007
	 	Glen Ellyn Plaza

Corporation/ Market

Plaza Shopping Center
	 	847-559-8882; FAX 847-559-9160
	 	c/o The Shiner Group

LLC 3100 Dundee #304

Northbrook, IL 60062
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 





 









 






	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	LEASE	 	LEASE EXPIRATION	 	 	 	 	 	 
	ADDRESS	 	CITY	 	STATE	 	ZIP	 	COMMENCEMENT	 	DATE	 	LANDLORD NAME	 	LANDLORD PHONE	 	LANDLORD ADDRESS
	11331 S. Michigan
Avenue

	 	Chicago
	 	IL
	 	 	60628	 	 	1/1/05
	 	12/31/2007
	 	Candace Professional,
Inc. (Reverend
Gardner)
	 	773-934-4499
	 	11331 S. Michigan
Ave, Chicago IL 60605
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	6462A N. Lindbergh

	 	Florissant
	 	MO
	 	 	63031	 	 	1/1/05
	 	12/31/2007
	 	Keevan Development
	 	314-921-2624
	 	8460 N. Lindbergh,
Suite 15 Florissant,
MO 63031
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	71 A West 159th Street

	 	Harvey
	 	IL
	 	 	60426	 	 	1/1/05
	 	12/31/2007
	 	Great Lakes Trust Co

AT/UT Number 01-014
	 	708-906-3300 (Cell);
708-598-0098 (home) Eddie
	 	c/o Musa Financial
Services 9147 S Oak
Park Ave., Oak Lawn,
IL 60453 (New as of
1/26/06)
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	1661 E. 80th Ave.

	 	Merrillville
	 	IN
	 	 	46410	 	 	1/1/05
	 	12/31/2007
	 	Acadia Merrillville
Realty, L.P.
	 	914-288-8100 (Legal) Property

Mgmt: Pete 937-312-1930
	 	1311 Mamaroneck
Ave.,Suite 260 White
Plains, NY 10605
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	20 E. Jefferson Ave.

	 	Naperville
	 	IL
	 	 	60540	 	 	1/1/06
	 	12/31/2007
	 	Naper LTD Partnership

(Jon Pusateri)
	 	Cell: 262-249-9622
	 	P.O. Box 2195
Naperville, IL
60567-2195
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	327 Armour Rd.

	 	Kansas City
	 	MO
	 	 	64116	 	 	2/1/05
	 	1/31/2008
	 	Revanne Partners,
L.P.(Ralph E. Lewis
II)
	 	816-792-5655
	 	c/o Prudential
Cres-Commerical 7 N.
Water Street Liberty,
MO 64068
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	9238 S. Stony Island
Ave.

	 	Chicago
	 	IL
	 	 	60617	 	 	3/1/03
	 	2/28/2008
	 	Stephen & Sheila Hill
	 	773-457-0126; 219-934-0520
(Sheila cell)
	 	P.O.Box 3483 Munster,
IN 46321
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	5 Clock Tower Plaza

	 	Elgin
	 	IL
	 	 	60120	 	 	9/1/04
	 	3/31/2008
	 	Butera Finer Foods
(Paul J. Butera)
	 	847-741-1010	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	5811 E. Riverside Blvd.

	 	Rockford
	 	IL
	 	 	61114	 	 	4/1/03
	 	3/31/2008
	 	Investquest, LLC (Dan

Cataldi)
	 	815-282-0202 or cell:

815-978-2258
	 	5813 E. Riverside
Blvd. Rockford, IL
61114
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	4721 S. Kingshighway

	 	St. Louis
	 	MO
	 	 	63109	 	 	5/1/03
	 	4/30/2008
	 	Kenneth R. Baldridge
d/b/a Baldridge
Properties/KRB
Properties
	 	314-966-2300; fax — 314-966-2370
	 	11825 Manchester St.
Louis, MO 63131
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	3535 N. Western Ave.

	 	Chicago
	 	IL
	 	 	60618	 	 	6/1/06
	 	5/31/2008
	 	Joe Hayes-Hayes
Properties Inc.
	 	773-929-7050; fax (773) 929-5049
	 	2811 N. Mildred
Chicago, IL 60657
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	1801 E. 71st St.

	 	Chicago
	 	IL
	 	 	60649	 	 	6/1/05
	 	5/31/2008
	 	Henry English/The
Black United Fund of
Illinois, an ILL.
Non-profit corporation
	 	773-324-0494
	 	1809 E. 71st Street
Chicago, IL 60649






 









 






	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	LEASE	 	LEASE EXPIRATION	 	 	 	 	 	 
	ADDRESS	 	CITY	 	STATE	 	ZIP	 	COMMENCEMENT	 	DATE	 	LANDLORD NAME	 	LANDLORD PHONE	 	LANDLORD ADDRESS
	5174 Franklin St.

	 	Michigan City
	 	IN
	 	 	46360	 	 	6/1/05
	 	5/31/2008
	 	Michigan City 421 LLC
	 	847-674-8020; fax 847-674-8157
	 	c/o American Asset
Management Services
4711 W. Golf Rd.,
#1000, Skokie, IL
60076
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	3249 W. 26th Street

	 	Chicago
	 	IL
	 	 	60623	 	 	8/1/04
	 	7/31/2008
	 	Dr. Fernando Ampuero
	 	773-438-3010
	 	3517 W. 26th Street
Chicago, IL 60623
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	646 W. Lake St.

	 	Addison
	 	IL
	 	 	60101	 	 	8/1/02
	 	7/31/2008
	 	John Bertakis
	 	708-686-0600 or 708-580-6330
	 	242 Bunting Lane

Bloomingdale, IL

60108
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	10407 Blue Ridge Blvd.

	 	Kansas City, MO
	 	MO
	 	 	64134	 	 	9/1/05
	 	8/31/2008
	 	Elaine Rosenburg d/b/a

Elis Enterprises
	 	913-814-7099/Cell:816-718-6277;
fax 913-814-7290
	 	P.O. Box 6734
Leawood, KS 66206
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	9257 W. Cermak Rd.

	 	North Riverside
	 	IL
	 	 	60546	 	 	10/1/05
	 	9/30/2008
	 	Andrew Nguyen
	 	913-568-2329	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	1119 E. Sibley Blvd.

	 	Dolton
	 	IL
	 	 	60419	 	 	1/1/02
	 	10/31/2008
	 	Donald Kim/ KJZM LLC
(new as of 3/08/06)
	 	847-971-3641
	 	PO Box 115;
Lincolnshire IL 60069
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	8531 Page Ave.

	 	Vinita Park
	 	MO
	 	 	63114	 	 	10/1/03
	 	10/31/2008
	 	I-70 Distribution
Center II, L.L.C. c/o
Gateway Commercial
	 	314-863-4447 (Monica Howard/AR);
fax: (314) 863-4407
	 	c/o Gateway Commercial
100 S. Brentwood
Blvd. Suite 222
St. Louis, MO 63105
	 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Chu Kim (Husband) Yang Kim (Wife) Work — 913-342-7873 Home
- 913-341-0626

	 	9900 Lamar Avenue Overland Park, KS
66207
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	1032 Minnesota Ave.

	 	Kansas City, KS
	 	KS
	 	 	66101	 	 	12/1/05
	 	11/30/2008
	 	Chu Kim and Yang Kim
	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	4851 N. Broadway St.

	 	Chicago
	 	IL
	 	 	60640	 	 	12/1/03
	 	11/30/2008
	 	Sun Development Group,
L.L.C.
	 	312-279-5323
	 	c/o Property
Solutions Group LLC
205 N. Michigan Ave.,
Suite 1615 Chicago,
IL 60601: Kathy
Staahl, Proprety
Manager
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	4200 S. East St.

	 	Indianapolis
	 	IN
	 	 	46227	 	 	1/1/06
	 	12/31/2008
	 	Tri-Land Properties,
Inc.
	 	708-531-8210
	 	c/o Triland
Properties, Inc One
Westbrook Corp.
Center Suite 520
Westchester, IL 60154
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	6804 Green Bay Rd.

	 	Kenosha
	 	WI
	 	 	53142	 	 	2/1/06
	 	1/31/2009
	 	Southport Plaza L.P.
	 	262-942-9800; fax 262-942-7023
	 	Barbara Jaeger, Prop.
Mgr. 6804 Green Bay
Road Suite 111
Kenosha, WI 53142
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 





 









 






	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	LEASE	 	LEASE EXPIRATION	 	 	 	 	 	 
	ADDRESS	 	CITY	 	STATE	 	ZIP	 	COMMENCEMENT	 	DATE	 	LANDLORD NAME	 	LANDLORD PHONE	 	LANDLORD ADDRESS
	539 E. Sante Fe, Ste. 2

	 	Olathe, KS
	 	KS
	 	 	66061	 	 	2/1/06
	 	1/31/2009
	 	Bison Properties LLC
c/o John C. Byram Jr.
(new company name &
address as of 4/26/06)
	 	913-541-8888; fax 913-541-8886;
e-mail: jcbyram@swbell.net
	 	15625 W. 87 Parkway,
Lenexa, KS 66219
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	7345 Lemont Rd.

	 	Downer’s Grove
	 	IL
	 	 	60516	 	 	2/1/06
	 	1/31/2009
	 	Kimco North Trust II
	 	516-869-9000: fax (516) 869-2584
	 	333 New Hyde Park
Rd., Ste 100, PO Box
5020, New Hyde Park,
NY 11042-0020
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	2001 N. Knoxville Ave.

	 	Peoria
	 	IL
	 	 	61603	 	 	3/1/04
	 	2/28/2009
	 	Plotkin Enterprises
	 	P. 309-692-4510
	 	7718 N. Harker Drive
Peoria, IL 61615
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	5706 West Cermak

	 	Cicero
	 	IL
	 	 	60804	 	 	3/1/06
	 	2/28/2009
	 	ATR Investments Cicero

IO LLC
	 	(312) 226-8022 (Alan); (312)
226-8022 (Main)
	 	1738 W. Erie St.,
Chicago, IL 60622
Attn: Alan T. Rasof
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	2205 W. Cermak

	 	Chicago
	 	IL
	 	 	60608	 	 	4/1/06
	 	3/31/2009
	 	ATR Investments LLC
	 	(312) 226-8022 (Alan); (312)
226-8022 (Main)
	 	1738 W. Erie St.,
Chicago, IL 60622
Attn: Alan T. Rasof
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	4614B W. Diversey Ave.

	 	Chicago
	 	IL
	 	 	60639	 	 	5/1/06
	 	4/30/2009
	 	Imperial Realty Co
(‘aschwartz@imperial-re
alty.com’)
	 	P. 773-736-4100; F. 773-736-4541
	 	4747 W. Peterson Ave.
Chicago, IL 60646
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	6419 W. North Ave.

	 	Oak Park
	 	IL
	 	 	60302	 	 	6/1/06
	 	5/31/2009
	 	Property Management
Services (Dick and
Margaret Blaurock)
	 	P. 708-358-1112; F. 708-358-8029
	 	Rossell N. Shopping
Center, 630 S.
Wenonah, Oak Park, IL
60304 (New as of
2/20/06)
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	6601 N. Clark Street

	 	Chicago
	 	IL
	 	 	60626	 	 	6/1/06
	 	5/31/2009
	 	ATR Investments LLC
	 	(312) 226-8022 (Alan); (312)
226-8022 (Main)
	 	1738 W. Erie St.,
Chicago, IL 60622
Attn: Alan T. Rasof
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	1958 Dempster St.

	 	Evanston
	 	IL
	 	 	60202	 	 	6/1/06
	 	5/31/2009
	 	Evanston Plaza L.L.C.
	 	847-215-5510 (Steve Korey
direct 847-215-5394); F.
847-215-5282
	 	c/o Joseph Freed &
Assoc. 220 N. Smith
St., Ste 300
Palatine, IL 60067
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	1155 East Ridge Road

	 	Griffith
	 	IN
	 	 	46319	 	 	6/1/06
	 	5/31/2009
	 	Hanover Acquisitions,

LLC c/o CB Richard

Ellis South Bend
	 	Cathy Catlin 574-237-6000; F.
574-237-6001
	 	PO Box 540; South
Bend, IN 46624
(RENT): Mailing: 202
S. Michigan Street;
Suite 900; South
Bend, IN 46601






 









 






	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	LEASE	 	LEASE EXPIRATION	 	 	 	 	 	 
	ADDRESS	 	CITY	 	STATE	 	ZIP	 	COMMENCEMENT	 	DATE	 	LANDLORD NAME	 	LANDLORD PHONE	 	LANDLORD ADDRESS
	20911 S. Cicero Ave.,
Unit B

	 	Matteson
	 	IL
	 	 	60443	 	 	7/1/06
	 	6/30/2009
	 	Century Plaza
Management of
Matteson, Inc. (Paul
Spiewak)
	 	847-680-8222; Phil Spiewak at
phils@century-tile.com.
	 	747 E. Roosevelt Road
Lombard, IL 60148
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	2109 N. Veterans Pkwy.

	 	Bloomington
	 	IL
	 	 	61704	 	 	7/1/06
	 	6/30/2009
	 	M&J Wilkow LTD., an
agent for M&J/JPC
Retail L.P., an
Illinois Limited
Partnership
	 	312/726-9622 (Janice Javors -

Property Manager 312-279-5980)
	 	c/o M&J/JPC Retail LP
180 N. Michigan
Avenue Chicago, IL
60601
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	6438 S. Pulaski Rd.

	 	Chicago
	 	IL
	 	 	60629	 	 	8/1/06
	 	7/31/2009
	 	Mr. John Zeno; Astoria
Plaza, Inc.; (Zenos
Investments)
	 	P.708-372-1776; F. 708-499-0806
(zenoinvestments@aol.com)
	 	7156 West 127th
Street, #312; Palos
Heights, IL 60463
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	4702 W. Irving Park Rd.

	 	Chicago
	 	IL
	 	 	60641	 	 	8/1/06
	 	7/31/2009
	 	Keylor Management &
Realty Inc. (Judy
Hart)
	 	P. 773-282-6262; F. 773-282-7351
	 	4708 W. Irving Park
Road Chicago, IL
60641
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	4371 S. Archer Ave.

	 	Chicago
	 	IL
	 	 	60609	 	 	9/1/06
	 	8/31/2009
	 	Casas Mex USA
Inc./Lourdes Casas
	 	773-581-4100
	 	4425 W. 63rd Street
Chicago, IL 60629
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	3918 W. North Ave.

	 	Chicago
	 	IL
	 	 	60647	 	 	10/1/06
	 	9/30/2009
	 	ATR Investments North

IO LLC
	 	(312) 226-8022 (Alan); (312)
226-8022 (Main)
	 	1738 W. Erie St.,
Chicago, IL 60622
Attn: Alan T. Rasof
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	5620-T Crawfordsville

	 	 	 	 	 	 	 	 	 	 	 	 	 	Bradley Operating
Limited Partnership/CENTRO
WATT (as of
	 	 	 	c/o Centro Watt
(formerly Heritage
Realty Investment,
Inc.). 131 Dartmouth
Street Boston, MA
02116-5134 (Bob
Pionke
847-272-9800/fax:
	Rd.

	 	Indianapolis
	 	IN
	 	 	46224	 	 	11/1/06
	 	10/31/2009
	 	11/7/06)
	 	317-243-8219
	 	847-480-1893)
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	1112 W. University
Blvd.

	 	Urbana
	 	IL
	 	 	61801	 	 	11/15/06
	 	11/14/2009
	 	Mildred Durst Trust
	 	217-367-3600
	 	c/o Mildred Durst
1112 W. University
Avenue Urbana, IL
61801
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	3566A Village Ct.

	 	Gary
	 	IN
	 	 	46408	 	 	12/1/03
	 	11/30/2009
	 	Bradley Operating
Limited Partnership/CENTRO
WATT (as of
11/7/06)
	 	617-247-2200
	 	c/o Centro Watt
(formerly Heritage
Realty Management,
Inc.) 131 Dartmouth
Street Boston, MA
02116-5134
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 





 









 






	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	LEASE	 	LEASE EXPIRATION	 	 	 	 	 	 
	ADDRESS	 	CITY	 	STATE	 	ZIP	 	COMMENCEMENT	 	DATE	 	LANDLORD NAME	 	LANDLORD PHONE	 	LANDLORD ADDRESS
	4307 S. Ashland Ave.

	 	Chicago
	 	IL
	 	 	60609	 	 	1/1/07
	 	12/31/2009
	 	Comar Properties
(Lynne Chenelle, Prop.
Mgr.)
	 	630-889-9600
	 	Corp. Office: 450
East Roosevelt Rd.
Lombard, IL
60148/Rent: P.O. Box
420 Elmhurst, IL
60126
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	3764 N. Meridian St.

	 	Indianapolis
	 	IN
	 	 	46208	 	 	1/1/07
	 	12/31/2009
	 	JR Realty c/o Ron
Anderson (Meridian,
Ind., office).
Premant@aol.com
	 	727-204-3027
	 	8044 Clymer Lane,
Indianapolis, IN
46250; 8014 12th Ave
South, St.
Petersburg, FL 33707
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	c/o A&R Katz
Management, Inc. 3175
Commercial Avenue,
Ste 100 Northbrook,
IL 60062-1923 (Abe
Katz’s Assistant :
	 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Fran Merar
847-205-1200; fax:
	1701 N. Larkin Ave

	 	Crest Hill
	 	IL
	 	 	60435	 	 	1/1/07
	 	12/31/2009
	 	A&R Katz Management,
Inc.
	 	847-205-1200
	 	847-205-1212;
franm@arkatz.com)
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	4642 N. Illinois

	 	Fairview Heights, IL
	 	IL
	 	 	62208	 	 	2/1/05
	 	3/31/2010
	 	Winchester Real Estate

LLC
	 	314-480-4120; F. 314-480-4140
	 	c/o Lee & Assoc. of
St. Louis 101 S.
Hanley Rd. Suite 1150
Clayton, MO 63105
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	1416 E. 53rd St.

	 	Chicago
	 	IL
	 	 	60615	 	 	4/1/05
	 	3/31/2010
	 	Podolsky Northstar

Realty Partners, LL
	 	P. 847-444-5700; 847-444-5702
(Fax)
	 	2610 Lake Cook Rd.,
Suite 100,
Riverwoods, IL
60015-3852 (NEW AS OF
6/5/06)
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	10253 S. Western Ave.

	 	Chicago
	 	IL
	 	 	60643	 	 	4/15/05
	 	4/14/2010
	 	St. Paul Trust
Co.08-9356/ Tom
Morrissey
	 	773-233-7900
	 	10249 S. Western
Chicago, IL 60643
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	1305 165th St.

	 	Hammond
	 	IN
	 	 	46320	 	 	5/1/07
	 	4/30/2010
	 	Columbia Limited

Partnership
	 	P. 847-677-9100; F. 847-677-9106
	 	c/o HSS Management
Co. 4801 W. Golf
Road, 2nd Floor
Skokie, IL 60077
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	6218 S. Western Avenue

	 	Chicago,
	 	IL
	 	 	60636	 	 	5/1/06
	 	4/30/2010
	 	ATR Investments

Western LLC
	 	(312) 226-8022 (Alan); (312)
226-8022 (Main)
	 	1738 W. Erie St.,
Chicago, IL 60622
Attn: Alan T. Rasof
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	3431 Nameoki Rd.

	 	Granite City
	 	IL
	 	 	62040	 	 	6/30/05
	 	6/30/2010
	 	Michael Margiotta

(Property management)

Priority Properties
	 	Priority Properties
314-612-8081 (office); Sharon
Kosyan (Accounting);
314-612-8475
	 	1045 South Woods Mill
Road, Suite One, Town
& Country, MO 63017
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 





 









 






	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	LEASE	 	LEASE EXPIRATION	 	 	 	 	 	 
	ADDRESS	 	CITY	 	STATE	 	ZIP	 	COMMENCEMENT	 	DATE	 	LANDLORD NAME	 	LANDLORD PHONE	 	LANDLORD ADDRESS
	15910 S. Harlem Ave.

	 	Tinley Park
	 	IL
	 	 	60477	 	 	9/1/07
	 	8/31/2010
	 	Inland Commercial
Property Management,
Inc.
	 	630-218-5262 (Angela Aeschliman

- Prop Mgr)
	 	c/o Park Center Plaza

4575 Paysphere Circle

Chicago, IL 60674
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	8809 S. Harlem Ave.

	 	Bridgeview
	 	IL
	 	 	60455	 	 	11/1/05
	 	10/31/2010
	 	New Plan of IL, LLC
c/o New Plan Excel
Realty Trust, Inc.
	 	212-869-3000
	 	420 Lexington Ave.,
7th Fl. NY, NY 10170
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	2022 1st Street

	 	Moline
	 	IL
	 	 	61265	 	 	12/1/05
	 	11/30/2010
	 	City Line Meyers, LLC
c/o Mid-America Asset
Mgmt.
	 	630-954-7300; fax 630-954-7306
	 	Two Mid-America

Plaza, 3rd Floor,

Oakbrook Terrace, IL

60181
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	1728 S. 6th St.

	 	Springfield
	 	IL
	 	 	62703	 	 	12/1/05
	 	11/30/2010
	 	Dowd Sullivan
	 	217-525-2288
	 	410 S. Grand Ave.
West Springfield, IL
62704
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	4712 W. Cermak Rd.

	 	Cicero
	 	IL
	 	 	60608	 	 	3/1/06
	 	2/28/2011
	 	Cermak Partnership

(Frank Levato)
	 	708-656-0911 or Cell:

630-935-6622
	 	4700 W. Cermak
Cicero, IL 60650
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Robert J. Lovero (atty)
708-795-9777; Yolanda Avelar/Philip
Avelar 708- 681-3641
	 	RENT: 3025 S. 24th
Avenue Broadview, IL
60153 (Avelar
Address) Mr. Lovero:
	1515 Lake St. Space #3

	 	Melrose Park
	 	IL
	 	 	60160	 	 	4/1/06
	 	3/30/2011
	 	Yolanda Avelar/ Philip

Avelar
	 	(landline) 708-267-3225 (Philip

cell)
	 	6536 W. Cermak Road,
Berwyn, IL 60402
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	144 S. Bolingbrook Dr.

	 	Bolingbrook
	 	IL
	 	 	60440	 	 	5/1/06
	 	4/30/2011
	 	Market Square
	 	630-954-7300
	 	c/o Mid-America Asset
Management, Inc/ Two
Mid America Plaza,
Third Floor, Oakbrook
Terrace, IL 60181;
Julie Ray (630)
954-7369; Fax
630-954-7306
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	4747 West 79th Street

	 	Chicago
	 	IL
	 	 	 	 	 	5/1/06
	 	5/31/2011
	 	Mitchco Development
LLC; Ed Lowery
	 	Tami Trok 312-986-6825 (senior

accountant)
	 	1455 South Michigan
Avenue, Suite 100
Chicago, Illinois
60605
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	302 W. New Indian
Trail Dr.

	 	Aurora
	 	IL
	 	 	60506	 	 	8/1/06
	 	7/31/2011
	 	Old Second National
Bank as Trustee (Janet
S. Dee, Trust Officer)
	 	630-906-5470
	 	37 S. River Street
Aurora, IL 60506-4172
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	16837 Torrence Ave.

	 	Lansing
	 	IL
	 	 	60438	 	 	8/1/06
	 	7/31/2011
	 	KFS Landings LLC
	 	847-215-5442
	 	c/o Joseph Freed &
Assoc. 220 N. Smith
St., Ste 300
Palatine, IL 60067
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 





 









 






	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	LEASE	 	LEASE EXPIRATION	 	 	 	 	 	 
	ADDRESS	 	CITY	 	STATE	 	ZIP	 	COMMENCEMENT	 	DATE	 	LANDLORD NAME	 	LANDLORD PHONE	 	LANDLORD ADDRESS
	3623 E. State Street

	 	Rockford
	 	IL
	 	 	61108	 	 	9/15/06
	 	9/30/2011
	 	Al and Anna Marie
Caruana
	 	(847) 706-9035
	 	1439 Shiloh Road,

Rockford, IL 61107
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	540 N. Western Ave.

	 	Chicago
	 	IL
	 	 	60612	 	 	1/1/07
	 	12/31/2011
	 	ATR Investments

Western IO LLC
	 	(312) 226-8022 (Alan); (312)
226-8022 (Main)
	 	1738 W. Erie St.,
Chicago, IL 60622
Attn: Alan T. Rasof
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	7909 Gulf Freeway

	 	Houston
	 	TX
	 	 	77017	 	 	3/1/03
	 	2/28/2006
	 	FLN Investments, Inc.
	 	Charles Miller/Broker ph

877-597-8400 cell 832-752-4500
	 	c/o Sheila Falk 13

Waterford Oaks Lane

Kemah, TX 77565
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	1332 S. Plano Rd Ste
700A

	 	Plano
	 	TX
	 	 	75081	 	 	1/4/04
	 	1/31/2007
	 	Heritage Buckingham

Place
	 	617-247-2200; fax 617-266-0885
(Heather Blacketer — Prop
Mananger 913-438-4538)
	 	c/o Centro Watt
(formerly Heritage
Realty Management,
Inc.) 131 Dartmouth
Street Boston, MA
02116-5134
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	13968 Josey Lane

	 	Farmers Branch
	 	TX
	 	 	75234	 	 	1/1/04
	 	2/28/2007
	 	Ford Coin Realty, L.P.
	 	Michelle Dzmura 214-706-6955
fax 214-706-0531
dzmura@aol.com
	 	c/o EF Properties LC;
5950 Berkshire Lane;
Suite 800; Dallas, TX
75225
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	609 N. 10th Street

	 	McAllen
	 	TX
	 	 	78501	 	 	8/1/03
	 	2/28/2007
	 	Texan Real Estate Sales
	 	 	 	1128 W. Pecan
McAllen, TX 78501
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	6923 Antoine Drive,
Suite B

	 	Houston
	 	TX
	 	 	77088	 	 	4/1/04
	 	3/31/2007
	 	Kevin Kim
	 	713-530-3369 or 713-957-9800

Home 281-599-7949 fax

713-957-9825
	 	6923-A Antoine Rd

Houston, TX
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	14360 Bellaire Blvd

#140

	 	Houston
	 	TX
	 	 	77083	 	 	5/1/04
	 	6/30/2007
	 	Levy & Associates C/O
Kagan Realty
Investors, Inc.
	 	713-748-2000
	 	8801 Knight Road

Houston, Tx 77054

Lease

account #

4000-0129-04
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	813 W. Bedford-Euless
Road

	 	Hurst
	 	TX
	 	 	76053	 	 	7/1/04
	 	6/30/2007
	 	Guion Gregg, III

Investments Tax

Id# 46-2809426
	 	P. 214-526-7001; F. 214-522-1628
	 	3838 Oak Lawn Ave.,
Ste 1416; Dallas, TX
75219
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	6912 N. Freeway

	 	Houston
	 	TX
	 	 	77076	 	 	8/1/04
	 	7/31/2007
	 	Aron Frank
	 	713-622-0554 Shane Frank

713-877-9600 fax 713-877-9657

cell 713-504-7711
	 	c/o Amco Jewelry
Company
1300 Post Oak
Blvd., Suite 420
Houston, TX 77056
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	1081 W. Main, Suite 106

	 	Lewisville
	 	TX
	 	 	75067	 	 	11/1/04
	 	10/31/2007
	 	TSCA-224 LIMITED

PARTNERSHIP tax ID

20-2744883
	 	P. 972-669-8440; F.
972-783-8901 www.quine.com
Nick
Carrington/ Property Manager
(Nick cell 972-523-8655) Brad
Quine (bquine@quine.com )
	 	c/o Quine &
Associates, Inc.
P.O. Box 833009
Richardson, Tx
75083-3009
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 





 









 






	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	LEASE	 	LEASE EXPIRATION	 	 	 	 	 	 
	ADDRESS	 	CITY	 	STATE	 	ZIP	 	COMMENCEMENT	 	DATE	 	LANDLORD NAME	 	LANDLORD PHONE	 	LANDLORD ADDRESS
	5630 Lemmon Avenue

	 	Dallas
	 	TX
	 	 	75209	 	 	11/1/04
	 	10/31/2007
	 	Carlisle

Interests/Prescott

Interests
	 	214-350-5555
	 	7979 Inwood Road
Suite 225 Dallas, Tx
75209
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	1008 NE Loop

	 	San Antonio
	 	TX
	 	 	78209	 	 	12/15/04
	 	12/14/2007
	 	Chester’s Hamburger
Co./ Margaret Ulrich
	 	210-490-5400
	 	15321 San Pedro, Ste

200 San Antonio, TX

78232
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	3402 Broadway

	 	Galveston
	 	TX
	 	 	77551	 	 	2/1/05
	 	1/31/2008
	 	Catherine Jo Taylor
	 	409-740-7162
	 	#18 Campeche Estate

Drive Galveston, TX

77554
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	119 W. Southmore

	 	Pasadena
	 	TX
	 	 	77502	 	 	3/1/03
	 	2/29/2008
	 	Campbell Investment Co.
	 	Roland Richards P.
713-472-4381; F. 713-472-4382
	 	1313 S. Houston Road
Pasadena, TX 77502
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	2815 N. MacArthur

	 	Irving
	 	TX
	 	 	75060	 	 	4/1/05
	 	3/30/2008
	 	PNYX, Ltd (Michael

Mantas)
	 	214-727-5153
	 	7203 J Carpenter

Dallas, TX 75242
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	13000 Josey Lane

	 	Farmers Branch
	 	TX
	 	 	75234	 	 	4/1/06
	 	3/31/2008
	 	Alamas Ventures LTD/Andres
Alarcon: Rosa
Diez
(rosadiez@dslproperties
        .com)
	 	P. 469-233-3017; F. 972-484-4119
	 	9628 Overlake Drive,
Dallas, TX 75220
-OR- 13000 Josey
Lane, Suite 107,
Farmers Branch, TX
75234
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	2717 61st Street

	 	Galveston
	 	TX
	 	 	77551	 	 	4/1/05
	 	3/31/2008
	 	Weingarten Realty

Investors
	 	Robert Bailey P. 713-866-6074;
F. 713-866-6049 Cell.
713-206-0255;
rbailey@weingarten.com
	 	PO Box 924133,

Houston, TX

77024-4133
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	10927 Jones Road

	 	Houston
	 	TX
	 	 	77065	 	 	4/1/05
	 	3/31/2008
	 	Weingarten Realty

Investors
	 	Lease # LAFFIPH01 Project #

0543
	 	P.O. Box 924133
Houston, TX
77292-4133 Rent
remit P.O. Box
200518 Houston, Tx
77216
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	10201 Lake June, Ste 

102

	 	Dallas
	 	TX
	 	 	75217	 	 	5/1/05
	 	4/30/2008
	 	King Kash Investors

1991 Limited
	 	Larry Fellman 214-361-0793
wlfrealty@prodigy.net
	 	c/o Fellman Realty

Management 11225 Park

Central Pl Dallas, TX

75230
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 





 









 






	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	LEASE	 	LEASE EXPIRATION	 	 	 	 	 	 
	ADDRESS	 	CITY	 	STATE	 	ZIP	 	COMMENCEMENT	 	DATE	 	LANDLORD NAME	 	LANDLORD PHONE	 	LANDLORD ADDRESS
	 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Yu Tu
c/o Reliance Property
Management
P.O. Box 802736
Dallas, Tx 75380
	1905 W. 15th Street

	 	Plano
	 	TX
	 	 	75075	 	 	5/1/05
	 	4/30/2008
	 	Yu Tu c/o Reliance

Property Management
	 	P. (972) 288-7833; F. (972)
288-7890
	 	United States of
America (NEW as of
10/30/06)
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	650 N. MacArthur

	 	Irving
	 	TX
	 	 	75061	 	 	5/15/03
	 	5/15/2008
	 	A & P Corporation (Mr.
Young Ha)
	 	214-883-2758
	 	PO Box 701762,

Dallas, TX 75370
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	210 Unviersity

	 	Edinburg
	 	TX
	 	 	78539	 	 	8/1/03
	 	7/31/2008
	 	Dorothy Chapapas
	 	956-581-2448
	 	8700 N. Taylor Road
McAllen, TX 78504
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	3522 Gus Thomasson
Suite 100

	 	Mesquite
	 	TX
	 	 	75150	 	 	9/1/05
	 	8/31/2008
	 	Town East Partnership

Easley Waggoner
	 	P.972-960-7742; F. 972-960-7743
e-mail:
leywagg@sbcglobal.net
	 	5939 Lindenshire Lane

Dallas, Tx 75230
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	3538 Denton Hwy

	 	Haltom City
	 	TX
	 	 	76117	 	 	9/1/05
	 	8/31/2008
	 	CA New Plan Fixed Rate
Partnership, L.P. c/o
New Plan Excel Realty
Trust, Inc
	 	Toni White (site property mgr)
972-668-2986 x 6525 fax
972-668-2989
twhite@newplan.com or Eddie
Myers emyers@newplan.com
	 	P.O. Box 848409
Dallas, Texas
75284-8409
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	c/o Jim Boller &

Associates, Inc 4455
	4455 S. Padre Island
Drive, Suite 9

	 	Corpus Christi
	 	TX
	 	 	78411-5167	 	 	3/27/02
	 	9/30/2008
	 	Commerice Office Park I
	 	Jim Boller 361-808-7100
	 	SPID ste 22 Corpus

Christi, Tx

78411-5148
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	5900 Chimney Rock,
Suite Q

	 	Houston
	 	TX
	 	 	77081	 	 	11/30/05
	 	11/30/2008
	 	Plaza de las Americas
c/o Premier Property
Services, Inc.
	 	Jeanie Stark, Property Manager,
Phone P. 713-463-9994; F.
713-463-7233
	 	9225 Katy Freeway,
Ste. 202; Houston TX
77024
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	1001 N. Beckley, #106-A

	 	DeSoto
	 	TX
	 	 	75115	 	 	1/1/06
	 	12/31/2008
	 	MICI DeSoto I, Ltd
	 	Sue Roamer 214-599-0631
sue@maclayproperties.com
	 	c/o Maclay Properties
Co. 3838 Oak Lawn,
Ste 810 Dallas, TX
75219
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	112 E. Seminary Drive,
Suite C

	 	Forth Worth
	 	TX
	 	 	76115	 	 	3/1/04
	 	2/28/2009
	 	EES Real Estate Trust
c/o Mrs. Betty
Crawford
	 	214-522-7171
	 	Sanford Family Trusts
4516 Lovers Lane,
Suite 230 Dallas, TX
75225
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	1418 S. Tyler St., Ste
B

	 	Harlingen
	 	TX
	 	 	78550	 	 	3/1/04
	 	2/28/2009
	 	STN, Inc. A Texas
Corp. c/o Lee Realty
	 	956-493-7711
	 	2901 N. 10th Street,
Suite N McAllen, TX
78501
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 





 









 






	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	LEASE	 	LEASE EXPIRATION	 	 	 	 	 	 
	ADDRESS	 	CITY	 	STATE	 	ZIP	 	COMMENCEMENT	 	DATE	 	LANDLORD NAME	 	LANDLORD PHONE	 	LANDLORD ADDRESS
	2960 W. NW Hwy

	 	Dallas
	 	TX
	 	 	75220	 	 	4/1/06
	 	3/31/2009
	 	Rader Properties
(Homer J. Rader Jr.,
d/b/a Rader
Properties)
	 	P. 972-392-7500; F. 972-392-7502
	 	12342 Inwood Rd.,
Dallas, TX 75244
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	2100 E. Beltline Road,
Bldg 1

	 	Carrollton
	 	TX
	 	 	75006	 	 	4/1/06
	 	3/31/2009
	 	Oahn Tran
	 	(972) 417-1026 (Pho Express);
Alternate (972) 417-1017
	 	2012 E. Beltline Rd.,
Carrollton, TX 75006
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	7952 Camp Bowie West

	 	Forth Worth
	 	TX
	 	 	76116	 	 	5/1/06
	 	4/30/2009
	 	Westside Café

Development, Ltd

Tracey

Sanford
	 	817-247-0854
	 	7950 Camp Bowie West

Fort Worth, TX 76116
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	1239 NW HWY

	 	Garland
	 	TX
	 	 	75041	 	 	5/1/06
	 	6/30/2009
	 	Meadowcreek Square

Shopping Center
	 	972-931-7400
	 	c/o Sabre Realty
Management, Inc.,
Commercial Division,
16475 Dallas Parkway,
Suite 880, Addison,
TX 75001
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	6301 Lyons Avenue

	 	Spring
	 	TX
	 	 	77379	 	 	6/1/06
	 	7/31/2009
	 	David J. Edwards
	 	P. 281-370-1760; F.
281-370-2360 Cell.
713-907-1371; E-mail
edw1760@aol.com
	 	17602 Mellow Ridge

Spring, TX 77379
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	3714-B West Ledbetter

	 	Dallas
	 	TX
	 	 	75233	 	 	8/1/06
	 	7/31/2009
	 	Lee Widmer

LL notice address:

3677 Asbury Street

Dallas, TX 75205
	 	Home 214-520-6365 Cell
214-354-5677 e-mail
leewidmer@charter.net
	 	Rent remit: c/o

Gateway National Bank

6801 Gaylord Pkwy

#101 Frisco, Tx 75034
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	815 I45 South

	 	Conroe
	 	TX
	 	 	77301	 	 	9/1/06
	 	8/31/2009
	 	Conroe Central Shop
Ctr. Turk Investments
(Allison Coontz)
	 	713-772-3727 fax 713-772-6301
	 	6230 A Evergreen

Houston, TX 77081
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	8211 C Long Point

	 	Houston
	 	TX
	 	 	77055	 	 	7/1/04
	 	8/31/2009
	 	Mia Reed & Co.,
Capital Fund V, Ltd.
	 	Michelle Fredericks

713-789-0890 fax 713-789-4672
	 	NEW ADDRESS AS OF
6-28-06; 1535 West
Loop South; Suite
250; Houston, TX
77027
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	118 E. Jefferson, Ste.
102

	 	Dallas
	 	TX
	 	 	75203	 	 	12/1/06
	 	11/30/2009
	 	Guion Gregg, III

Investments Tax

Id# 46-2809426
	 	Guion Gregg 214-526-7001 fax

214-522-1628 after hours

214-762-7001
	 	3838 Oak Lawn Ave,

Ste 1416 Dallas, TX

75219
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 





 









 






	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	LEASE	 	LEASE EXPIRATION	 	 	 	 	 	 
	ADDRESS	 	CITY	 	STATE	 	ZIP	 	COMMENCEMENT	 	DATE	 	LANDLORD NAME	 	LANDLORD PHONE	 	LANDLORD ADDRESS
	4012 Ross Avenue

	 	Dallas
	 	TX
	 	 	75204	 	 	12/10/04
	 	12/9/2009
	 	Ross Ave. Retail, LLC
	 	David Claassen phone

214-361-8300 fax 214-361-1155
	 	c/o David E. Claassen
8400 Westchester
Suite 300 Dallas, Tx
75225
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	410 E. Pioneer Pkwy,
#500

	 	Grand Prairie
	 	TX
	 	 	75051	 	 	1/1/07
	 	12/31/2009
	 	Centerville Partners,

Ltd
	 	Jerry Head 972-840-3119 fax

903-874-4009
	 	P.O. Box 472098
Garland, TX 75047
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	1006 Bay Area Blvd

	 	Houston
	 	TX
	 	 	77058	 	 	1/1/05
	 	12/31/2009
	 	SW Clear Lake, LP c/o

Southwestern

Investment Group, LLC
	 	Michelle Roberts 303-534-1040

fax 303-534-6700
	 	333 W Hampden Avenue
Suite 810 Englewood
CO 80110
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	2943 S Buckner Blvd #

275

	 	Dallas
	 	TX
	 	 	75227	 	 	2/1/07
	 	1/31/2010
	 	The Buckner

Partnership, LP
	 	 	 	c/o United Equities

6909 Ashcroft, Suite

200 Houston, TX 77081
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Robert Bailey 713-866-6074	 	 
	1004 Federal Road

	 	Houston
	 	TX
	 	 	77015	 	 	3/1/05
	 	2/28/2010
	 	Weingarten Realty

Investors
	 	fax 713-866-6049 cell
713-206-0255
rbailey@weingarten.com
	 	P.O. Box 924133
Houston, TX
77292-4133
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	2208 S. Fielder, Suite
116

	 	Arlington
	 	TX
	 	 	76013	 	 	3/1/07
	 	2/28/2010
	 	Grand Prairie

Associates
	 	Sue Romer 214-599-0631
sue@maclayproperties.com
	 	3838 Oak Lawn Ave,

Ste 810 Dallas, TX

75219
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	1201 Main Street, Ste.
2424

	 	Dallas
	 	TX
	 	 	75202	 	 	6/16/06
	 	7/31/2010
	 	RAK Main Place
Associates LP (owner);
RAK Group LLC
Management on site
(Tom Ligon)
	 	214-744-9800; fax 214-744-9810	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	342 FM 1960 West

	 	Houston
	 	TX
	 	 	77090	 	 	12/1/06
	 	11/30/2010
	 	Weingarten Realty

Investors/ Raleigh LP	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Robert Bailey 713-866-6074	 	 
	5892 Eastex Freeway

	 	Beaumont
	 	TX
	 	 	77708	 	 	11/29/05
	 	11/30/2010
	 	Weingarten Realty

Investors
	 	fax 713-866-6049 cell
713-206-0255
rbailey@weingarten.com
	 	P.O. Box 924133
Houston, TX
77292-4133
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	6520 Skillman

	 	Dallas
	 	TX
	 	 	75231	 	 	11/1/06
	 	10/31/2011
	 	Merriman Park Shopping

Center
	 	817-732-4000 Jean McCorvy/Prop
Mgr fax 817-377-7729 e-mail
jmccorvy@woodmont.com
	 	c/o The Woodmont
Company 2100 W.
Seventh Street Fort
Worth, Texas 76107
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	810 Broad Street, Unit 

8

	 	Sumter
	 	SC
	 	 	 	 	 	2/1/2005
	 	1/31/2007
	 	Island Investment LLC
	 	 	 	1254 Wilson Hall Rd.,
Sumter SC 29150






 










 





	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	LEASE	 	LEASE EXPIRATION	 	 	 	 	 	 
	ADDRESS	 	CITY	 	STATE	 	ZIP	 	COMMENCEMENT	 	DATE	 	LANDLORD NAME	 	LANDLORD PHONE	 	LANDLORD ADDRESS
	1836 Ashley River
Road, Ste. D2
(Crossroads Center)

	 	Charleston
	 	SC
	 	 	29223	 	 	3/1/2004
	 	2/28/2007
	 	Crossroads Investors
Ltd.
	 	 	 	c/o Ziff Properties

701 East Bay Street,

Charleston, SC 29403
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	3315 Broad River Road
Ste. 170 (Widewater
Square)

	 	Columbia
	 	SC
	 	 	 	 	 	4/30/2004
	 	5/31/2007
	 	MK Newmarket LLC c/o

RCG Ventures
	 	 	 	PO Box 53483 Atlanta,

GA 30355: Managed by

NAI Avant

803-254-0100
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Northwoods Mall; 2150
Northwoods Blvd., #60

	 	N. Charleston
	 	SC
	 	 	29406	 	 	5/1/2006
	 	4/30/2007
	 	North Charleston Joint

Venture II, LLC
	 	 	 	North Charleston JV
II LLC; 2150
Northwoods Blvd; #60;
North Charleston SC
29406-4021
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	246-C E. Blackstock Rd.

	 	Spartanburg
	 	SC
	 	 	 	 	 	5/1/2005
	 	4/30/2008
	 	Rockledge Development
Corp.
	 	 	 	PO Box 170252,

Spartanburg, SC 29301
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	215 Pelham Rd. #B108

	 	Greenville
	 	SC
	 	 	29615	 	 	6/1/2005
	 	5/31/2008
	 	Regency Realty Group
	 	 	 	121 W. Forsythe
Street, Ste. 200,
Jacksonville, FL
32202
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	7352 Notch Road

(Creekside Plaza)

	 	Columbia
	 	SC
	 	 	29223	 	 	7/15/2006
	 	7/31/2011
	 	First Palmer Trust c/o
Hugh A. Palmer
	 	 	 	PO Box 23489,

Columbia, SC

29224-3489
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	4450 Sojourn Drive,
Suite 500

	 	Addison
	 	TX
	 	 	75001	 	 	3/1/00
	 	3/31/2010
	 	DBSI Discovery Real

Estate Services
	 	866-489-3377
	 	DBSI Discovery Real
Estate Services,
12426 W. Explorer
Dr., Suite 100,
Boise, Idaho 83713
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	1201 Main Place, Suite 

2424

	 	Dallas
	 	TX
	 	 	75202	 	 	8/1/04
	 	7/31/2007
	 	RAK One Main Place

Associates, LP
	 	214-744-9800
	 	1223 Paysphere

Circle, Chicago, IL

60674
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	100 Rialto Place #700

	 	Melbourne
	 	FL
	 	 	32901	 	 	7/1/04
	 	6/30/2007
	 	Rialto LLC
	 	321-984-2942
	 	100 Rialto Place,
Suite 450 Melbourne,
FL 32901
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	150 Harvester Drive

	 	Burr Ridge
	 	IL
	 	 	60527	 	 	6/1/2006
	 	11/30/2016
	 	BJF Estancia I, LLC
	 	708-532-4321
	 	150 Harvester Dr.
#100 Burr Ridge, IL
60527
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	2360 University Drive

	 	Coral Springs
	 	FL
	 	 	33065	 	 	1/1/1996
	 	12/20/2000
	 	Tye Holdings LLC dba

Royal University Plaza
	 	Howard Schachter; (954) 868-5701
	 	2556 University

Drive, Coral Springs,

FL 33065
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	7520 E. Colonial Drive

	 	Orlando
	 	FL
	 	 	32807	 	 	3/14/2003
	 	3/14/2006
	 	Orville “Butch” Crouso
	 	321-231-0189
	 	7465 Camford Court,

Winter Park, FL 32792
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	3690 Davie Blvd.

	 	Fort Lauderdale
	 	FL
	 	 	33312	 	 	1/1/2005
	 	12/31/2006
	 	21st Century Holdings

(George Berwig)
	 	954-308-1252
	 	3661 Oakland Park
Blvd., #300,
Lauderdale Lakes, FL
33311
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 





 









 






	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	LEASE	 	LEASE EXPIRATION	 	 	 	 	 	 
	ADDRESS	 	CITY	 	STATE	 	ZIP	 	COMMENCEMENT	 	DATE	 	LANDLORD NAME	 	LANDLORD PHONE	 	LANDLORD ADDRESS
	406 South State Road 7

	 	Hollywood
	 	FL
	 	 	33021	 	 	3/1/2004
	 	2/28/2007
	 	Bostonian Inc. c/o
Dacar Management LLC
	 	954-927-4885
	 	336 East Dania Beach
Blvd. Dania, FL 33004
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	8960/62/64 Taft Street

	 	Pembroke Pines
	 	FL
	 	 	33024	 	 	9/1/2002
	 	8/31/2007
	 	Pine Plaza Corp.,
Marant & Associates,
Inc. Managing Agent.
	 	954-434-3934 (Grant Marant

954-557-4203 Cell) Assistant:

Michelle Bourst
	 	5240 S. University
Drive, Suite E-106,
Davie, FL 33328
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	12145 Pembroke Rd.
Suite 307

	 	Pembroke Pines
	 	FL
	 	 	33025	 	 	9/1/2002
	 	8/31/2007
	 	PMAT Flamingo

Marketplace, LLC
	 	Mike Whelan
[mailto:mhw@pmat.net]
985-847-2377 cell: 985-788-8496
(AR: Angela Pigford:
504-681-3401 or Yvonne
Lockwood: 504-681-3405)
	 	PO Box 62600,
Department 1361, New
Orleans, LA
70162-2600 ALSO PMAT
Flamingo LLC c/o
Property One, Inc.
1615 Poydras Street,
Ste. 1350, New
Orleans, LA 70112 (AS
OF 2/9/06)
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	7245 NW 88th Avenue

	 	Tamarac
	 	FL
	 	 	33321	 	 	9/1/2002
	 	8/31/2007
	 	Misala Inc. c/o Dacar
Management LLC
	 	P. (954) 927-4885
	 	336 East Dania Beach
Blvd. Dania, FL 33004
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	1501 North Main Street

	 	Kissimmee
	 	FL
	 	 	34744	 	 	10/1/2004
	 	9/30/2007
	 	Tillie Baker
	 	 	 	1503 North Main

Street, Kissimmee, FL
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	4558 S. Semoran Blvd.
#8

	 	Orlando
	 	FL
	 	 	32822	 	 	4/1/2005
	 	3/31/2008
	 	Semoran Retail, Inc.
c/o Stoltz Mgmt. of
Delaware, Inc.
	 	P. (610) 667-5800
	 	725 Conshohocken
State Rd., Bala
Cynwyd, PN 19004
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	4325 S Orange Blossom 

Trail

	 	Orlando
	 	FL
	 	 	32703	 	 	5/1/2005
	 	4/30/2008
	 	The Boswell Company
	 	P. (404) 252-4237
	 	80 West Wieuca Road,
NW, Ste. 202A,
Atlanta, GA 30342
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	5206 B West Colonial
Dr.

	 	Orlando
	 	FL
	 	 	32808	 	 	8/1/2005
	 	7/31/2008
	 	Onomea, Inc.
	 	P. 407-299-5000 x 1189
	 	12609 Nicolette Ct.
Clermont, FL 34711
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	4992 W. Atlantic Blvd.

	 	Margate
	 	FL
	 	 	33063	 	 	9/1/2003
	 	8/31/2008
	 	Coconut Square Realty
Co., LTD,
	 	P. 954-972-0322; F.954-972-0323
	 	PO Box 8552 Coral

Springs, FL 33075
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	1839 North Pine Island
Rd.

	 	Plantation
	 	FL
	 	 	33322	 	 	4/1/1994
	 	9/30/2008
	 	Gator Investments
	 	P. (305) 949-9049 (Lisa in AR)
	 	1595 NE 63rd Street,
N. Miami Beach, FL
33162
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	8310 State Rd. 84

	 	Davie
	 	FL
	 	 	33324	 	 	1/1/2005
	 	12/31/2008
	 	Arrel Enterprises,
Inc./ Route 84
Associates
	 	P. 954-474-3508 (Michael
Leaventhal)
	 	8540 State Rd. 84,
Fort Lauderdale, FL
33324
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 





 









 






	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	LEASE	 	LEASE EXPIRATION	 	 	 	 	 	 
	ADDRESS	 	CITY	 	STATE	 	ZIP	 	COMMENCEMENT	 	DATE	 	LANDLORD NAME	 	LANDLORD PHONE	 	LANDLORD ADDRESS
	735 E. Oakland Park
Blvd.

	 	Ft. Lauderdale
	 	FL
	 	 	33334	 	 	1/1/2006
	 	12/31/2008
	 	21st Century Holdings

(George Berwig)
	 	P. 954-308-1252
	 	3661 Oakland Park
Blvd., #300,
Lauderdale Lakes, FL
33311
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	2601 Broadway, Ste 182

	 	Rivera Beach
	 	FL
	 	 	33404	 	 	3/1/2004
	 	2/28/2009
	 	Cooksey & Cooksey, PA
	 	P. 561-842-4908; F. 561-863-4677
	 	2601 Broadway #3,

Riviera Beach, FL

33404
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	5100 W. Commercial
Blvd.

	 	Tamarac
	 	FL
	 	 	33319	 	 	4/1/2006
	 	3/31/2009
	 	MicronUSA Corp. attn:
Romina Traficante
	 	(561) 305-7664 (Romina Cell)
	 	PO Box 1875, Boca

Raton, FL 33429
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	743 S. Orange Blossom
Trail

	 	Apopka
	 	FL
	 	 	32703	 	 	7/1/2006
	 	6/30/2009
	 	Janet L. Galvin;
Liberty Universal
Management, Inc., 314
E. Anderson Street,
Orlando, FL 32801
(business contact)
	 	P. 954-385-0001; F.516-294-3576
	 	Ed or Scott Ross;
Apopka Regional
Shopping Center; 600
Old Country Road,
Suite 435, Garden
City, NY 11530 (RENT)
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	3562 South US 1

	 	Stuart
	 	FL
	 	 	34997	 	 	11/1/2004
	 	10/31/2009
	 	Morris Stuart

Associates LLC
	 	 	 	350 Veterans Blvd.
Rutherford, NJ 07070
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	15904 State Rd. #84

	 	Sunrise
	 	FL
	 	 	33326	 	 	3/1/2007
	 	2/28/2010
	 	Westgate Square LLC,
	 	P. 954-615-0615; F. 954-615-0616
	 	15970 West State Rd.
84, #119, Sunrise, FL
33326
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	11707 Miracle Hills 

Drive

	 	Omaha
	 	NE
	 	 	68154	 	 	 	 	 	 	 	 	 	 	 






USAgencies Owned and Leased Real Property




See attached.




 










 





SCHEDULE 3.25




ACQUISITION DOCUMENTATION





	1.	 	Purchase and Sale Agreement by and among the Equityholders of USAgencies, L.L.C. signatory
thereto as Sellers and Affirmative Insurance Holdings, Inc. as Buyer, dated as of October 3, 2006.






	2.	 	Escrow Agreement dated as of January ___, 2007, by and among Affirmative Insurance
Holdings, Inc., a Delaware corporation, the Sellers’ Committee on behalf of the Persons identified
on Exhibit A thereto and The Frost National Bank, as escrow agent.





 









 





SCHEDULE 3.26




REGULATED INSURANCE SUBSIDIARY PERMITS




Affirmative Regulated Insurance Subsidiary Permits 




	 	 	 	 	 
	Regulated Insurance 	 	Jurisdiction(s) of Permits	 	Lines of Permitted Business
	Subsidiary	 	 	 	 
	 
	 	 	 	 
	Affirmative Insurance Company

	 	Alabama
	 	Property; Miscellaneous Casualty, Surety Including Official Surety Bonds,
Marine
	 
	 	 	 	 
	Affirmative Insurance Company

	 	Arizona
	 	Casualty without Workers’ Compensation; Property
	 
	 	 	 	 
	Affirmative Insurance Company

	 	Arkansas
	 	Property; Casualty (Excluding Workers Compensation); Surety; Marine
	 
	 	 	 	 
	Affirmative Insurance Company

	 	California
	 	Fire; Marine; Liability; Burglary; Automobile; Miscellaneous
	 
	 	 	 	 
	Affirmative Insurance Company

	 	Connecticut
	 	Worker’s Compensation
	 
	 	 	 	 
	Affirmative Insurance Company

	 	Florida
	 	Fire; Allied Lines; Farmowners Multi Peril; Homeowners Multi Peril;
Commercial Multi Peril; Inland Marine; Earthquake; Other Liability;
Private Passenger Auto Liability; Commercial Automobile Liability; PPA
Physical Damage; Commercial Auto Physical Damage; Fidelity; Surety; Glass;
Burglary and Theft; Boiler and Machinery; Livestock; Industrial Fire;
Industrial Extended Coverage
	 
	 	 	 	 
	Affirmative Insurance Company

	 	Georgia
	 	Property; Marine and Transportation; Casualty (Including Workers’
Compensation); Surety
	 
	 	 	 	 
	Affirmative Insurance Company

	 	Idaho
	 	Casualty, Excluding Work Comp; Surety; Marine and Transportation; Property
	 
	 	 	 	 
	Affirmative Insurance Company

	 	Illinois
	 	Class 2 (Casualty, Fidelity and Surety): Accident and Health; Vehicle;
Liability; Workers’ Compensation; Burglary and Forgery; Glass; Fidelity
and Surety; Miscellaneous; Other Casualty Risks; Contingent Losses;
Livestock and Domestic Animals; Legal Expense Insurance
Class 3 (Fire and Marine, etc.): Fire; Elements; War, Riot and Explosion;
Marine and Transportation; Vehicle; Property Damage, Sprinkler Leakage






 









 






	 	 	 	 	 
	Regulated Insurance 	 	Jurisdiction(s) of Permits	 	Lines of Permitted Business
	Subsidiary	 	 	 	 
	 
	 	 	 	 
	 

	 	 	 	and Crop; Other Fire and Marine Risks; Contingent Losses; Legal Expense
Insurance
	 
	 	 	 	 
	Affirmative Insurance Company

	 	Indiana
	 	Class II (Casualty): Accident and Health — Disability; Burglary, Theft;
Glass; Boiler and Machinery; Automobile; Sprinkler; Liability; Fidelity &
Surety without Bail Bonds; MiscellaneousClass III (Property): Fire,
Windstorm, Hail, Loot, Riot; Sprinkler; Marine
	 
	 	 	 	 
	Affirmative Insurance Company

	 	Iowa
	 	Fire; Extended coverage; Other allied lines; Homeowners multiple peril;
Commercial multiple peril; Earthquake; Growing crops; Ocean marine; Inland
marine; Accident only; Accident and health; Hospital and medical expense;
Group accident and health; Non-cancellable accident and health; Liability
other than auto (BI); Liability other than auto (PD); Auto liability (BI);
auto liability (PD); Auto physical damage; Aircraft physical damage;
Fidelity; Surety; Glass; Burglary and theft; Boiler and machinery
	 
	 	 	 	 
	Affirmative Insurance Company

	 	Kansas
	 	Fire; Windstorm & Hail; Extended Coverage; Optional Perils; Sprinkler
Leakage; Business Interruption; Earthquake; Water Damage; Inland Marine;
Rain; Automobile Physical Damage; Flood; Homeowners Policies; Automobile
Liability; General Liability; Fidelity, Surety & Forgery Bonds; Glass;
Burglary, Theft & Robbery; Boiler & Machinery; Malpractice Liability;
Cargo Liability
	 
	 	 	 	 
	Affirmative Insurance Company

	 	Kentucky
	 	Property, Casualty (limited to vehicle, liability, burglary & theft,
personal property floater, glass, boiler & machinery, leakage & fire
extinguishing equipment, failure of certain institutions to record
documents, automobile guaranty and miscellaneous), Surety; Marine &
Transportation
	 
	 	 	 	 
	Affirmative Insurance Company

	 	Michigan
	 	Recognition as an Accredited Reinsurer in Michigan
	 
	 	 	 	 
	Affirmative Insurance Company

	 	Mississippi
	 	Fire and Allied Lines; Casualty/Liability; Fidelity; Surety; Boiler and
Machinery; Plate Glass; Inland Marine; Auto Phy Damage/Liab; Guaranty
	 
	 	 	 	 
	Affirmative Insurance Company

	 	Missouri
	 	Liability; Miscellaneous; Property
	 
	 	 	 	 
	Affirmative Insurance Company

	 	Nebraska
	 	Property Insurance; Glass Insurance; Burglary and Theft Insurance; Boiler
and Machinery Insurance; Liability Insurance; Vehicle Insurance; Fidelity
Insurance; Surety Insurance; Marine Insurance






 









 






	 	 	 	 	 
	Regulated Insurance 	 	Jurisdiction(s) of Permits	 	Lines of Permitted Business
	Subsidiary	 	 	 	 
	 
	 	 	 	 
	Affirmative Insurance Company

	 	Nevada
	 	Casualty (Excluding Workers’ Compensation) — Property
	 
	 	 	 	 
	Affirmative Insurance Company

	 	New Mexico
	 	Property (Excluding Marine and Transportation; Casualty and Vehicle
	 
	 	 	 	 
	Affirmative Insurance Company

	 	New York
	 	Recognition as an Accredited Reinsurer in New York
	 
	 	 	 	 
	Affirmative Insurance Company

	 	North Carolina
	 	Fire; Extended Coverage; Commercial Water Damage; Residential Water
Damage; Burglary and Theft; Glass; Boiler and Machinery; Elevator; Animal;
Automobile Collision; Other Collision; Automobile Personal Injury
Liability; Other Personal Injury Liability; Automobile Property Damage
Liability; Other Property Damage Liability; Workmen’s Compensation &
Employer’s Liability; Fidelity and Surety; Motor Vehicle and Aircraft
Property Damage, Fire, Theft, Comprehensive, Collision; Inland Marine
	 
	 	 	 	 
	Affirmative Insurance Company

	 	North Dakota
	 	Casualty; Property
	 
	 	 	 	 
	Affirmative Insurance Company

	 	Ohio
	 	Accident & Health; Aircraft; Allied Lines; Boiler & Machinery; Burglary &
Theft; Collectively Renewable A & H; Commercial Auto — Liability;
Commercial Auto — No Fault; Commercial Auto — Phys. Damage; Credit
Accident & Health; Earthquake; Fidelity; Financial Guaranty; Fire; Glass,
Group Accident & Health; Guaranteed Renewable A & H; Inland Marine;
Multiple Peril — Commercial; Multiple Peril — Farmowners; Multiple Peril -
Homeowners; Noncancellable A & H; Nonrenew — State Reasons (A&H); Ocean
Marine; Other Accident only; Other Liability; Private Passenger Auto -
Liab.; Private Passenger Auto-Other; Private Passenger-Phys Damage;
Surety; Workers Compensation
	 
	 	 	 	 
	Affirmative Insurance Company

	 	Oklahoma
	 	Property; Casualty
	 
	 	 	 	 
	Affirmative Insurance Company

	 	Oregon
	 	Casualty (Excluding Workers’ Compensation)
	 
	 	 	 	 
	Affirmative Insurance Company

	 	Pennsylvania
	 	Auto Liability; Inland Marine and Physical Damage
	 
	 	 	 	 
	Affirmative Insurance Company

	 	Rhode Island
	 	All Lines of insurance except life, annuities, title, mortgage guaranty
and worker’s compensation.
	 
	 	 	 	 
	Affirmative Insurance Company

	 	South Carolina
	 	Property; Casualty
	 
	 	 	 	 
	Affirmative Insurance Company

	 	South Dakota
	 	Fire & Allied Lines; Inland & Ocean Marine; Bodily Injury (No Auto);






 









 






	 	 	 	 	 
	Regulated Insurance 	 	Jurisdiction(s) of Permits	 	Lines of Permitted Business
	Subsidiary	 	 	 	 
	 
	 	 	 	 
	 

	 	 	 	Property Damage (No Auto); Bodily Injury (Auto); Property Damage (Auto);
Physical Damage (Auto); Fidelity & Surety Bonds; Glass; Burglary & Theft;
Boiler & Machinery; Bail Bonds
	 
	 	 	 	 
	Affirmative Insurance Company

	 	Tennessee
	 	Property; Casualty; Surety
	 
	 	 	 	 
	Affirmative Insurance Company

	 	Texas
	 	Automobile Liability; Automobile Physical Damage and Reinsurance on all
lines authorized to be written on a direct basis
	 
	 	 	 	 
	Affirmative Insurance Company

	 	Utah
	 	Liability; Property; Vehicle Liability
	 
	 	 	 	 
	Affirmative Insurance Company

	 	Virginia
	 	Fire; Miscellaneous Property; Farm Multiple Peril; Homeowners Multiple
Peril; Commercial Multiple Peril; Inland Marine; Workers
Compensation-Employer; Liability Other Than Auto; Automobile Liability;
Automobile Physical Damage; Fidelity; Surety; Glass; Burglary and Theft;
Boiler and Machinery; Water Damage
	 
	 	 	 	 
	Affirmative Insurance Company

	 	Washington
	 	Vehicle
	 
	 	 	 	 
	Affirmative Insurance Company

	 	West Virginia
	 	Fire; Marine; Casualty; Surety
	 
	 	 	 	 
	Affirmative Insurance Company

	 	Wisconsin
	 	Fire, inland marine, and other property insurance; Liability and
incidental medical expense insurance; Automobile and aircraft insurance;
Fidelity insurance; Surety insurance; Miscellaneous
	 
	 	 	 	 
	 

	 	 	 	Property; Automobile Insurance — Limited; Casualty: Automobile; Casualty:
	Affirmative Insurance
Company of Michigan

	 	Michigan
	 	Liablity; Casualty: Misc — Other; Disability coverage supplemental to Auto
Insurance
	 
	 	 	 	 
	Insura Property & Casualty 

Insurance Company

	 	Arizona
	 	Casualty Without Workers’ Compensation; Marine and Transportation;
Property; Surety; Vehicle






 









 






	 	 	 	 	 
	Regulated Insurance 	 	Jurisdiction(s) of Permits	 	Lines of Permitted Business
	Subsidiary	 	 	 	 
	 
	 	 	 	 
	Insura Property & Casualty 

Insurance Company

	 	Arkansas
	 	Property; Casualty (Excluding Workers Compensation); Surety; Marine
	 
	 	 	 	 
	Insura Property & Casualty 

Insurance Company

	 	Colorado
	 	Fidelity and Surety; General Casualty; General Property; Motor Vehicle
(Casualty); Motor Vehicle (Property); Professional Malpractice;
	 
	 	 	 	 
	Insura Property & Casualty 

Insurance Company

	 	Connecticut
	 	Fire, Extended Coverage, and Other Allied Lines; Homeowners Multiple
Peril; Commercial Multiple Peril; Inland Marine; Workman’s Compensation;
Liability other than Auto (BI and PD); Auto Liability (BI and PD); Auto
Physical Damage; Glass; Burglary and Theft; Credit; Reinsurance
	 
	 	 	 	 
	Insura Property & Casualty 

Insurance Company

	 	Florida
	 	Fire; Allied Lines; Farmowners Multi Peril; Homeowners Multi Peril;
Commercial Multi Peril; Inland Marine; Medical Malpractice; Earthquake;
Other Liability; Private Passenger Auto Liability; Commercial Automobile
Liability; PPA Physical Damage; Commercial Auto Physical Damage; Fidelity;
Surety; Glass; Burglary and Theft; Boiler and Machinery; Industrial Fire;
Industrial Extended Coverage; Mobile Home Multi Peril; Mobile Home
Physical Damage
	 
	 	 	 	 
	Insura Property & Casualty 

Insurance Company

	 	Georgia
	 	Property; Marine and Transportation; Casualty (Including Workers’
Compensation); Surety
	 
	 	 	 	 
	Insura Property & Casualty 

Insurance Company

	 	Illinois
	 	Class 2 (Casualty, Fidelity and Surety): Accident and Health; Vehicle;
Liability; Workers’ Compensation; Burglary and Forgery; Glass; Fidelity
and Surety; Miscellaneous; Other Casualty Risks; Contingent Losses;
Livestock and Domestic Animals; Legal Expense InsuranceClass 3 (Fire and
Marine, etc.): Fire; Elements; War, Riot and Explosion; Marine and
Transportation; Vehicle; Property Damage, Sprinkler Leakage and Crop;
Other Fire and Marine Risks; Contingent Losses; Legal Expense Insurance
	 
	 	 	 	 
	Insura Property & Casualty 

Insurance Company

	 	Indiana
	 	Class II (Casualty): Accident and Health — Disability; Workers’
Compensation; Burglary, Theft; Glass; Boiler and Machinery; Automobile;
Sprinkler; Liability; Fidelity & Surety without Bail Bonds; Miscellaneous
Class III (Property): Fire, Windstorm, Hail, Loot, Riot; Sprinkler; Marine
	 
	 	 	 	 
	Insura Property & Casualty 

Insurance Company

	 	Iowa
	 	Fire; Extended coverage; Other allied lines; Homeowners multiple peril;
Commercial multiple peril; Earthquake; Growing crops; Ocean marine;






 









 








	 	 	 	 	 
	Regulated Insurance 	 	Jurisdiction(s) Of Permits	 	Lines of Permitted Business
	Subsidiary	 	 	 	 
	 
	 	 	 	 
	 

	 	 	 	Inland
marine; Accident only; Accident and health; Hospital and medical expense;
Group accident and health; Non-cancellable accident and health; Liability
other than auto (BI); Liability other than auto (PD); Auto liability (BI);
auto liability (PD); Auto physical damage; Aircraft physical damage;
Fidelity; Surety; Glass; Burglary and theft; Boiler and machinery
	 
	 	 	 	 
	Insura Property & Casualty 

Insurance Company

	 	Kansas
	 	Fire; Windstorm & Hail; Extended Coverage; Optional Perils; Sprinkler
Leakage; Business Interruption; Earthquake; Water Damage; Inland Marine;
Rain; Automobile Physical Damage; Flood; Homeowners Policies; Automobile
Liability; General Liability; Fidelity, Surety & Forgery Bonds; Glass;
Burglary, Theft & Robbery; Boiler & Machinery; Malpractice Liability;
Cargo Liability
	 
	 	 	 	 
	Insura Property & Casualty 

Insurance Company

	 	Kentucky
	 	Property, Casualty (limited to vehicle, liability, workers’ compensation &
employer’s liability, burglary & theft, personal property floater, glass,
boiler & machinery, leakage & fire extinguishing equipment, failure of
certain institutions to record documents, automobile guaranty and
miscellaneous), Surety; Marine & Transportation
	 
	 	 	 	 
	Insura Property & Casualty 

Insurance Company

	 	Mississippi
	 	Fire and Allied Lines; Casualty/Liability; Fidelity; Surety; Boiler and
Machinery; Plate Glass; Inland Marine; Auto Phy Damage/Liab; Guaranty
	 
	 	 	 	 
	Insura Property & Casualty 

Insurance Company

	 	Missouri
	 	Miscellaneous; Accident & Health; Liability; Property
	 
	 	 	 	 
	Insura Property & Casualty 

Insurance Company

	 	Nebraska
	 	Property Insurance; Glass Insurance; Burglary and Theft Insurance; Boiler
and Machinery Insurance; Liability Insurance; Vehicle Insurance; Fidelity
Insurance; Surety Insurance; Marine Insurance
	 
	 	 	 	 
	Insura Property & Casualty 

Insurance Company

	 	Nevada
	 	Casualty (Excluding Workers’ Compensation) — Property
	 
	 	 	 	 
	Insura Property & Casualty 

Insurance Company

	 	New Mexico
	 	Vehicle
	 
	 	 	 	 
	Insura Property & Casualty 

Insurance Company

	 	North Carolina
	 	Fire; Extended Coverage; Commercial Water Damage; Residential Water
Damage; Burglary and Theft; Glass; Boiler and Machinery; Elevator; Animal;
Automobile Collision; Other Collision; Automobile Personal Injury
Liability; Other Personal Injury Liability; Automobile Property Damage






 









 








	 	 	 	 	 
	Regulated Insurance 	 	Jurisdiction(s) of Permits	 	Lines of Permitted Business
	Subsidiary	 	 	 	 
	 
	 	 	 	 
	 

	 	 	 	Liability; Other Property Damage Liability; Workmen’s Compensation &
Employer’s Liability; Fidelity and Surety; Motor Vehicle and Aircraft
Property Damage, Fire, Theft, Comprehensive, Collision; Inland Marine;
Ocean Marine; Marine Protection and Indemnity; Aircraft Voluntary
Settlement
	 
	 	 	 	 
	Insura Property & Casualty 

Insurance Company

	 	North Dakota
	 	Casualty; Property
	 
	 	 	 	 
	Insura Property & Casualty 

Insurance Company

	 	Ohio
	 	Accident & Health; Aircraft; Allied Lines; Boiler & Machinery; Burglary &
Theft; Collectively Renewable A & H; Commercial Auto — Liability;
Commercial Auto — No Fault; Commercial Auto — Phys. Damage; Credit
Accident & Health; Earthquake; Fidelity; Financial Guaranty; Fire; Glass,
Group Accident & Health; Guaranteed Renewable A & H; Inland Marine;
Multiple Peril — Commercial; Multiple Peril — Farmowners; Multiple Peril -
Homeowners; Noncancellable A & H; Nonrenew — State Reasons (A&H); Ocean
Marine; Other Accident only; Other Liability; Private Passenger Auto -
Liab.; Private Passenger Auto-Other; Private Passenger-Phys Damage;
Surety;
	 
	 	 	 	 
	Insura Property & Casualty 

Insurance Company

	 	Oklahoma
	 	Property; Casualty
	 
	 	 	 	 
	Insura Property & Casualty 

Insurance Company

	 	Oregon
	 	Casualty (Excluding Workers’ Compensation)
	 
	 	 	 	 
	Insura Property & Casualty 

Insurance Company

	 	Rhode Island
	 	All lines of insurance except life, annuities, title and mortgage guaranty.
	 
	 	 	 	 
	Insura Property & Casualty 

Insurance Company

	 	South Carolina
	 	Property; Casualty
	 
	 	 	 	 
	Insura Property & Casualty 

Insurance Company

	 	South Dakota
	 	Fire & Allied Lines; Inland & Ocean Marine; Bodily Injury (No Auto);
Property Damage (No Auto); Bodily Injury (Auto); Property Damage (Auto);
Physical Damage (Auto); Fidelity & Surety Bonds; Glass; Burglary & Theft;
Boiler & Machinery; Bail Bonds
	 
	 	 	 	 
	Insura Property & Casualty 

Insurance Company

	 	Tennessee
	 	Property; Casualty; Surety
	 
	 	 	 	 
	Insura Property & Casualty

	 	Texas
	 	Automobile — Liability and Physical Damage and Reinsurance on all lines







 










 





	 	 	 	 	 
	Regulated Insurance Subsidiary	 	Jurisdiction(s) of Permits	 	Lines of Permitted Business
	Insurance Company

	 	 	 	authorized to be written on a direct basis
	Insura Property & Casualty

	 	Utah
	 	Liability; Property; Vehicle Liability
	Insurance Company
	 	 	 	 
	 
	 	 	 	 
	Insura Property &

Casualty Insurance

	 	 	 	Fire; Miscellaneous Property and Casualty; Farm Multiple Peril; Homeowners
Multiple Peril; Commercial Multiple Peril; Inland Marine; Workers
Compensation-Employer; Liability Other Than Auto; Automobile Liability;
Automobile Physical Damage; Aircraft Liability; Air Physical Damage;
	Company

	 	Virginia
	 	Fidelity; Glass; Burglary and Theft; Boiler and Machinery; Water Damage
	 
	 	 	 	 
	Insura Property & Casualty 

Insurance Company

	 	Washington
	 	Vehicle
	 
	 	 	 	 
	Insura Property & Casualty 

Insurance Company

	 	West Virginia
	 	Fire; Marine; Casualty; Surety
	 
	 	 	 	 
	Insura Property & Casualty 

Insurance Company

	 	Wisconsin
	 	None.






USAgencies Regulated Insurance Subsidiary Permits 




	 	 	 	 	 
	Regulated Insurance Subsidiary	 	Jurisdiction(s) of Permits	 	Lines of Permitted Business
	USAgencies Direct Insurance
Company, Inc.

	 	Alabama
	 	Miscellaneous Casualty; Surety Excluding Official Surety Bonds; Marine
	 
	 	 	 	 
	USAgencies Direct Insurance
Company, Inc.

	 	Arizona
	 	Vehicle
	 
	 	 	 	 
	USAgencies Direct Insurance Company, Inc.

	 	Illinois	 	Class 2 (Casualty, Fidelity and Surety): Vehicle; Liability;
Workers’ Compensation; Burglary and Forgery; Glass; Miscellaneous;
Other Casualty Risks; Contingent Losses; Livestock and Domestic
Animals; Legal Expense Insurance
	

	 		 	Class 3 (Fire and Marine, etc.): Marine and Transportation; Vehicle; Property Damage, Sprinkler Leakage and Crop; Other Fire and Marine
Risks; Contingent Losses






 









 






	 	 	 	 	 
	Regulated Insurance Subsidiary	 	Jurisdiction(s) of Permits	 	Lines of Permitted Business
	USAgencies Direct Insurance 
Company,
Inc.

	 	Indiana
	 	Class II (Casualty) — Accident and Health — Disability; Workers’
Compensation; Burglary, Theft; Glass; Boiler and Machinery;
Automobile; Sprinkler; Liability; Credit; Title; Fidelity &
Surety-excluding bail bonds; Miscellaneous; Legal Expenses; Class III (Property) — Fire, Windstorm, Hail, Loot, Riot; Crops; Sprinkler;
Marine
	 
	 	 	 	 
	USAgencies Direct Insurance 
Company,
Inc.

	 	Iowa
	 	Fire; Extended coverage; Other allied lines; Homeowners multiple
peril (Inc. B.I.); Commercial multiple peril; Earthquake; Growing
crops; Ocean marine; Inland marine; Workers’ compensation; Liability
other than auto (B.I.); Liability other than auto (P.D.); Auto
liability (B.I.); Auto liability (P.D.); Auto physical damage;
Aircraft physical damage; Glass; Burglary and theft; Boiler and
machinery
	 
	 	 	 	 
	USAgencies Direct Insurance 
Company,
Inc.

	 	Kentucky
	 	Multiple Line — Health; Property; Surety; Casualty; and Marine and
transportation Insurance
	 
	 	 	 	 
	USAgencies Direct Insurance 
Company,
Inc.

	 	Louisiana
	 	Vehicle
	 
	 	 	 	 
	USAgencies Direct Insurance 
Company,
Inc.

	 	Massachusetts
	 	Ocean & Inland Marine
	 
	 	 	 	 
	USAgencies Direct Insurance 
Company,
Inc.

	 	Montana
	 	Property; Marine; Casualty (excluding Workers’ Compensation)
	 
	 	 	 	 
	USAgencies Direct Insurance 
Company,
Inc.

	 	Nevada
	 	Property; Casualty (excluding Workers’ Compensation)
	 
	 	 	 	 
	USAgencies Direct Insurance 
Company,
Inc.

	 	New York
	 	Fire; miscellaneous property; water damage; burglary and theft;
glass; boiler and machinery; collision; personal injury liability;
property damage liability; motor vehicle and aircraft physical
damage; marine and inland marine; marine protection and indemnity
	 
	 	 	 	 
	 

	 	 	 	Allied Lines; Boiler & Machinery; Burglary & Theft; Commercial Auto -
Liability; Commercial Auto — No Fault; Commercial Auto — Physical






 









 









	 	 	 	 	 
	Regulated Insurance Subsidiary	 	Jurisdiction(s) of Permits	 	Lines of Permitted Business
	
	 	Oregon
	 	Damage; Earthquake; Fidelity; Fire; Glass; Inland Marine; Multiple
Peril — Commercial; Multiple Peril — Farmowners; Multiple Peril -
Homeowners; Ocean Marine; Other Liability; Private Passenger Auto -
Liability; Private Passenger Auto — Other; Private Passenger -
Physical Damage; Surety; Workers Compensation
	 
	 	 	 	 
	USAgencies Direct Insurance Company,
Inc.

	 	Oregon
	 	 Casualty (Excluding Workers’ Coompensation); Marine and Transportation
	 
	 	 	 	 
	USAgencies Direct Insurance Company,
Inc.

	 	Texas
	 	Fire; Allied Coverages; Ocean Marine; Employers’ Liability;
Automobile — Liability & Physical Damage; Liability other than
Automobile; Glass; Burglary & Theft; Boiler & Machinery and
Reinsurance on all lines authorized to be writtenon a direct basis.
	 
	 	 	 	 
	USAgencies Direct Insurance Company,
Inc.

	 	Washington
	 	Property; Marine & Transportation; Vehicle; General Casualty
	 
	 	 	 	 
	USAgencies Direct Insurance Company,
Inc.

	 	Wisconsin
	 	Fire, inland marine, and other property insurance; Ocean marine
insurance; Liability and incidental medical expense insurance;
Automobile and aircraft insurance; Miscellaneous
	 
	 	 	 	 
	USAgencies Casualty Insurance Company,
Inc.

	 	Louisiana
	 	Vehicle






 









 





SCHEDULE 6.01




EXISTING INDEBTEDNESS




Affirmative Existing Indebtedness





	1.	 	None.





USAgencies Existing Indebtedness





	1.	 	USAgencies Management Services, Inc. has outstanding debt as follows:






	 	a.	 	$11,517 owed to GMAC Financial Services for vehicle fleet financing.
	 
	 	b.	 	$147,412 owed to Capital One Commercial Equipment Finance (formerly Hibernia Bank) for an
equipment capital lease.






 










 





SCHEDULE 6.02




EXISTING LIENS




Affirmative Existing Liens




	 	 	 
	1.

	 	Affirmative Insurance Holdings, Inc.
	 

	 	Delaware Secretary of State
	 

	 	Federal Tax Liens – clear.
	 

	 	UCC






	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	FILE	 	 
	 	 	SECURED PARTY	 	LIEN TYPE	 	FILE NUMBER	 	DATE	 	COLLATERAL
	1	 	Dell Financial Services, L.P.
	 	UCC-1	 	51175455	 	4/15/05	 	Computer equipment lease
	2	 	Cisco Systems Capital Corporation
	 	UCC-1	 	63705696	 	10/24/06	 	Equipment lease
	 	 	 
	 	 	 	 	 	 	 	 






	 	 	 
	2.

	 	Affirmative Property Holdings, Inc.
	 

	 	Texas Secretary of State
	 

	 	UCC






	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	FILE	 	 
	 	 	SECURED PARTY	 	LIEN TYPE	 	FILE NUMBER	 	DATE	 	COLLATERAL
	1	 	Pitney Bowes Credit Corporation
	 	UCC-1	 	04-0080962978	 	9/8/04	 	Pitney Bowes equipment
	2	 	Dell Financial Services, L.P.
	 	UCC-1	 	05-0014607962	 	5/10/05	 	Computer equipment lease
	3	 	Key Equipment Finance Inc.
	 	UCC-1	 	06-0017164904	 	5/19/06	 	Equipment, inventory, etc.
	4	 	Greater Bay Bank N.A.
	 	UCC-1	 	06-0018005282	 	5/26/06	 	Copiers
	5	 	Citicorp Vendor Finance, Inc.
	 	UCC-1	 	06-0018693922	 	6/2/06	 	Equipment (various fax machines)
	6	 	Citicorp Vendor Finance, Inc.
	 	UCC-1	 	06-0030630745	 	9/13/06	 	Copiers






	 	 	 
	3.

	 	A-Affordable Insurance Agency, Inc.
	 

	 	Texas Secretary of State
	 

	 	UCC






	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	FILE	 	 
	 	 	SECURED PARTY	 	LIEN TYPE	 	FILE NUMBER	 	DATE	 	COLLATERAL
	1	 	Citicorp Vendor Finance, Inc.
	 	UCC-1	 	01-00081647	 	4/27/01	 	Copiers lease
	 	 	 
	 	Continuation	 	06-00130631	 	4/18/06	 	 
	2	 	Citicorp Vendor Finance, Inc.
	 	UCC-1	 	04-0054146953	 	1/14/04	 	Specific equipment
	3	 	Meadow Creek Square S/C,
	 	UCC-1	 	06-0016720779	 	5/16/06	 	All goods, wares,
	 	 	Ltd., Meadow Creek Square
	 	 	 	 	 	 	 	equipment, fixtures, etc.
	 	 	S/C, G.P., LLC
	 	 	 	 	 	 	 	 
	 	 	 
	 	Amendment	 	06-00168128	 	5/17/06	 	Restated collateral







USAgencies Existing Liens




 









 








	 	 	 
	1.

	 	USAgencies, L.L.C.









	 	 	 
	 

	 	State of Louisiana, East Baton Rouge Parish

	 

	 	UCC






	 	 	 	 	 	 	 	 	 	 	 
	 	 	SECURED PARTY	 	LIEN TYPE	 	FILE NUMBER	 	FILE DATE	 	COLLATERAL
	1	 	Cisco Systems Capital Corporation
	 	UCC-1	 	17-1216962	 	6/29/01	 	Equipment lease
	 	 	 
	 	 	 	 	 	 	 	 
	 	 	 
	 	Amendment	 	17-1257819	 	11/5/03	 	 
	 	 	 
	 	Continuation	 	17-1295217	 	3/28/06	 	 
	2	 	Citicorp Vendor Finance, Inc.
	 	UCC-1	 	09-1040045	 	1/13/05	 	Copier







 









 







SCHEDULE 6.04




EXISTING INVESTMENTS




Affirmative Existing Investments




	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Bank Name	 	Beneficiary	 	Bank Account #	 	Account Name	 	Location	 	Contact Name	 	Contact Number
	Non-Restricted
Securities
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	UBS Financial
Services, Inc.
	 	N/A	 	Y1 13774	 	Affirmative Insurance Company	 	New York, NY	 	Hank Ludwicki	 	 	212-821-2189	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	UBS Financial
Services, Inc.
	 	N/A	 	Y1 13773	 	Insura Property & Casualty Insurance Company	 	New York, NY	 	Hank Ludwicki	 	 	212-821-2189	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	UBS Financial
Services, Inc.
	 	N/A	 	Y1 00880	 	Affirmative Insurance Company of Michigan	 	New York, NY	 	Hank Ludwicki	 	 	212-821-2189	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Comerica Bank
	 	N/A	 	4085000178	 	Affirmative Insurance Company	 	Detroit, MI	 	Ralph Johnston	 	 	313-222-9053	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Comerica Bank
	 	N/A	 	4085000187	 	Insura Property & Casualty Insurance Company	 	Detroit, MI	 	Ralph Johnston	 	 	313-222-9053	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Comerica Bank
	 	N/A	 	2085001302	 	Affirmative Insurance Company of Michigan	 	Detroit, MI	 	Ralph Johnston	 	 	313-222-9053	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Frost National Bank
	 	N/A	 	WA181	 	Affirmative Insurance Company	 	Fort Worth, TX	 	Chris Massey	 	 	817-420-5052	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Frost National Bank
	 	N/A	 	WA182	 	Insura Property & Casualty Insurance Company	 	Fort Worth, TX	 	Chris Massey	 	 	817-420-5052	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Restricted Securities
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Trusts:
	 	 	 	 	 	 	 	 	 	 	 	 	 	 







 









 










	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Bank Name	 	Beneficiary	 	Bank Account #	 	Account Name	 	Location	 	Contact Name	 	Contact Number
	Frost National Bank(NV)
	 	Old American-AAF	 	W00015500	 	Affirmative Insurance Company - OACM A-Affordable Trust	 	Fort Worth, TX	 	Chris Massey	 	 	817-420-5052	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Frost National Bank
	 	Old American-AIS-SW	 	W00015600	 	Affirmative Insurance Company - OACM AIS-SW Trust	 	Fort Worth, TX	 	Chris Massey	 	 	817-420-5052	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Frost National Bank
	 	Vesta	 	WA570	 	Affirmative Insurance Company - Vesta AIC Trust	 	Fort Worth, TX	 	Chris Massey	 	 	817-420-5052	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Special Deposits:
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	US Bank (GA)
	 	Policyholder	 	61-584708200	 	Affirmative Insurance Company	 	Winston-Salem, NC	 	Debbie Blackburn	 	 	877-877-2143 x3	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Illinois National Bank (IL)
	 	Policyholder	 	155	 	Affirmative Insurance Company (NAIC#42609)	 	Springfield, IL	 	Cathy Suhling	 	 	217-557-4639	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Century Bank (NM)
	 	Policyholder	 	4955	 	Affirmative Insurance Company	 	Santa Fe, NM	 	Alan Snow	 	 	505-995-1210	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	US Bank (NC)
	 	Policyholder	 	58-078477600	 	Affirmative Insurance Company	 	Winston-Salem, NC	 	Diane Grubbs	 	 	877-877-2143 x1	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Frost National Bank
	 	Policyholder	 	W00015600	 	Affirmative Insurance Company	 	Fort Worth, TX	 	Chris Massey	 	 	817-420-5052	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	US Bank (SC)
	 	Policyholder	 	222-121060003300	 	Affirmative Insurance Company	 	Winston-Salem, NC	 	Debbie Blackburn	 	 	877-877-2143 x3	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Sun Trust Bank (VA)
	 	Policyholder	 	7023549	 	Affirmative Insurance Company	 	Richmond, VA	 	Brenda Whitener	 	 	804-782-7792	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	US Bank (GA)
	 	Policyholder	 	61-584918600	 	Insura Property & Casualty Insurance Company	 	Winston-Salem, NC	 	Debbie Blackburn	 	 	877-877-2143 x3	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Illinois National Bank (IL)
	 	Policyholder	 	14238	 	Insura Property & Casualty Insurance Company	 	Springfield, IL	 	Cathy Suhling	 	 	217-557-4639	 
	 
	 	 	 	 	 	(NAIC#38806)	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	US Bank (NC)
	 	Policyholder	 	58-078544100	 	Insura Property & Casualty Insurance Company	 	Winston-Salem, NC	 	Diane Grubbs	 	 	877-877-2143	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Century Bank (NM)
	 	Policyholder	 	5020	 	Insura Property & Casualty Insurance Company	 	Santa Fe, NM	 	Alan Snow	 	 	505-995-1210	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Frost National Bank
	 	Policyholder	 	WA182	 	Insura Property & Casualty Insurance Company	 	Fort Worth, TX	 	Chris Massey	 	 	817-420-5052	 
	(NV)
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	US Bank (SC)
	 	Policyholder	 	222-12106000300	 	Insura Property & Casualty Insurance Company	 	Winston-Salem, NC	 	Debbie Blackburn	 	 	877-877-2143 x3	 







 









 










	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Bank Name	 	Beneficiary	 	Bank Account #	 	Account Name	 	Location	 	Contact Name	 	Contact Number
	Sun Trust Bank (VA)
	 	Policyholder	 	7022958	 	Insura Property & Casualty Insurance Company	 	Richmond, VA	 	Brenda Whitener	 	 	804-782-7792	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	JP Morgan Chase (MI)
	 	Policyholder	 	341000163	 	Affirmative Insurance Company of Michigan	 	Lansing, MI	 	Betty Lotoszinski	 	 	517-241-9072	 







USAgencies Existing Investments




Deposit Accounts




	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	Contact
	Bank Name	 	Bank Account #	 	Account Name	 	Location	 	Contact Name	 	Number
	Capital One, N. A.

	 	2080045355 — Operating
	 	USAgencies Direct

Insurance Company
	 	Baton Rouge, LA
	 	Janet Olson
	 	(225) 381-2140
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Capital One, N. A.

	 	792086675 – Operating

2080108020 –
	 	792086675 –
Operating
	 	 	 	Janet Olson
	 	(225) 381-2140
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	Consolidated Return

Account
	 	2080108020 –

Consolidated Return

Account	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	792156894 – Payroll
Account
	 	792156894 – Payroll
Account
	 	Baton Rouge, LA	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	8660199999 – Kiosk
Account
	 	8660199999 — Kiosk
Account
 USAgencies Management
Services, Inc	 	 	 	 	 	 
	JPMorgan Chase Bank, N.A.

	 	 000000641907191 –
Deposit (Sales
Office)
	 	USAgencies
Management
	 	Illinois Market
P. O. Box 260180
	 	Tine Neames
	 	(225) 332-7782
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	Services
	 	Baton Rouge, LA

70826	 	 	 	 






 









 










	 	 	 	 	 	 	 	 	 	 	 
	Bank Name	 	Bank Account #	 	Account Name	 	Location	 	Contact Name	 	Number
	Regions Bank

	 	4305089786 – Deposit
(Sales Office)
	 	USAgencies
Management Services
	 	Baton Rouge, LA
	 	Bonnie Couvillon
	 	(225) 767-9394
	 
	 	 	 	 	 	 	 	 	 	 
	Capital One, N. A.

	 	792088139 – Operating
8649099999 – Tower key
	 	USAgencies Casualty
Insurance Company
	 	Baton Rouge, LA
	 	Janet Olson
	 	(225) 381-2140
	 
	 	 	 	 	 	 	 	 	 	 
	First National Bank

	 	139539 – Deposit
(Sales Office)
	 	USAgencies Casualty

Insurance Company
	 	Crowley, LA
	 	Diane Sarver
	 	(337) 783-4014
	 
	 	 	 	 	 	 	 	 	 	 
	JPMorgan Chase Bank, N. A

	 	2101345508 — Deposit
 (Sales Office)
	 	USAgencies Casualty

Insurance Company
	 	Baton Rouge, LA
	 	Tine Neames
	 	(225) 332-7782
	 
	 	 	 	 	 	 	 	 	 	 
	Plaquemine Bank & Trust

	 	119210 — Deposit
(Sales Office)
	 	USAgencies Casualty

Insurance Company
	 	Plaquemine, LA
	 	Rhett Vaughn
	 	(225) 687-6388
	 
	 	 	 	 	 	 	 	 	 	 
	Regions Bank

	 	4305051908 — Deposit
(Sales Office)
	 	USAgencies Casualty

Insurance Company
	 	Baton Rouge, LA
	 	Bonnie Couvillon
	 	(225) 767-9394
	 
	 	 	 	 	 	 	 	 	 	 
	Sabine State Bank

	 	9009760 — Deposit
(Sales Office)
	 	USAgencies Casualty

Insurance Company
	 	Many, LA
	 	Bridget Hicks
	 	(318) 256-7000
	 
	 	 	 	 	 	 	 	 	 	 
	Winnsboro state Bank

	 	1027158 — Deposit
(Sales Office)`
	 	USAgencies Casualty

Insurance Company
	 	Winnsboro, LA
	 	Michael Woods
	 	(318) 435-7535
	 
	 	 	 	 	 	 	 	 	 	 
	Capital One, N.A.

	 	792157378 – Operating

8661099999 – TowerKEY
	 	LIFCO, L.L.C.
	 	Baton Rouge, LA
	 	Janet Olson
	 	(225) 381-2140






 









 










	 	 	 	 	 	 	 	 	 	 	 
	Bank Name	 	Bank Account #	 	Account Name	 	Location	 	Contact Name	 	Number
	First National Bank

	 	139594 – Deposit
(Sales Office)
	 	LIFCO, L.L.C.
	 	Crowley, LA
	 	Diane Sarver
	 	(337) 783-4014
	 
	 	 	 	 	 	 	 	 	 	 
	JP Morgan Chanse Bank, N.A.

	 	2102203162 — Deposit
(Sales Office)
	 	LIFCO, L.L.C.
	 	Baton Rouge, LA
	 	Tine Neames
	 	(225) 332-7782
	 
	 	 	 	 	 	 	 	 	 	 
	Plaquemine Bank & Trust

	 	119474 — Deposit
(Sales Office)
	 	LIFCO, L.L.C.
	 	Plaquemine, LA
	 	Rhett Vaughn
	 	(225) 687-6380
	 
	 	 	 	 	 	 	 	 	 	 
	Regions Bank

	 	4305051916 — Deposit
(Sales Office)
	 	LIFCO, L.L.C.
	 	Baton Rouge, LA
	 	Bonnie Couvillon
	 	(225) 767-9394
	 
	 	 	 	 	 	 	 	 	 	 
	Sabine State Bank & Trust Co.

	 	9009779 — Deposit
(Sales Office)
	 	LIFCO, L.L.C.
	 	Many, LA
	 	Bridget Hicks
	 	(318) 256-7000
	 
	 	 	 	 	 	 	 	 	 	 
	Winnsboro State Bank & Trust

	 	1027166 — Deposit
(Sales Office)
	 	LIFCO, L.L.C.
	 	Winnsboro, LA
	 	Michael Woods
	 	(318) 435-7535






Special Investment Accounts




Restricted Securities Accounts




	 	 	 	 	 	 	 
	Bank Name	 	Bank Account #	 	Account Name	 	Location
	Capital One, N.A.

	 	710415027
	 	USAgencies Casualty Insurance Company, Inc.
	 	Louisiana
	 
	 	 	 	 	 	 
	Capital One, N.A.

	 	760110015
	 	USAgencies Direct Insurance Company
	 	Louisiana
	 
	 	 	 	 	 	 
	US Bank

	 	141049754
	 	USAgencies Direct Insurance Company
	 	Arizona
	 
	 	 	 	 	 	 
	US Bank

	 	141049754
	 	USAgencies Direct Insurance Company
	 	Arizona
	 
	 	 	 	 	 	 
	Bank of New York

	 	050261
	 	USAgencies Direct Insurance Company
	 	Nevada
	 
	 	 	 	 	 	 
	Bank of New York

	 	350518
	 	USAgencies Direct Insurance Company
	 	New York
	 
	 	 	 	 	 	 
	Capital One, N.A.

	 	710415043
	 	USAgencies Direct Insurance Company
	 	Ohio