Exhibit 10.1


 


AMENDED AND RESTATED REVOLVING CREDIT
AGREEMENT


 


Dated as of August 14, 2008


 


among


 


SAFETY INSURANCE GROUP, INC.


 


THE LENDERS LISTED ON SCHEDULE I HERETO


 


and


 


RBS CITIZENS, N.A.,
as Administrative Agent


 

















 


TABLE OF CONTENTS


 


	
   

  	
   

  	
   

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  1.

  	
  DEFINITIONS
  AND RULES OF INTERPRETATION

  	
  1

  
	
   

  	
   

  	
   

  
	
   

  	
  1.1.

  	
   

  	
  Definitions

  	
  1

  
	
   

  	
  1.2.

  	
   

  	
  Rules of
  Interpretation

  	
  17

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.

  	
  THE
  REVOLVING CREDIT FACILITY

  	
  18

  
	
   

  	
   

  	
   

  
	
   

  	
  2.1.

  	
   

  	
  Commitment
  to Lend

  	
  18

  
	
   

  	
  2.2.

  	
   

  	
  Commitment
  Fee

  	
  18

  
	
   

  	
  2.3.

  	
   

  	
  Reduction of
  Total Commitment

  	
  18

  
	
   

  	
  2.4.

  	
   

  	
  The Notes

  	
  19

  
	
   

  	
  2.5.

  	
   

  	
  Interest on
  Loans

  	
  19

  
	
   

  	
  2.6.

  	
   

  	
  Requests for
  Loans

  	
  19

  
	
   

  	
  2.7.

  	
   

  	
  Conversion
  Options

  	
  20

  
	
   

  	
   

  	
   

  	
  2.7.1.

  	
  Conversion
  to Different Type of Loan

  	
  20

  
	
   

  	
   

  	
   

  	
  2.7.2.

  	
  Continuation
  of Type of Loan

  	
  20

  
	
   

  	
   

  	
   

  	
  2.7.3.

  	
  LIBOR Rate
  Loans

  	
  20

  
	
   

  	
  2.8.

  	
   

  	
  Funds for
  Loan

  	
  21

  
	
   

  	
   

  	
   

  	
  2.8.1.

  	
  Funding
  Procedures

  	
  21

  
	
   

  	
   

  	
   

  	
  2.8.2.

  	
  Advances by
  Administrative Agent

  	
  21

  
	
   

  	
  2.9.

  	
   

  	
  Letters of
  Credit

  	
  22

  
	
   

  	
   

  	
   

  	
  2.9.1.

  	
  Commitment
  to Issue Letters of Credit

  	
  22

  
	
   

  	
   

  	
   

  	
  2.9.2.

  	
  Letter of
  Credit Applications

  	
  22

  
	
   

  	
   

  	
   

  	
  2.9.3.

  	
  Terms of
  Letters of Credit

  	
  22

  
	
   

  	
   

  	
   

  	
  2.9.4.

  	
  Reimbursement
  Obligations of Lenders

  	
  22

  
	
   

  	
   

  	
   

  	
  2.9.5.

  	
  Participations
  of Lenders

  	
  22

  
	
   

  	
   

  	
   

  	
  2.9.6.

  	
  Reimbursement
  Obligation of the Borrower

  	
  23

  
	
   

  	
   

  	
   

  	
  2.9.7.

  	
  Letter of
  Credit Payments

  	
  23

  
	
   

  	
   

  	
   

  	
  2.9.8.

  	
  Obligations
  Absolute

  	
  24

  
	
   

  	
   

  	
   

  	
  2.9.9.

  	
  Reliance by
  Issuer

  	
  24

  
	
   

  	
   

  	
   

  	
  2.9.10.

  	
  Letter of
  Credit Fee

  	
  25

  
	
   

  	
  2.10.

  	
   

  	
  Increase in
  Commitment

  	
  25

  
	
   

  	
   

  	
   

  	
  2.10.1.

  	
  Request for
  Increase

  	
  25

  
	
   

  	
   

  	
   

  	
  2.10.2.

  	
  Lender
  Elections to Increase

  	
  25

  
	
   

  	
   

  	
   

  	
  2.10.3.

  	
  Notification
  by Administrative Agent; Additional Lenders

  	
  25

  
	
   

  	
   

  	
   

  	
  2.10.4.

  	
  Effective
  Date and Allocations

  	
  26

  
	
   

  	
   

  	
   

  	
  2.10.5.

  	
  Conditions
  to Effectiveness of Increase

  	
  26

  
	
   

  	
   

  	
   

  	
  2.10.6.

  	
  Conflicting
  Provisions

  	
  26

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3.

  	
  REPAYMENT OF
  THE LOANS

  	
  26

  
	
   

  	
   

  	
   

  
	
   

  	
  3.1.

  	
   

  	
  Maturity

  	
  26

  
	
   

  	
  3.2.

  	
   

  	
  Mandatory
  Repayments of Loans

  	
  26

  
	
   

  	
  3.3.

  	
   

  	
  Optional
  Repayments of Loans

  	
  26

  



 


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  Page

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4.

  	
  CERTAIN
  GENERAL PROVISIONS

  	
  27

  
	
   

  	
   

  	
   

  
	
   

  	
  4.1.

  	
   

  	
  Closing Fees

  	
  27

  
	
   

  	
  4.2.

  	
   

  	
  Funds for
  Payments

  	
  27

  
	
   

  	
   

  	
   

  	
  4.2.1.

  	
  Payments to
  Administrative Agent

  	
  27

  
	
   

  	
   

  	
   

  	
  4.2.2.

  	
  No Offset,
  etc

  	
  27

  
	
   

  	
   

  	
   

  	
  4.2.3.

  	
  Non-U.S.
  Lenders

  	
  28

  
	
   

  	
   

  	
   

  	
  4.2.4.

  	
  Liabilities

  	
  29

  
	
   

  	
  4.3.

  	
   

  	
  Computations

  	
  29

  
	
   

  	
  4.4.

  	
   

  	
  Inability to
  Determine LIBOR Rate

  	
  30

  
	
   

  	
  4.5.

  	
   

  	
  Illegality

  	
  30

  
	
   

  	
  4.6.

  	
   

  	
  Additional
  Costs, etc

  	
  30

  
	
   

  	
  4.7.

  	
   

  	
  Capital
  Adequacy

  	
  31

  
	
   

  	
  4.8.

  	
   

  	
  Certificate

  	
  32

  
	
   

  	
  4.9.

  	
   

  	
  Indemnity

  	
  32

  
	
   

  	
  4.10.

  	
   

  	
  Interest
  After Default

  	
  32

  
	
   

  	
   

  	
   

  	
  4.10.1.

  	
  Overdue
  Amounts

  	
  32

  
	
   

  	
   

  	
   

  	
  4.10.2.

  	
  Amounts Not
  Overdue

  	
  33

  
	
   

  	
  4.11.

  	
   

  	
  Replacement
  of Lenders

  	
  33

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  5.

  	
  COLLATERAL
  SECURITY AND GUARANTIES

  	
  33

  
	
   

  	
   

  	
   

  
	
   

  	
  5.1.

  	
   

  	
  Security of
  Borrower

  	
  33

  
	
   

  	
  5.2.

  	
   

  	
  Guaranties
  and Security of Subsidiaries

  	
  34

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  6.

  	
  REPRESENTATIONS
  AND WARRANTIES

  	
  34

  
	
   

  	
   

  	
   

  
	
   

  	
  6.1.

  	
   

  	
  Corporate
  Authority

  	
  34

  
	
   

  	
   

  	
   

  	
  6.1.1.

  	
  Incorporation;
  Good Standing

  	
  34

  
	
   

  	
   

  	
   

  	
  6.1.2.

  	
  Authorization

  	
  35

  
	
   

  	
   

  	
   

  	
  6.1.3.

  	
  Enforceability

  	
  35

  
	
   

  	
  6.2.

  	
   

  	
  Governmental
  Approvals

  	
  35

  
	
   

  	
  6.3.

  	
   

  	
  Title to
  Properties; Leases

  	
  35

  
	
   

  	
  6.4.

  	
   

  	
  Financial
  Statements and Projections

  	
  35

  
	
   

  	
   

  	
   

  	
  6.4.1.

  	
  Fiscal Year

  	
  35

  
	
   

  	
   

  	
   

  	
  6.4.2.

  	
  Financial
  Statements

  	
  35

  
	
   

  	
   

  	
   

  	
  6.4.3.

  	
  Projections

  	
  36

  
	
   

  	
  6.5.

  	
   

  	
  No Material
  Adverse Changes, etc

  	
  36

  
	
   

  	
  6.6.

  	
   

  	
  Franchises,
  Patents, Copyrights, etc

  	
  36

  
	
   

  	
  6.7.

  	
   

  	
  Litigation

  	
  36

  
	
   

  	
  6.8.

  	
   

  	
  No
  Materially Adverse Contracts, etc

  	
  37

  
	
   

  	
  6.9.

  	
   

  	
  Compliance
  with Other Instruments, Laws, etc

  	
  37

  
	
   

  	
  6.10.

  	
   

  	
  Tax Status

  	
  37

  
	
   

  	
  6.11.

  	
   

  	
  No Event of
  Default

  	
  37

  
	
   

  	
  6.12.

  	
   

  	
  Investment
  Company Act

  	
  37

  



 


ii

















 


	
   

  	
   

  	
   

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  6.13.

  	
   

  	
  Absence of
  Financing Statements, etc

  	
  37

  
	
   

  	
  6.14.

  	
   

  	
  Perfection
  of Security Interest

  	
  37

  
	
   

  	
  6.15.

  	
   

  	
  Certain
  Transactions

  	
  38

  
	
   

  	
  6.16.

  	
   

  	
  Employee
  Benefit Plans

  	
  38

  
	
   

  	
   

  	
   

  	
  6.16.1.

  	
  In General

  	
  38

  
	
   

  	
   

  	
   

  	
  6.16.2.

  	
  Terminability
  of Welfare Plans

  	
  38

  
	
   

  	
   

  	
   

  	
  6.16.3.

  	
  Guaranteed
  Pension Plans

  	
  38

  
	
   

  	
   

  	
   

  	
  6.16.4.

  	
  Multiemployer
  Plans

  	
  39

  
	
   

  	
  6.17.

  	
   

  	
  Use of
  Proceeds

  	
  39

  
	
   

  	
   

  	
   

  	
  6.17.1.

  	
  General

  	
  39

  
	
   

  	
   

  	
   

  	
  6.17.2.

  	
  Regulations
  U and X

  	
  39

  
	
   

  	
  6.18.

  	
   

  	
  Environmental
  Compliance

  	
  39

  
	
   

  	
  6.19.

  	
   

  	
  Subsidiaries,
  etc

  	
  40

  
	
   

  	
  6.20.

  	
   

  	
  Distribution
  Restrictions

  	
  41

  
	
   

  	
  6.21.

  	
   

  	
  Insurance
  Regulatory Matters

  	
  41

  
	
   

  	
  6.22.

  	
   

  	
  Reinsurance

  	
  41

  
	
   

  	
  6.23.

  	
   

  	
  Disclosure

  	
  41

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  7.

  	
  AFFIRMATIVE
  COVENANTS

  	
  41

  
	
   

  	
   

  	
   

  
	
   

  	
  7.1.

  	
   

  	
  Punctual
  Payment

  	
  41

  
	
   

  	
  7.2.

  	
   

  	
  Maintenance
  of Office

  	
  41

  
	
   

  	
  7.3.

  	
   

  	
  Records and
  Accounts

  	
  41

  
	
   

  	
  7.4.

  	
   

  	
  Financial
  Statements, Certificates and Information

  	
  42

  
	
   

  	
  7.5.

  	
   

  	
  Notices

  	
  43

  
	
   

  	
   

  	
   

  	
  7.5.1.

  	
  Default

  	
  43

  
	
   

  	
   

  	
   

  	
  7.5.2.

  	
  Environmental
  Events

  	
  44

  
	
   

  	
   

  	
   

  	
  7.5.3.

  	
  Notification
  of Claim against Collateral

  	
  44

  
	
   

  	
   

  	
   

  	
  7.5.4.

  	
  Notice of
  Litigation and Judgments

  	
  44

  
	
   

  	
   

  	
   

  	
  7.5.5.

  	
  Notice of
  Change in Rating

  	
  44

  
	
   

  	
   

  	
   

  	
  7.5.6.

  	
  Notice of
  Material Adverse Effect

  	
  44

  
	
   

  	
  7.6.

  	
   

  	
  Legal
  Existence; Maintenance of Properties

  	
  44

  
	
   

  	
  7.7.

  	
   

  	
  Insurance;
  Reinsurance

  	
  45

  
	
   

  	
  7.8.

  	
   

  	
  Taxes

  	
  45

  
	
   

  	
  7.9.

  	
   

  	
  Inspection
  of Properties and Books, etc

  	
  46

  
	
   

  	
   

  	
   

  	
  7.9.1.

  	
  General

  	
  46

  
	
   

  	
   

  	
   

  	
  7.9.2.

  	
  Appraisals

  	
  46

  
	
   

  	
   

  	
   

  	
  7.9.3.

  	
  Communications
  with Accountants

  	
  46

  
	
   

  	
  7.10.

  	
   

  	
  Compliance
  with Laws, Contracts, Licenses, and Permits

  	
  46

  
	
   

  	
  7.11.

  	
   

  	
  Employee
  Benefit Plans

  	
  47

  
	
   

  	
  7.12.

  	
   

  	
  Use of
  Proceeds

  	
  47

  
	
   

  	
  7.13.

  	
   

  	
  Insurance
  Regulatory Filings; Examination Reports

  	
  47

  
	
   

  	
  7.14.

  	
   

  	
  Further
  Assurances

  	
  48

  



 


iii

















 


	
   

  	
   

  	
   

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  8.

  	
  CERTAIN
  NEGATIVE COVENANTS

  	
  48

  
	
   

  	
   

  	
   

  
	
   

  	
  8.1.

  	
   

  	
  Restrictions
  on Indebtedness

  	
  48

  
	
   

  	
  8.2.

  	
   

  	
  Restrictions
  on Liens

  	
  49

  
	
   

  	
   

  	
   

  	
  8.2.1.

  	
  Permitted
  Liens

  	
  49

  
	
   

  	
   

  	
   

  	
  8.2.2.

  	
  Restrictions
  on Negative Pledges and Upstream Limitations

  	
  51

  
	
   

  	
  8.3.

  	
   

  	
  Restrictions
  on Investments

  	
  52

  
	
   

  	
  8.4.

  	
   

  	
  Restricted
  Payments

  	
  53

  
	
   

  	
  8.5.

  	
   

  	
  Merger,
  Consolidation and Disposition of Assets

  	
  53

  
	
   

  	
   

  	
   

  	
  8.5.1.

  	
  Mergers and
  Acquisitions

  	
  53

  
	
   

  	
   

  	
   

  	
  8.5.2.

  	
  Disposition
  of Assets

  	
  55

  
	
   

  	
  8.6.

  	
   

  	
  Sale and
  Leaseback

  	
  55

  
	
   

  	
  8.7.

  	
   

  	
  Compliance
  with Environmental Laws

  	
  55

  
	
   

  	
  8.8.

  	
   

  	
  Employee
  Benefit Plans

  	
  55

  
	
   

  	
  8.9.

  	
   

  	
  Business
  Activities; Non-Admitted Assets

  	
  56

  
	
   

  	
  8.10.

  	
   

  	
  Fiscal Year

  	
  56

  
	
   

  	
   

  	
   

  	
  8.11.

  	
  Change in
  Terms of Capital Stock

  	
  56

  
	
   

  	
   

  	
   

  	
  8.12.

  	
  Modification
  of Documents

  	
  56

  
	
   

  	
   

  	
   

  	
  8.13.

  	
  Transactions
  with Affiliates

  	
  56

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  9.

  	
  FINANCIAL
  COVENANTS

  	
  57

  
	
   

  	
   

  	
   

  
	
   

  	
  9.1.

  	
   

  	
  Risk Based
  Capital

  	
  57

  
	
   

  	
  9.2.

  	
   

  	
  Net Premiums
  to Statutory Surplus

  	
  57

  
	
   

  	
  9.3.

  	
   

  	
  Minimum
  Statutory Surplus

  	
  57

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  10.

  	
  CLOSING
  CONDITIONS

  	
  57

  
	
   

  	
   

  	
   

  
	
   

  	
  10.1.

  	
   

  	
  Loan
  Documents

  	
  57

  
	
   

  	
  10.2.

  	
   

  	
  Certified
  Copies of Governing Documents

  	
  57

  
	
   

  	
  10.3.

  	
   

  	
  Corporate or
  Other Action

  	
  58

  
	
   

  	
  10.4.

  	
   

  	
  Incumbency
  Certificate

  	
  58

  
	
   

  	
  10.5.

  	
   

  	
  Validity of
  Liens

  	
  58

  
	
   

  	
  10.6.

  	
   

  	
  Perfection
  Certificates and UCC Search Results

  	
  58

  
	
   

  	
  10.7.

  	
   

  	
  Certificates
  of Insurance

  	
  58

  
	
   

  	
  10.8.

  	
   

  	
  Solvency
  Certificate

  	
  58

  
	
   

  	
  10.9.

  	
   

  	
  Opinion of
  Counsel

  	
  58

  
	
   

  	
  10.10.

  	
   

  	
  Reserved

  	
  59

  
	
   

  	
  10.11.

  	
   

  	
  Reserved

  	
  59

  
	
   

  	
  10.12.

  	
   

  	
  Payment of
  Fees

  	
  59

  
	
   

  	
  10.13.

  	
   

  	
  Reserved

  	
  59

  
	
   

  	
  10.14.

  	
   

  	
  No Material
  Adverse Change

  	
  59

  
	
   

  	
  10.15.

  	
   

  	
  No
  Litigation

  	
  59

  
	
   

  	
  10.16.

  	
   

  	
  Consents and
  Approvals

  	
  59

  
	
   

  	
  10.17.

  	
   

  	
  Rating

  	
  59

  



 


iv

















 


	
   

  	
   

  	
   

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  10.18.

  	
   

  	
  Financial
  Tests

  	
   

  
	
   

  	
  10.19.

  	
   

  	
  Reinsurance

  	
   

  
	
   

  	
  10.20.

  	
   

  	
  Disbursement
  Instructions

  	
   

  
	
   

  	
  10.21.

  	
   

  	
  Proceedings
  and Documents

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  11.

  	
  CONDITIONS
  TO ALL BORROWINGS

  	
  60

  
	
   

  	
   

  	
   

  
	
   

  	
  11.1.

  	
   

  	
  Representations
  True; No Event of Default

  	
  60

  
	
   

  	
  11.2.

  	
   

  	
  No Legal
  Impediment

  	
  60

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  12.

  	
  EVENTS OF
  DEFAULT; ACCELERATION; ETC

  	
  60

  
	
   

  	
   

  	
   

  
	
   

  	
  12.1.

  	
   

  	
  Events of
  Default and Acceleration

  	
  60

  
	
   

  	
  12.2.

  	
   

  	
  Termination
  of Commitments

  	
  63

  
	
   

  	
  12.3.

  	
   

  	
  Remedies

  	
  64

  
	
   

  	
  12.4.

  	
   

  	
  Distribution
  of Collateral Proceeds

  	
  64

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  13.

  	
  THE
  ADMINISTRATIVE AGENT

  	
  65

  
	
   

  	
   

  	
   

  
	
   

  	
  13.1.

  	
   

  	
  Authorization

  	
  65

  
	
   

  	
  13.2.

  	
   

  	
  Employees
  and Administrative Agents

  	
  65

  
	
   

  	
  13.3.

  	
   

  	
  No Liability

  	
  66

  
	
   

  	
  13.4.

  	
   

  	
  No
  Representations

  	
  66

  
	
   

  	
   

  	
   

  	
  13.4.1.

  	
  General

  	
  66

  
	
   

  	
   

  	
   

  	
  13.4.2.

  	
  Closing
  Documentation, etc

  	
  66

  
	
   

  	
  13.5.

  	
   

  	
  Payments

  	
  67

  
	
   

  	
   

  	
   

  	
  13.5.1.

  	
  Payments to
  Administrative Agent

  	
  67

  
	
   

  	
   

  	
   

  	
  13.5.2.

  	
  Distribution
  by Administrative Agent

  	
  67

  
	
   

  	
   

  	
   

  	
  13.5.3.

  	
  Delinquent
  Lenders

  	
  67

  
	
   

  	
  13.6.

  	
   

  	
  Holders of
  Notes

  	
  67

  
	
   

  	
  13.7.

  	
   

  	
  Indemnity

  	
  68

  
	
   

  	
  13.8.

  	
   

  	
  Administrative
  Agent as Lender

  	
  68

  
	
   

  	
  13.9.

  	
   

  	
  Resignation

  	
  68

  
	
   

  	
  13.10.

  	
   

  	
  Notification
  of Defaults and Events of Default

  	
  68

  
	
   

  	
  13.11.

  	
   

  	
  Duties in
  the Case of Enforcement

  	
  68

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  14.

  	
  ASSIGNMENT
  AND PARTICIPATION

  	
  69

  
	
   

  	
   

  	
   

  
	
   

  	
  14.1.

  	
   

  	
  Conditions
  to Assignment by Lenders

  	
  69

  
	
   

  	
  14.2.

  	
   

  	
  Certain
  Representations and Warranties; Limitations; Covenants

  	
  69

  
	
   

  	
  14.3.

  	
   

  	
  Register

  	
  70

  
	
   

  	
  14.4.

  	
   

  	
  New Notes

  	
  71

  
	
   

  	
  14.5.

  	
   

  	
  Participations

  	
  71

  
	
   

  	
  14.6.

  	
   

  	
  Assignee or
  Participant Affiliated with the Borrower

  	
  71

  
	
   

  	
  14.7.

  	
   

  	
  Miscellaneous
  Assignment Provisions

  	
  72

  
	
   

  	
  14.8.

  	
   

  	
  Assignment
  by Borrower

  	
  72

  



 


v

















 


	
   

  	
   

  	
   

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  15.

  	
  PROVISIONS
  OF GENERAL APPLICATIONS

  	
  72

  
	
   

  	
   

  	
   

  
	
   

  	
  15.1.

  	
   

  	
  Setoff

  	
  72

  
	
   

  	
  15.2.

  	
   

  	
  Expenses

  	
  73

  
	
   

  	
  15.3.

  	
   

  	
  Indemnification

  	
  74

  
	
   

  	
  15.4.

  	
   

  	
  Treatment of
  Certain Confidential Information

  	
  75

  
	
   

  	
   

  	
   

  	
  15.4.1.

  	
  Confidentiality

  	
  75

  
	
   

  	
   

  	
   

  	
  15.4.2.

  	
  Prior
  Notification

  	
  76

  
	
   

  	
   

  	
   

  	
  15.4.3.

  	
  Other

  	
  76

  
	
   

  	
  15.5.

  	
   

  	
  Survival of
  Covenants, Etc

  	
  76

  
	
   

  	
  15.6.

  	
   

  	
  Notices

  	
  76

  
	
   

  	
  15.7.

  	
   

  	
  Governing
  Law

  	
  77

  
	
   

  	
  15.8.

  	
   

  	
  Headings

  	
  77

  
	
   

  	
  15.9.

  	
   

  	
  Counterparts

  	
  77

  
	
   

  	
  15.10.

  	
   

  	
  Entire
  Agreement, Etc

  	
  77

  
	
   

  	
  15.11.

  	
   

  	
  Waiver of
  Jury Trial

  	
  78

  
	
   

  	
  15.12.

  	
   

  	
  Consents,
  Amendments, Waivers, Etc

  	
  78

  
	
   

  	
  15.13.

  	
   

  	
  Severability

  	
  80

  



 


vi

















 


Exhibits


 


	
  Exhibit
  A

  	
   

  	
  Form of
  Amended and Restated Note

  
	
  Exhibit
  B

  	
   

  	
  Form of
  Loan Request

  
	
  Exhibit
  C

  	
   

  	
  Form of
  Compliance Certificate

  
	
  Exhibit
  D

  	
   

  	
  Form of
  Assignment and Acceptance

  
	
  Exhibit
  E

  	
   

  	
  Form of
  Omnibus Amendment and Reaffirmation Agreement

  



 


Schedules


 


	
   

  	
   

  	
   

  
	
  Schedule
  1

  	
   

  	
  Lenders and
  Commitments

  
	
  Schedule
  6.3

  	
   

  	
  Title to
  Properties; Leases

  
	
  Schedule
  6.5

  	
   

  	
  No Material
  Adverse Change

  
	
  Schedule
  6.7

  	
   

  	
  Litigation

  
	
  Schedule
  6.15

  	
   

  	
  Certain
  Transactions

  
	
  Schedule
  6.18

  	
   

  	
  Environmental
  Compliance

  
	
  Schedule
  6.19

  	
   

  	
  Subsidiaries,
  Etc.

  
	
  Schedule
  8.1

  	
   

  	
  Existing
  Indebtedness

  
	
  Schedule
  8.2

  	
   

  	
  Existing
  Liens

  
	
  Schedule
  8.3

  	
   

  	
  Existing
  Investments

  



 
















 


AMENDED AND
RESTATED REVOLVING CREDIT AGREEMENT


 


This AMENDED AND RESTATED REVOLVING CREDIT
AGREEMENT (this “Credit Agreement”) is made as of August 14,
2008, by and among SAFETY INSURANCE GROUP,
INC. (successor by merger to Thomas Black Corporation), a Delaware
corporation (the “Borrower”), RBS CITIZENS, N.A.
(successor by merger to Citizens Bank of Massachusetts), a national banking
association (“RBS Citizens”), and the other lending institutions listed
on Schedule  1 hereto (collectively, the “Lenders”), and RBS CITIZENS, N.A., as administrative agent for itself and
such other lending institutions (in such capacity, the “Administrative Agent”).


 


WITNESSETH


 


WHEREAS, the
Borrower has heretofore entered into a Revolving Credit Agreement dated as of November 27,
2002, with the financial institutions from time to time party thereto
(collectively, the “Existing Lenders”) and the Administrative Agent (as
amended and in effect immediately prior to the date hereof, the “Existing
Credit Agreement”), pursuant to which the Existing Lenders made certain
loans to the Borrower and extended certain financial accommodations;


 


WHEREAS, Citizens
Bank merged with and into RBS Citizens, N.A., and pursuant to such merger, RBS
Citizens succeeded to Citizens Bank’s rights under the Existing Credit
Agreement;


 


WHEREAS, the
Borrower desires to amend and restate the terms and provisions of the Existing
Credit Agreement, in the form hereof, and the Existing Lenders and the
Administrative Agent are willing to so amend and restate the Existing Credit
Agreement in order to, among other things, add a letter of credit sub-facility
and provide for an optional increase in a maximum amount of Twenty Million
Dollars ($20,000,000), with the proceeds of any Loans to be used to provide for
working capital and for other general corporate purposes of the Borrower and
its Subsidiaries; and


 


WHEREAS, the
Administrative Agent and the Lenders have agreed to such modification all on
and subject to the terms and conditions of this Credit Agreement.


 


NOW, THEREFORE, in
consideration of the premises and of the mutual covenants and agreements
contained herein, the parties hereto hereby agree to amend and restate the
Existing Credit Agreement in its entirety as follows:


 


1.                                      DEFINITIONS
AND RULES OF INTERPRETATION.


 


1.1.                            Definitions.  The
following terms shall have the meanings set forth in this §1 or elsewhere in
the provisions of this Credit Agreement referred to below:


 


Adjustment Date.  The first day of the month immediately
following the month in which a Compliance Certificate is to be delivered by the
Borrower pursuant to §7.4(c).


 

















 


Administrative Agent’s Office.  The Administrative Agent’s office located at
28 State Street, 15th Floor, Boston, MA 02109, or such other location as the
Administrative Agent may designate from time to time.


 


Administrative Agent.  RBS Citizens, N.A. (successor by merger to
Citizens Bank of Massachusetts), acting as agent for the Lenders, and each
other Person appointed as the successor Administrative Agent in accordance with
§13.9.


 


Administrative Agent’s Special Counsel.  Bingham McCutchen LLP or such other counsel
as may be approved by the Administrative Agent.


 


Affected Lender.  See §4.11.


 


Affiliate.  Any Person which, directly or indirectly,
controls, is controlled by or is under common control with the Borrower.  “Control” of the Borrower means the power,
directly or indirectly, (a) to vote ten percent (10%) or more of the
Capital Stock (on a fully diluted basis) of the Borrower having ordinary voting
power for the election of directors, managing members or general partners (as
applicable); or (b) to direct or cause the direction of the management and
policies of the Borrower (whether by contract or otherwise).


 


Aggregate Statutory Surplus.  The sum of the Statutory Surplus of each of
the direct Insurance Subsidiaries.


 


Assignment and Acceptance.  See §14.1.


 


Balance Sheet Date.  December 31, 2007.


 


Base Rate.  variable annual rate of interest so
designated from time to time by RBS Citizens as its “prime rate”, such rate
being a reference rate and not necessarily representing the lowest or best rate
being charged to any customer.  Changes
in the Base Rate resulting from any changes in RBS Citizens’ “prime rate” shall
take place immediately without notice or demand of any kind.


 


Base Rate Loans.  Loans bearing interest calculated by
reference to the Base Rate.


 


Borrower.  Safety Insurance Group, Inc. (successor
by merger to Thomas Black Corporation), a Delaware corporation.


 


Business Day.  Any day on which lending institutions in
Boston, Massachusetts and New York, New York, are open for the transaction of
banking business and, in the case of LIBOR Rate Loans, also a day which is a
LIBOR Business Day.


 


Capital Assets.  Fixed assets, both tangible (such as land,
buildings, fixtures, machinery and equipment) and intangible (such as patents,
copyrights, trademarks, franchises and good will); provided that Capital
Assets shall not include any item customarily charged directly to expense or
depreciated over a useful life of twelve (12) months or less in accordance with
GAAP.


 


2

















 


Capital Expenditures.  Amounts paid or Indebtedness incurred by any
Person in connection with (a) the purchase or lease by such Person of
Capital Assets that would be required to be capitalized and shown on the
balance sheet of such Person in accordance with GAAP or (b) the lease of
any assets by any Person as lessee under any Synthetic Lease to the extent that
such assets would have been Capital Assets had the Synthetic Lease been treated
for accounting purposes as a Capitalized Lease; other than (i) expenditures
made in connection with the replacement, substitution or restoration of assets
to the extent financed (A) from insurance proceeds paid on account of the
loss of or damage to the assets being replaced or restored, (B) with
awards of compensation arising from the taking by eminent domain or
condemnation of the asset being replaced, or (C) from the exchange of
existing equipment and (ii) the purchase of plant, property, or equipment
made within one hundred eighty (180) days of the sale of any asset permitted
under §8.5.2 to the extent purchased with the proceeds of such sale.


 


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


 


Capitalized Leases.  Leases under which the Borrower or any of its
Subsidiaries is the lessee or obligor, the discounted future rental payment
obligations under which are required to be capitalized on the balance sheet of
the lessee or obligor in accordance with GAAP.


 


Cash Equivalents.  As to the Borrower and its Subsidiaries, (a) securities
issued or directly and fully guaranteed or insured by the United States of
America and having a maturity of not more than one (1) year from the date
of acquisition; (b) certificates of deposit, time deposits and eurodollar
time deposits with maturities of six (6) months or less from the date of
acquisition, bankers’ acceptances with maturities not exceeding six (6) months
and overnight bank deposits, in each case, (i) with any Lenders or (ii) with
any domestic commercial bank organized under the laws of the United States of
America or any state thereof or a foreign subsidiary of such bank, in each case
having a rating of not less than A or its equivalent by S&P or any
successor and having capital and surplus in excess of $500,000,000; (c) repurchase
obligations with a term of not more than thirty (30) days for underlying
securities of the types described in clauses (a) and (b) above; (d) any
commercial paper or finance company paper issued by (i) any Lender or any
holding company controlling any Lender or (ii) any other Person that is
rated not less than “P-2” or “A-2” or their equivalents by Moody’s or S&P
or their successors; (e) securities with maturities of one year or less
from the date of acquisition issued or fully guaranteed by any state,
commonwealth or territory of the United States, by any political subdivision or
taxing authority of any such state, commonwealth or territory or by any foreign
government, the securities of which state, commonwealth, territory, political
subdivision, taxing authority or foreign government (as the case may be) are
rated at least A by S&P or A by Moody’s; (f) securities with
maturities of six (6) months or less from the date of acquisition backed
by standby letters of credit issued by any Lender or any commercial bank
satisfying the requirements of clause (b)(ii) of this definition; and (g) shares
of money market mutual or similar funds which invest at least ninety-five
percent (95%) in assets satisfying the requirements of clauses (a) through
(f) of this definition.


 


CERCLA.  See §6.18(a).


 


3

















 


Closing Date.  The first date on which the conditions set
forth in §10 and §11 have been satisfied and any Loans are to be made or converted
from “Loans” (as defined in the Existing Credit Agreement).


 


Closing Fee.  See §4.1.


 


Code.  The Internal Revenue Code of 1986.


 


Collateral.  All of the property, rights and interests of
the Borrower and its Subsidiaries that are subject to the Liens created by the
Security Documents.


 


Commitment.  With respect to each Lender, the amount set
forth on Schedule 1 hereto as the amount of
such Lender’s commitment to make Loans to, the Borrower, as the same may be
reduced from time to time; or if such commitment is terminated pursuant to the
provisions hereof, zero.


 


Commitment Fee.  See §2.2.


 


Commitment Percentage.  With respect to each Lender, the percentage
set forth on Schedule 1 hereto as such
Lender’s percentage of the aggregate Commitments of all of the Lenders.


 


Compliance Certificate.  See §7.4(c).


 


Consolidated or consolidated.  With reference to any term defined herein,
shall mean that term as applied to the accounts of the Borrower and its
Subsidiaries, consolidated in accordance with GAAP.


 


Continuing Directors.  With respect to any period of twenty-four
(24) consecutive calendar months, any member of the board of directors of the
Borrower who (a) was a member of such board of directors on the first day
of such period, 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.


 


Conversion Request.  A notice given by the Borrower to the Administrative
Agent of the Borrower’s election to convert or continue a Loan in accordance
with §2.7.


 


Credit Agreement.  This Amended and Restated Revolving Credit
Agreement, including the Schedules and Exhibits hereto.


 


Default.  See §12.1.


 


Delinquent Lender.  See §13.5.3.


 


Distribution.  The declaration or payment of any dividend on
or in respect of any shares of any class of Capital Stock of any Person, other
than dividends payable solely in additional shares of Capital Stock of such
Person; the purchase, redemption, defeasance, retirement or other acquisition
of any shares of any class of Capital Stock of any Person, directly or
indirectly 


 


4

















 


through a Subsidiary of such Person or
otherwise (including the setting apart of assets for a sinking or other
analogous fund to be used for such purpose); the return of capital by any
Person to its shareholders as such; or any other distribution on or in respect
of any shares of any class of Capital Stock of any Person.


 


Division.  See §6.1.1.


 


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


 


Domestic Lending Office.  Initially, the office of each Lender
designated as such in Schedule 1 hereto;
thereafter, such other office of such Lender, if any, located within the United
States that will be making or maintaining Base Rate Loans.


 


Drawdown Date.  The date on which any Loan is made or is to
be made, and the date on which any Loan is converted or continued in accordance
with §2.7.


 


Eligible Assignee.  Any of (a) (i) a commercial bank or
finance company organized under the laws of the United States, or any State
thereof or the District of Columbia, and having total assets in excess of
$1,000,000,000; (ii) a savings and loan association or savings bank
organized under the laws of the United States, or any State thereof or the
District of Columbia, and having a net worth of at least $100,000,000,
calculated in accordance with generally accepted accounting principles; (iii) a
commercial bank organized under the laws of any other country which is a member
of the Organization for Economic Cooperation and Development (the “OECD”), or a
political subdivision of any country, and having total assets in excess of
$1,000,000,000, provided that such bank is acting through a branch or agency
located in the country in which it is organized or another country which is
also a member of OECD; (iv) the central bank of any country which is a
member of the OECD; (v) any investment company, investment fund, financial
institution or other institutional lender (other than any financial institution
which but for the amount of its total assets would have been an Eligible
Assignee under clauses (i) through (iv) above) having total assets in
excess of $100,000,000; and (vi) if, but only if, any Event of Default has
occurred and is continuing, any other bank, insurance company, commercial
finance company or other financial institution or other Person approved by the
Administrative Agent, such approval not to be unreasonably withheld.


 


Employee Benefit Plan.  Any employee benefit plan within the meaning
of §3(3) of ERISA maintained or contributed to by the Borrower or any
ERISA Affiliate, other than a Guaranteed Pension Plan or a Multiemployer Plan.


 


Environmental Laws.  See §6.18(a).


 


EPA.  See §6.18(b).


 


ERISA.  The Employee Retirement Income Security Act
of 1974.


 


ERISA Affiliate.  Any Person which is treated as a single
employer with the Borrower under §414 of the Code.


 


5

















 


ERISA Reportable Event.  A reportable event with respect to a
Guaranteed Pension Plan within the meaning of §4043 of ERISA and the
regulations promulgated thereunder.


 


Eurocurrency Reserve Rate.  For any day with respect to a LIBOR Rate
Loan, the maximum rate (expressed as a decimal) at which any bank subject
thereto would be required to maintain reserves under Regulation D of the Board
of Governors of the Federal Reserve System (or any successor or similar
regulations relating to such reserve requirements) against “Eurocurrency
Liabilities” (as that term is used in Regulation D), if such liabilities were
outstanding.  The Eurocurrency Reserve
Rate shall be adjusted automatically on and as of the effective date of any
change in the Eurocurrency Reserve Rate.


 


Event of Default.  See §12.1.


 


Existing Credit Agreement.  The Revolving Credit Agreement, dated as of November 27,
2002, among the Borrower, RBS Citizens (successor by merger to Citizens Bank of
Massachusetts) and the other lending institutions party thereto and RBS
Citizens (successor by merger to Citizens Bank of Massachusetts), as
Administrative Agent for such lending institutions, as amended and in effect on
the Closing Date.


 


Fee Letter.  The fee letter dated as of the Closing Date
among the Borrower and the Administrative Agent.


 


Fees.  Collectively, the Commitment Fee and the
Closing Fee.


 


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


 


GAAP or generally accepted accounting
principles.  (a) When
used in §9, whether directly or indirectly through reference to a capitalized
term used therein, means (i) principles that are consistent with the
principles promulgated or adopted by the Financial Accounting Standards Board
and its predecessors, in effect for the fiscal year ended on the Balance Sheet
Date, and (ii) to the extent consistent with such principles, the
accounting practice of the Borrower reflected in its financial statements for
the year ended on the Balance Sheet Date, and (b) when used in general,
other than as provided above, means principles that are (i) consistent
with the principles promulgated or adopted by the Financial Accounting
Standards Board and its predecessors, as in effect from time to time, and (ii) consistently
applied with past financial statements of the Borrower adopting the same
principles, provided that in each case referred to in this definition of
“GAAP” a certified public accountant would, insofar as the use of such
accounting principles is pertinent, be in a position to deliver an unqualified
opinion (other than a qualification regarding changes in GAAP) as to financial
statements in which such principles have been properly applied.


 


Governing Documents.  With respect to any Person, its certificate
or articles of incorporation, its by-laws and all stockholder agreements,
voting trusts and similar arrangements applicable to any of its Capital Stock.


 


6

















 


Governmental Authority.  Any foreign, federal, state, regional, local,
municipal or other government, or any department, commission, board, bureau,
agency, public authority or instrumentality thereof, or any court or
arbitrator.


 


Guaranteed Pension Plan.  Any employee pension benefit plan within the
meaning of §3(2) of ERISA maintained or contributed to by the Borrower or
any ERISA Affiliate the benefits of which are guaranteed on termination in full
or in part by the PBGC pursuant to Title IV of ERISA, other than a
Multiemployer Plan.


 


Hazardous Substances.  See §6.18(b).


 


Incentive Arrangements.  With respect to any Person, any stock
appreciation rights, “phantom” stock plans, subscription and stockholders
agreements and other incentive and bonus plans and similar arrangements made in
connection with the retention of executives, officers or employees by such
Person or any of its Subsidiaries.


 


Increase Option.  See §2.10.1.


 


Indebtedness.  As to any Person and whether recourse is
secured by or is otherwise available against all or only a portion of the
assets of such Person and whether or not contingent, but without duplication:


 


(a)                                  every
obligation of such Person for money borrowed,


 


(b)                                 every obligation of such Person evidenced by
bonds, debentures, notes or other similar instruments, including obligations
incurred in connection with the acquisition of property, assets or businesses,


 


(c)                                  every reimbursement obligation of such Person
with respect to letters of credit, bankers’ acceptances or similar facilities
issued for the account of such Person,


 


(d)                                 every obligation of such Person issued or
assumed as the deferred purchase price of property or services (including
securities purchase agreements but excluding trade accounts payable or accrued
liabilities arising in the ordinary course of business which are not overdue or
which are being contested in good faith),


 


(e)                                  every obligation of such Person under any
Capitalized Lease,


 


(f)                                    every obligation of such Person under any
Synthetic Lease,


 


(g)                                 all sales by such Person of (i) accounts
or general intangibles for money due or to become due, (ii) chattel paper,
instruments or documents creating or evidencing a right to payment of money or (iii) other
receivables (collectively “receivables”), whether pursuant to a purchase
facility or otherwise, other than in connection with the disposition of the
business operations of such Person relating thereto or a disposition of
defaulted receivables for collection and not as a financing arrangement, and
together with any obligation of such Person to pay any discount, interest,
fees, indemnities, penalties, recourse, expenses or other amounts in connection
therewith,


 


7

















 


(h)                                 every obligation of such Person (an “equity
related purchase obligation”) to purchase, redeem, retire or otherwise
acquire for value any shares of Capital Stock issued by such Person or any
rights measured by the value of such Capital Stock,


 


(i)                                     every obligation of such Person under any
forward contract, futures contract, swap, option or other financing agreement
or arrangement (including, without limitation, caps, floors, collars and
similar agreements), the value of which is dependent upon interest rates, currency
exchange rates, commodities or other indices (a “derivative contract”),


 


(j)                                     every obligation in respect of Indebtedness
of any other entity (including any partnership in which such Person is a
general partner) to the extent that such Person is liable therefor as a result
of such Person’s ownership interest in or other relationship with such entity,
except to the extent that the terms of such Indebtedness provide that such
Person is not liable therefor and such terms are enforceable under applicable
law,


 


(k)                                  every obligation, contingent or otherwise, of
such Person guaranteeing, or having the economic effect of guarantying or
otherwise acting as surety for, any obligation of a type described in any of
clauses (a) through (j) (the “primary obligation”) of another
Person (the “primary obligor”), in any manner, whether directly or
indirectly, and including, without limitation, any obligation of such Person (i) to
purchase or pay (or advance or supply funds for the purchase of) any security
for the payment of such primary obligation, (ii) to purchase property,
securities or services for the purpose of assuring the payment of such primary
obligation, or (iii) to maintain working capital, equity capital or other
financial statement condition or liquidity of the primary obligor so as to
enable the primary obligor to pay such primary obligation.


 


The “amount” or “principal amount” of any Indebtedness at
any time of determination represented by (t) any Indebtedness, issued at a
price that is less than the principal amount at maturity thereof, shall be the
amount of the liability in respect thereof determined in accordance with GAAP, (u) any
Capitalized Lease shall be the principal component of the aggregate of the
rentals obligation under such Capitalized Lease payable over the term thereof
that is not subject to termination by the lessee, (v) any sale of
receivables shall be the amount of unrecovered capital or principal investment
of the purchaser (other than the Borrower or any of its wholly-owned
Subsidiaries) thereof, excluding amounts representative of yield or interest
earned on such investment, (w) any Synthetic Lease shall be the stipulated
loss value, termination value or other equivalent amount, (x) any
derivative contract shall be the maximum amount of any termination or loss
payment required to be paid by such Person if such derivative contract were, at
the time of determination, to be terminated by reason of any event of default
or early termination event thereunder, whether or not such event of default or
early termination event has in fact occurred, (y) any equity related
purchase obligation shall be the maximum fixed redemption or purchase price
thereof inclusive of any accrued and unpaid dividends to be comprised in such
redemption or purchase price and (z) any guaranty or other contingent
liability referred to in clause (k) shall be an amount equal to the stated
or determinable amount of the primary obligation in respect of which such
guaranty or other contingent obligation is made or, if not stated or determinable,
the maximum reasonably anticipated liability in respect thereof 


 


8

















 


(assuming such Person is required to perform
thereunder) as determined by such Person in good faith.


 


Insurance Regulatory Authorities.  Collectively, in relation to any Person, the
insurance regulatory authorities, commissions, agencies, departments, boards or
other authorities having jurisdiction over such Person or over the business of
such Person.


 


Insurance Subsidiaries.  Safety Insurance, Safety Indemnity. Safety
Property and any other Subsidiary of the Borrower which is required to be
licensed by any Insurance Regulatory Authority as an insurance company.


 


Interest Payment Date.  (a) As to any Base Rate Loan, the first
day of each calendar month with respect to interest accrued during the prior
calendar month, including, without limitation, the calendar month which
includes the Drawdown Date of such Base Rate Loan; and (b) as to any LIBOR
Rate Loan in respect of which the Interest Period is (i) three (3) months
or less, the last day of such Interest Period and (ii) more than three (3) months,
the last day of each three (3) month interval from the first day of such
Interest Period.


 


Interest Period.  With respect to each Loan, (a) initially,
the period commencing on the Drawdown Date of such Loan and ending on the last
day of one of the periods set forth below, as selected by the Borrower in a
Loan Request or as otherwise required by the terms of this Credit Agreement (i) for
any Base Rate Loan, the last day of the calendar quarter; and (ii) for any
LIBOR Rate Loan, 1, 2, 3, 6 or 9 months; and (b) thereafter, each period
commencing on the last day of the next preceding Interest Period applicable to
such Loan and ending on the last day of one of the periods set forth above, as
selected by the Borrower in a Conversion Request; provided that all of
the foregoing provisions relating to Interest Periods are subject to the
following:


 


(A)                              if
any Interest Period with respect to a LIBOR Rate Loan would otherwise end on a
day that is not a LIBOR Business Day, that Interest Period shall be extended to
the next succeeding LIBOR Business Day unless the result of such extension
would be to carry such Interest Period into another calendar month, in which
event such Interest Period shall end on the immediately preceding LIBOR
Business Day;


 


(B)                                if
any Interest Period with respect to a Base Rate Loan would end on a day that is
not a Business Day, that Interest Period shall end on the next succeeding
Business Day;


 


(C)                                if
the Borrower shall fail to give notice as provided in §2.7, the Borrower shall
be deemed to have requested a conversion of the affected LIBOR Rate Loan to a
Base Rate Loan and the continuance of all Base Rate Loans as Base Rate Loans on
the last day of the then current Interest Period with respect thereto;


 


(D)                               any
Interest Period relating to any LIBOR Rate Loan that begins on the last LIBOR
Business Day of a calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such 


 


9

















 


Interest Period) shall end on the last LIBOR Business Day of a calendar
month; and


 


(E)                                 any
Interest Period that would otherwise extend beyond the Maturity Date shall end
on the Maturity Date.


 


Interest Rate Agreement.  Any interest rate swap agreement, interest
rate cap agreement, interest rate collar agreement, interest rate futures
contract, interest rate option agreement or other similar agreement or arrangement
to which the Borrower is a party, designed to protect the Borrower against
fluctuations in interest rates.


 


Investment Grade Securities.  Any debt Investments having a fixed maturity
which have a rating by the NAIC of 1 or 2, or, if the NAIC rating categories in
effect on the date hereof change, such other rating or ratings of such
Investments determined by the NAIC to be symbolic of investment grade quality.


 


Investments.  All expenditures made and all liabilities
incurred (contingently or otherwise) for the acquisition of stock or
Indebtedness of, or for loans, advances, capital contributions or transfers of
property to, or in respect of any guaranties (or other commitments as described
under Indebtedness), or obligations of, any Person.  In determining the aggregate amount of
Investments outstanding at any particular time: (a) the amount of any
Investment represented by a guaranty shall be taken at not less than the
principal amount of the obligations guaranteed and still outstanding; (b) there
shall be included as an Investment all interest accrued with respect to
Indebtedness constituting an Investment unless and until such interest is paid;
(c) there shall be deducted in respect of each such Investment any amount
received as a return of capital (but only by repurchase, redemption,
retirement, repayment, liquidating dividend or liquidating distribution); (d) there
shall not be deducted in respect of any Investment any amounts received as
earnings on such Investment, whether as dividends, interest or otherwise,
except that accrued interest included as provided in the foregoing clause (b) may
be deducted when paid; and (e) there shall not be deducted from the
aggregate amount of Investments any decrease in the value thereof.


 


Lender Affiliate.  (a) With respect to any Lender, (i) an
Affiliate of such Lender or (ii) any entity (whether a corporation,
partnership, limited liability company, trust or legal entity) that is engaged
in making, purchasing, holding or otherwise investing in bank loans and similar
extensions of credit in the ordinary course of its business and is administered
or managed by such Lender or an Affiliate of such Lender and (b) with
respect to any Lender that is a fund which invests in bank loans and similar
extensions of credit, any other entity (whether a corporation, partnership,
limited liability company, trust or other legal entity) that is a fund that
invests in bank loans and similar extensions of credit and is managed by the
same investment advisor as such Lender or by an Affiliate of such investment
advisor.


 


Lenders.  RBS Citizens and the other lending
institutions listed on Schedule 1 hereto
and any other Person who becomes an assignee of any rights and obligations of a
Lender pursuant to §14.


 


Letter of Credit.  See §2.9.1.


 


10

















 


Letter of Credit Application.  See §2.9.1.


 


Letter of Credit Fee.  See §2.9.10.


 


Letter of Credit Participation.  See §2.9.4.


 


LIBOR Business Day.  Any day on which commercial banks are open
for international business (including dealings in Dollar deposits) in London or
such other eurodollar interbank market as may be selected by the Administrative
Agent in its sole discretion acting in good faith.


 


LIBOR Lending Office.  Initially, the office of each Lender
designated as such in Schedule 1 hereto;
thereafter, such other office of such Lender, if any, that shall be making or
maintaining LIBOR Rate Loans.


 


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


 


LIBOR Rate Loans.  Loans bearing interest calculated by
reference to the LIBOR Rate.


 


Lien.  Any mortgage, deed of trust, security
interest, pledge, hypothecation, assignment, attachment, deposit arrangement,
encumbrance, lien (statutory, judgment or otherwise), or other security
agreement or preferential arrangement of any kind or nature whatsoever
(including any conditional sale or other title retention agreement, any
Capitalized Lease, any Synthetic Lease, any financing lease involving
substantially the same economic effect as any of the foregoing and the filing
of any financing statement under the UCC or comparable law of any
jurisdiction).


 


Loan Documents.  This Credit Agreement, the Notes, the
Security Documents and the Fee Letter.


 


Loan Request.  See §2.6.


 


Loans.  Revolving credit loans made or to be made by
the Lenders to the Borrower pursuant to §2.


 


11

















 


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


 


(a)                                  a
material adverse effect on the business, properties, condition (financial or
otherwise), assets, operations or income of the Borrower and its Subsidiaries,
taken as a whole; or


 


(b)                                 a material adverse effect on the ability of
the Borrower and its Subsidiaries, to perform any of its respective Obligations
under any of the Loan Documents to which it is a party.


 


Material Documents.  The Tax Sharing Agreement.


 


Material Insurance License.  Any license issued by a state to any
Insurance Subsidiary that permits such Insurance Subsidiary to transact
insurance business in such state and in respect of which the premiums written
under the authority of such license account for more than twenty percent (20%)
of Net Premiums Written during the then most recently ended fiscal year of the
Borrower.


 


Maturity Date.  August 14, 2013.


 


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


 


Moody’s.  Moody’s Investors Services, Inc. and any
successor thereto.


 


Multiemployer Plan.  Any multiemployer plan within the meaning of
§3(37) of ERISA maintained or contributed to by the Borrower or any ERISA
Affiliate.


 


NAIC.  The National Association of Insurance
Commissioners or any successor thereto, or in lieu thereof, any other
association, agency or other organization performing substantially similar
advisory, coordination or other life functions among insurance departments,
insurance commissions and similar Governmental Authorities of the various
states of the United States of America toward the promotion of uniformity in
the practices of such Governmental Authorities.


 


Net Premiums Written.  In relation to any Insurance Subsidiary for
any particular period, (i) the sum of (A) all income on direct
premiums written by such Insurance Subsidiary during such period arising from
policies (if any) issued by such Insurance Subsidiary as the direct  primary 
insurance carrier, plus (B) all income on premiums written and
collected by such Insurance Subsidiary during such period arising from policies
reinsured by such Insurance Subsidiary acting as a reinsurer for insurance
ceded to it by another company which is the primary insurance carrier, less (ii) the
sum of (A) all refunds of premiums due by such insurance company to
insurers arising from endorsements, cancellations or audits, plus (B) all
other premium expense by reason of insurance ceded by such insurance company to
other insurance companies as reinsurers in order to reinsure such insurance
company either as the primary insurance carrier or as a reinsurer, all as
determined for such period in accordance with SAP.


 


12
















 


Non-Admitted Assets.  Assets of any Insurance Subsidiary which are
prohibited by Insurance Regulatory Authorities from being treated as assets for
statutory reporting purposes.


 


Non-U.S. Lender.  See §4.2.3.


 


Note Record. 
A Record with respect to a Note.


 


Notes. 
See §2.4.


 


Obligations. 
All indebtedness, obligations and liabilities of any of the Borrower and
its Subsidiaries to any of the Lenders and the Administrative Agent,
individually or collectively, existing on the date of this Credit Agreement or arising
thereafter, direct or indirect, joint or several, absolute or contingent,
matured or unmatured, liquidated or unliquidated, secured or unsecured, arising
by contract, operation of law or otherwise, arising or incurred under this
Credit Agreement or any of the other Loan Documents or any Interest Rate
Agreement or in respect of any of the Loans made or any of the Notes or other
instruments at any time evidencing any thereof.


 


Omnibus Amendment and Reaffirmation Agreement.  The Omnibus Amendment and Reaffirmation
Agreement, dated on or about the date hereof, among the Borrower, the
Subsidiary Guarantors and the Administrative Agent.


 


outstanding. 
With respect to the Loans, the aggregate unpaid principal thereof as of
any date of determination.


 


PBGC.  The Pension Benefit Guaranty Corporation
created by §4002 of ERISA and any successor entity or entities having similar
responsibilities.


 


Perfection Certificates.  The Perfection Certificates as defined in the
Security Agreements.


 


Permitted Acquisition.  See §8.5.1.


 


Permitted Liens.  Liens permitted by §8.2.


 


Person. 
Any individual, corporation, limited liability company partnership,
limited liability partnership, trust, other unincorporated association,
business, or other legal entity, and any Governmental Authority.


 


Portfolio Investments.  Investments made by an Insurance Subsidiary
in accordance with the Safety Insurance Investment Policy which are permitted
by §8.3.


 


RBS Citizens. 
RBS Citizens, N.A. (successor by merger to Citizens Bank of Massachusetts),
in its individual capacity.


 


RCRA. 
See §6.18(a).


 


13

















 


Real Estate. 
All real property at any time owned or leased (as lessee or sublessee)
by the Borrower or any of its Subsidiaries.


 


Record. 
The grid attached to a Note, or the continuation of such grid, or any
other similar record, including computer records, maintained by any Lender with
respect to any Loan referred to in such Note.


 


Reference Period.  As of any date of determination, the period
of four (4) consecutive fiscal quarters of the Borrower and its
Subsidiaries ending on such date, or if such date is not a fiscal quarter end
date, the period of four (4) consecutive fiscal quarters most recently
ended (in each case treated as a single accounting period).


 


Register. 
See §14.3.


 


Reimbursement Obligation.  The Borrower’s obligation to reimburse the
Administrative Agent and the Lenders on account of any drawing under any Letter
of Credit as provided in §2.9.6.


 


Replacement Lender.  See §4.11.


 


Replacement Notice.  See §4.11.


 


Required Lenders.  As of any date, the Lender holding more than
fifty percent (50%) of the outstanding principal amount of the Notes on such
date plus the unused portion of the Commitments on such date; and if no such principal
is outstanding, the Lenders whose aggregate Commitments constitute more than
fifty percent (50%) of the Total Commitment.


 


Reserves. 
In relation to any Insurance Subsidiary at any time, all reserves for
payment of policy benefits, losses, claims, expenses and similar purposes
determined in accordance with SAP.


 


Restricted Payment.  In relation to the Borrower and its
Subsidiaries, any (a) Distribution, (b) payment or prepayment by the
Borrower or its Subsidiaries to the Borrower or any Affiliate of the Borrower, (c) derivatives
or other transactions with any financial institution, commodities or stock
exchange or clearinghouse (a “Derivatives Counterparty”) obligating the
Borrower or any Subsidiary to make payments to such Derivatives Counterparty as
a result of any change in market value of any Capital Stock of the Borrower or
such Subsidiary, or (d) any principal, interest or other amounts due in
respect of any Indebtedness which by its terms is subordinated to payment of
the Obligations.


 


Risk Based Capital Ratio.  With respect to any Insurance Subsidiary and
as at any date of determination, the ratio of (a) Total Adjusted Capital
for such Insurance Subsidiary as of such date, to (b) the Authorized
Control Level RBC for such Insurance Subsidiary as of such date, in each case
as such terms are defined by the NAIC Risk-Based Capital (RBC) for Insurers
Model Act.


 


Safety Indemnity.  Safety Indemnity Insurance Company, a
Massachusetts corporation.


 


14

















 


Safety Insurance.  Safety Insurance Company, a Massachusetts
corporation.


 


Safety Insurance Investment Policy.  The Asset Investment Criteria of Safety
Insurance delivered by the Borrower to the Administrative Agent on or prior to
the Closing Date, as amended, restated or otherwise modified from time to time
in accordance with §8.12 hereof.


 


Safety Property.  Safety Property and Casualty Insurance
Company, a Massachusetts corporation.


 


SAP Financial Statements.  The Statutory Annual Financial Statements and
the Statutory Quarterly Financial Statements.


 


SARA. 
See §6.18(a).


 


Security Agreements.  Collectively, (a) the Security
Agreement, dated as of November 27, 2002, between the Borrower and the
Administrative Agent and (b) the Security Agreement, dated as of November 27,
2002 between the Subsidiary Guarantors and the Administrative Agent, in each
case as previously amended and as amended by the Omnibus Amendment and
Reaffirmation Agreement.


 


Security Documents.  The Omnibus Amendment and Reaffirmation
Agreement, the Subsidiary Guaranty, the Security Agreements, the Stock Pledge
Agreements and all other instruments and documents, including without
limitation Uniform Commercial Code financing statements, required to be
executed or delivered pursuant to any Security Document.


 


S&P. 
Standard & Poor’s Ratings Group.


 


Statutory Annual Financial Statements.  With respect to any Insurance Subsidiary, the
annual fiscal year-end financial statements required by the SAP to be filed
with the Insurance Regulatory Authorities of the state in which such Insurance
Subsidiary is organized and licensed to sell insurance.


 


Statutory Accounting Practices or SAP.  Statutory accounting practices consistently
applied throughout the periods specified and the immediately prior period in
accordance with NAIC’s Annual Statement Instructions and Accounting Practices
and Procedures Manual, except to the extent that applicable state law may
differ or that state rules or regulations require differences in reporting
not relating to accounting practices and procedures in which case such state
requirements shall apply.


 


Statutory Net Income.  In relation to any Insurance Subsidiary for
any particular period, the net income of such Insurance Subsidiary for such
period that appears on the SAP Financial Statements, as determined in
accordance with SAP.


 


Statutory Quarterly Financial Statements.  With respect to any Insurance Subsidiary, the
quarterly financial statements required by SAP to be filed with the Insurance
Regulatory Authorities of the state in which such Insurance Subsidiary is
organized and licensed to sell insurance.


 


15

















 


Statutory Surplus.  In relation to any Insurance Subsidiary at
any time, the total surplus of such Insurance Subsidiary that appears or should
appear, on the SAP Financial Statements of such Insurance Subsidiary determined
in accordance with SAP.


 


Stock Pledge Agreements.  The several Stock Pledge Agreements, each
dated as of November 27, 2002, between (a) the Borrower and the
Administrative Agent, and (b) Whiteshirts Management and the
Administrative Agent, in each case as previously amended and as amended by the
Omnibus Amendment and Reaffirmation Agreement.


 


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


 


Subsidiary Guarantors.  Each Subsidiary of the Borrower which is not
an Insurance Subsidiary.


 


Subsidiary Guaranty.  The Guaranty, dated as of November 27,
2002, by each Subsidiary Guarantor in favor of the Lenders and the
Administrative Agent, as previously amended and as amended by the Omnibus
Amendment and Reaffirmation Agreement, pursuant to which each Subsidiary
Guarantor has guaranteed to the Lenders and the Administrative Agent the
payment and performance of the Obligations.


 


Synthetic Lease.  Any lease of goods or other property, whether
real or personal, which is treated as an operating lease under GAAP and as a
loan or financing for U.S. income tax purposes.


 


Tax Sharing Agreement.  The Amended and Restated Tax Sharing
Agreement, dated as of February 28, 2002 by and among the Borrower and the
Subsidiaries (as defined therein), previously delivered to the Administrative
Agent.


 


Taxes. 
See §4.2.2.


 


Total Commitment.  The sum of the Commitments of the Lenders, as
in effect from time to time.  On the
Closing Date, the Total Commitment shall be equal to $30,000,000.


 


Type. 
As to any Loan, its nature as a Base Rate Loan or a LIBOR Rate Loan.


 


Unpaid Reimbursement Obligation.  Any Reimbursement Obligation for which the
Borrower does not reimburse the Administrative Agent and the Lenders on the
date specified in, and in accordance with, §2.9.6.


 


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


 


16

















 


Whiteshirts Asset Management.  Whiteshirts Asset Management Corporation
(f/k/a Thomas Black Insurance Agency, Inc.), a Massachusetts corporation.


 


Whiteshirts Management.  Whiteshirts Management Corporation (f/k/a RBS, Inc.),
a Massachusetts corporation.


 


1.2.                            Rules of
Interpretation.


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


(j)                                     Unless otherwise expressly indicated, in the
computation of periods of time from a specified date to a later specified date,
the word “from” means “from and including,” the words “to” and “until” each
mean “to but excluding,” and the word “through” means “to and including.”


 


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


 


17

















 


(l)                                     This Credit Agreement and the other Loan
Documents are the result of negotiation among, and have been reviewed by
counsel to, among others, the Administrative Agent and the Borrower and are the
product of discussions and negotiations among all parties.  Accordingly, this Credit Agreement and the
other Loan Documents are not intended to be construed against the
Administrative Agent or any of the Lenders merely on account of the
Administrative Agent’s or any Lender’s involvement in the preparation of such
documents.


 


2.                                      THE
REVOLVING CREDIT FACILITY.


 


2.1.                            Commitment
to Lend.  Subject to the terms
and conditions set forth in this Credit Agreement, each of the Lenders
severally agrees to lend to the Borrower and the Borrower may borrow, repay,
and reborrow from time to time from the Closing Date up to but not including
the Maturity Date upon notice by the Borrower to the Administrative Agent given
in accordance with §2.6, such sums as are requested by the Borrower up to a
maximum aggregate amount outstanding (after giving effect to all amounts
requested) at any one time equal to such Lender’s Commitment, provided
that the sum of the outstanding amount of the Loans (after giving effect to all
amounts requested) shall not at any time exceed the Total Commitment at such
time.  The Loans shall be made pro rata
in accordance with each Lender’s Commitment Percentage.  Each request for a Loan hereunder shall
constitute a representation and warranty by the Borrower that the conditions
set forth in §10 and §11, in the case of the initial Loans to be made on the
Closing Date, and §11, in the case of all other Loans, have been satisfied on
the date of such request.


 


2.2.                            Commitment
Fee.  The Borrower agrees to pay
to the Administrative Agent for the accounts of the Lenders in accordance with
their respective Commitment Percentages a commitment fee (the “Commitment
Fee”) calculated at the rate of one quarter of one percent (0.25%) per
annum on the daily amount during each calendar quarter or portion thereof from
the date hereof to the Maturity Date by which the Total Commitment exceeds the
outstanding amount of Loans during such calendar quarter.  The Commitment Fee shall be payable quarterly
in arrears on the first day of each calendar quarter for the immediately
preceding calendar quarter commencing on the first such date following the date
hereof, with a final payment on the Maturity Date or any earlier date on which
the Commitments shall terminate.


 


2.3.                            Reduction
of Total Commitment.  The
Borrower shall have the right at any time and from time to time upon five (5) Business
Days prior written notice to the Administrative Agent to reduce by $500,000 or
an integral multiple of $100,000 in excess thereof or to terminate entirely the
Total Commitment, whereupon the Commitments of the Lenders shall be reduced pro
rata in accordance with their respective Commitment Percentages of the amount
specified in such notice or, as the case may be, terminated.  Promptly after receiving any notice of the
Borrower delivered pursuant to this §2.3, the Administrative Agent will notify
the Lenders of the substance thereof. 
Upon the effective date of any such reduction or termination, the
Borrower shall pay to the Administrative Agent for the respective accounts of
the Lenders the full amount of 


 


18

















 


any Commitment
Fee then accrued on the amount of the reduction.  No reduction or termination of the
Commitments may be reinstated.


 


2.4.                            The
Notes.  The Loans shall be
evidenced by separate promissory notes of the Borrower in substantially the
form of Exhibit A hereto (each a “Note”), dated as of the
Closing Date (or such other date on which a Lender may become a party hereto in
accordance with §14 hereof) and completed with appropriate insertions.  One Note shall be payable to the order of
each Lender in a principal amount equal to such Lender’s Commitment or, if
less, the outstanding amount of all Loans made by such Lender, plus interest
accrued thereon, as set forth below.  The
Borrower irrevocably authorizes each Lender to make or cause to be made, at or
about the time of the Drawdown Date of any Loan or at the time of receipt of
any payment of principal on such Lender’s Note, an appropriate notation on such
Lender’s Note Record reflecting the making of such Loan or (as the case may be)
the receipt of such payment.  The
outstanding amount of the Loans set forth on such Lender’s Note Record shall be
prima facie evidence of the principal amount thereof owing and unpaid to such
Lender, but the failure to record, or any error in so recording, any such
amount on such Lender’s Note Record shall not limit or otherwise affect the
obligations of the Borrower hereunder or under any Note to make payments of
principal or interest on any Note when due.


 


2.5.                            Interest on Loans. 
Except as otherwise provided in §4.10,


 


(a)                                  Each
Loan which is a Base Rate Loan shall bear interest for the period commencing
with the Drawdown Date thereof and ending on the last day of the Interest
Period with respect thereto at the rate per annum equal to the Base Rate as in
effect from time to time.


 


(b)                                 Each
Loan which is a LIBOR Rate Loan shall bear interest for the period commencing
with the Drawdown Date thereof and ending on the last day of the Interest
Period with respect thereto at the rate per annum equal to the LIBOR Rate
determined for such Interest Period plus one and one-quarter of one percent
(1.25%).


 


(c)                                  The
Borrower promises to pay interest on each Loan in arrears on each Interest
Payment Date with respect thereto.


 


2.6.                            Requests
for Loans.  The Borrower shall
give to the Administrative Agent written notice in the form of Exhibit B
hereto (or telephonic notice confirmed in a writing in the form of Exhibit B
hereto) of each Loan requested hereunder (a “Loan Request”) (a) no
later than 11:00 a.m. (Boston time) on the proposed Drawdown Date of any
Base Rate Loan and (b) no later than 11:00 a.m. (Boston time) on not
less than three (3) LIBOR Business Days prior to the proposed Drawdown
Date of any LIBOR Rate Loan.  Each such
notice shall specify (i) the principal amount of the Loan requested, (ii) the
proposed Drawdown Date of such Loan, (iii) the Interest Period for such
Loan and (iv) the Type of such Loan. 
If a Loan Request does not specify the Type of Loan requested, it will
be treated as a request for a Base Rate Loan. 
Promptly upon receipt of any such notice, the Administrative Agent shall
notify each of the Lenders thereof. Each Loan Request shall be irrevocable and
binding on the Borrower and shall obligate the 


 


19

















 


Borrower to
accept the Loan requested from the Lenders on the proposed Drawdown Date.  Each Loan Request for a Base Rate Loan shall
be in a minimum aggregate amount of $100,000 or an integral multiple of
$100,000 in excess thereof and each Loan Request for a LIBOR Rate Loan shall be
in a minimum aggregate amount of $500,000 or an integral multiple of $100,000
in excess thereof.


 


2.7.                            Conversion Options.


 


2.7.1. 
Conversion to Different Type of Loan.  The Borrower may elect from time to time to
convert any outstanding Loan to a Loan of another Type, provided that (a) with
respect to any such conversion of a LIBOR Rate Loan to a Base Rate Loan, the
Borrower shall give the Administrative Agent written notice (or telephone
notice promptly confirmed in writing) no later than 11:00 a.m. (Boston
time) on the date of such election; (b) with respect to any such
conversion of a Base Rate Loan to a LIBOR Rate Loan, the Borrower shall give
the Administrative Agent at least three (3) LIBOR Business Days prior
written notice of such election; (c) with respect to any such conversion
of a LIBOR Rate Loan into a Base Rate Loan, if such conversion is not made on
the last day of the Interest Period with respect thereto, such conversion shall
require the payment of any amounts due under §4.9 hereof, and (d) no Loan
may be converted into a LIBOR Rate Loan when any Default or Event of Default
has occurred and is continuing.  On the
date on which such conversion is being made each Lender shall take such action
as is necessary to transfer its Commitment Percentage of such Loans to its
Domestic Lending Office or its LIBOR Lending Office, as the case may be.  All or any part of outstanding Loans of any
Type may be converted into a Loan of another Type as provided herein, provided
that any partial conversion into a Base Rate Loan shall be in an aggregate
principal amount of $100,000 or a whole multiple of $100,000 in excess thereof
and a partial conversion into a LIBOR Rate Loan shall be in an aggregate
principal amount of $500,000 or a whole multiple of $100,000 in excess thereof.  Each Conversion Request relating to the
conversion of a Loan to a LIBOR Rate Loan shall be irrevocable by the Borrower.


 


2.7.2. 
Continuation of Type of Loan.  Any Loan of any Type may be continued as a
Loan of the same Type upon the expiration of an Interest Period with respect
thereto by compliance by the Borrower with the notice provisions contained in
§2.7.1; provided that no LIBOR Rate Loan may be continued as such when any
Default or Event of Default has occurred and is continuing, but shall be
automatically converted to a Base Rate Loan on the last day of the first
Interest Period relating thereto ending during the continuance of any Default
or Event of Default of which officers of the Administrative Agent active upon
the Borrower’s account have actual knowledge.  In the event that the Borrower fails to
provide any such notice with respect to the continuation of any LIBOR Rate Loan
as such, then such LIBOR Rate Loan shall be automatically converted to a Base
Rate Loan on the last day of the first Interest Period relating thereto.  The Administrative Agent shall notify the
Lenders promptly when any such automatic conversion contemplated by this §2.7.2
is scheduled to occur.


 


2.7.3. 
LIBOR Rate Loans.  Any conversion to or from LIBOR Rate Loans
shall be in such amounts and be made pursuant to such elections so that, after 


 


20

















 


giving effect
thereto, the aggregate principal amount of all LIBOR Rate Loans having the same
Interest Period shall not be less than $500,000 or a whole multiple of $100,000
in excess thereof. No more than seven (7) LIBOR Rate Loans having
different Interest Periods may be outstanding at any time.


 


2.8.                            Funds for Loan.


 


2.8.1. 
Funding Procedures.  Not later than 1:00 p.m. (Boston time)
on the proposed Drawdown Date of any Loans, each of the Lenders will make
available to the Administrative Agent, at the Administrative Agent’s Office, in
immediately available funds, the amount of such Lender’s Commitment Percentage
of the amount of the requested Loans. 
Upon receipt from each Lender of such amount, and upon receipt of the
documents required by §§10 and 11 and the satisfaction of the other conditions
set forth therein, to the extent applicable, the Administrative Agent will make
available to the Borrower the aggregate amount of such Loans made available to
the Administrative Agent by the Lenders. 
The failure or refusal of any Lender to make available to the
Administrative Agent at the aforesaid time and place on any Drawdown Date the
amount of its Commitment Percentage of the requested Loans shall not relieve
any other Lender from its several obligation hereunder to make available to the
Administrative Agent the amount of such other Lender’s Commitment Percentage of
any requested Loans.


 


2.8.2. 
Advances by Administrative Agent.  The Administrative Agent may, unless notified
to the contrary by any Lender prior to a Drawdown Date, assume that such Lender
has made available to the Administrative Agent on such Drawdown Date the amount
of such Lender’s Commitment Percentage of the Loans to be made on such Drawdown
Date, and the Administrative Agent may (but it shall not be required to), in
reliance upon such assumption, make available to the Borrower a corresponding
amount.  If any Lender makes available to
the Administrative Agent such amount on a date after such Drawdown Date, such
Lender shall pay to the Administrative Agent on demand an amount equal to the
product of (a) the average computed for the period referred to in clause (c) below,
of the weighted average interest rate paid by the Administrative Agent for
federal funds acquired by the Administrative Agent during each day included in
such period, times (b) the amount of such Lender’s Commitment Percentage
of such Loans, times (c) a fraction, the numerator of which is the number
of days that elapse from and including such Drawdown Date to the date on which
the amount of such Lender’s Commitment Percentage of such Loans shall become
immediately available to the Administrative Agent, and the denominator of which
is 360.  A statement of the
Administrative Agent submitted to such Lender with respect to any amounts owing
under this paragraph shall be prima facie evidence of the amount due and owing
to the Administrative Agent by such Lender. 
If the amount of such Lender’s Commitment Percentage of such Loans is
not made available to the Administrative Agent by such Lender within three (3) Business
Days following such Drawdown Date, the Administrative Agent shall be entitled
to recover such amount from the Borrower on demand, with interest thereon at
the rate per annum applicable to the Loans made on such Drawdown Date.


 


21

















 


2.9.                            Letters of Credit.


 


2.9.1. 
Commitment to Issue Letters of Credit.  Subject to the terms and conditions hereof
and the execution and delivery by the Borrower of a letter of credit
application on the Administrative Agent’s customary form (a “Letter of
Credit Application”), the Administrative Agent, on behalf of the Lenders
and in reliance upon the agreement of the Lenders set forth in §2.9.4 and upon
the representations and warranties of the Borrower contained herein, agrees, in
its individual capacity, to issue, extend and renew for the account of the
Borrower one or more standby letters of credit (each, a “Letter of Credit”),
in such form as may be requested from time to time by the Borrower and agreed
to by the Administrative Agent; provided, however, that, after
giving effect to such request, (i) the sum of the aggregate amount
available to be drawn on all Letters of Credit outstanding shall not exceed
$5,000,000 at any one time and (ii) the sum of (1) the Maximum
Drawing Amount and (2) the amount of all Revolving Credit Loans
outstanding shall not exceed the Total Commitment at such time.


 


2.9.2. 
Letter of Credit Applications.  Each Letter of Credit Application shall be
completed to the satisfaction of the Administrative Agent.  In the event that any provision of any Letter
of Credit Application shall be inconsistent with any provision of this Credit
Agreement, then the provisions of this Credit Agreement shall, to the extent of
any such inconsistency, govern.


 


2.9.3. 
Terms of Letters of Credit.  Each Letter of Credit issued, extended or
renewed hereunder shall, among other things, (a) provide for the payment
of sight drafts for honor thereunder when presented in accordance with the
terms thereof and when accompanied by the documents described therein, and (b) provide
for a term of no more than one (1) year subject to automatic renewals, but
in no event have an expiry date later than the date which is fourteen (14) days
(or, if the Letter of Credit is confirmed by a confirmer or otherwise provides
for one or more nominated persons, forty-five (45) days) prior to the Revolving
Credit Loan Maturity Date.  Each Letter
of Credit so issued, extended or renewed shall be subject to either the Uniform
Customs or the International Standby Practices (ISP98), International Chamber
of Commerce Publication No. 590, or any successor code of standby letter of
credit practices among banks adopted by the Administrative Agent in the
ordinary course of its business as a standby letter of credit issuer and in
effect at the time of issuance of such Letter of Credit.


 


2.9.4. 
Reimbursement Obligations of Lenders.  Each Lender severally agrees that it shall be
absolutely liable, without regard to the occurrence of any Default or Event of
Default or any other condition precedent whatsoever, to the extent of such
Lender’s Commitment Percentage of the Total Commitment, to reimburse the
Administrative Agent on demand for the amount of each draft paid by the
Administrative Agent under each Letter of Credit to the extent that such amount
is not reimbursed by the Borrower pursuant to §2.9.6 (such agreement for a
Lender being called herein the “Letter of Credit Participation” of such
Lender).


 


2.9.5. 
Participations of Lenders.  Each such payment made by a Lender shall be
treated as the purchase by such Lender of a participating interest in the
Borrower’s Reimbursement Obligation under §2.9.6 in an amount equal to such
payment.  


 


22

















 


Each Lender
shall share in accordance with its funded participating interest in any
interest which accrues pursuant to §2.9.6.


 


2.9.6. 
Reimbursement Obligation of the Borrower.  In order to induce the Administrative Agent
to issue, extend and renew each Letter of Credit and the Lenders to participate
therein, the Borrower hereby agrees to reimburse or pay to the Administrative
Agent, for the account of the Administrative Agent or (as the case may be) the
Lenders, with respect to each Letter of Credit issued, extended or renewed by
the Administrative Agent hereunder,


 


(a)                                  except as otherwise expressly provided in
subsections (b) and (c) below, on each date that any draft presented
under such Letter of Credit is honored by the Administrative Agent, or the
Administrative Agent otherwise makes a payment with respect thereto, (i) the
amount paid by the Administrative Agent under or with respect to such Letter of
Credit, and (ii) the amount of any taxes, fees, charges or other costs and
expenses whatsoever incurred by the Administrative Agent or any Lender in
connection with any payment made by the Administrative Agent or any Lender
under, or with respect to, such Letter of Credit,


 


(b)                                 upon the reduction (but not termination) of
the Total Commitment to an amount less than the Maximum Drawing Amount, an
amount equal to such difference, which amount shall be held by the
Administrative Agent for the benefit of the Lenders and the Administrative
Agent as cash collateral for all Reimbursement Obligations, and


 


(c)                                  upon the termination of the Total Commitment,
or the acceleration of the Reimbursement Obligations with respect to all
Letters of Credit in accordance with §14, an amount equal to the then Maximum
Drawing Amount on all Letters of Credit, which amount shall be held by the
Administrative Agent for the benefit of the Lenders and the Administrative
Agent as cash collateral for all Reimbursement Obligations.


 


Each such
payment shall be made to the Administrative Agent at the Administrative Agent’s
Office in immediately available funds. 
Interest on any and all amounts remaining unpaid by the Borrower under
this §2.9.6 at any time from the date such amounts become due and payable
(whether as stated in this §2.9.6, by acceleration or otherwise) until payment
in full (whether before or after judgment) shall be payable to the
Administrative Agent on demand at the rate calculated in accordance with §4.10
for Revolving Credit Loans.


 


2.9.7. 
Letter of Credit Payments.  If any draft shall be presented or other
demand for payment shall be made under any Letter of Credit, the Administrative
Agent shall notify the Borrower of the date and amount of the draft presented
or demand for payment and of the date and time when it expects to pay such
draft or honor such demand for payment. 
If the Borrower fails to reimburse the Administrative Agent as provided
in §2.9.6 on or before the date that such draft is paid or other payment is
made by the Administrative Agent, the Administrative Agent may at any time
thereafter notify the Lenders of the amount of any such Unpaid Reimbursement
Obligation.  No later than 1:00 p.m.
(Boston time) on the Business Day next following the receipt of such notice,
each Lender shall make available to the Administrative Agent, at the
Administrative 


 


23

















 


Agent’s
Office, in immediately available funds, such Lender’s Commitment Percentage (in
respect of the Total Commitment) of such Unpaid Reimbursement Obligation,
together with an amount equal to the product of (a) the average, computed
for the period referred to in clause (c) below, of the weighted average
interest rate paid by the Administrative Agent for federal funds acquired by
the Administrative Agent during each day included in such period, times (b) the
amount equal to such Lender’s Commitment Percentage (in respect of the Total
Commitment) of such Unpaid Reimbursement Obligation, times (c) a fraction,
the numerator of which is the number of days that elapse from and including the
date the Administrative Agent paid the draft presented for honor or otherwise
made payment to the date on which such Lender’s Commitment Percentage (in
respect of the Total Commitment) of such Unpaid Reimbursement Obligation shall
become immediately available to the Administrative Agent, and the denominator
of which is 360.  The responsibility of
the Administrative Agent to the Borrower and the Lenders shall be only to
determine that the documents (including each draft) delivered under each Letter
of Credit in connection with such presentment shall be in conformity in all
material respects with such Letter of Credit.


 


2.9.8. 
Obligations Absolute.  The Borrower’s obligations under this §2.9
shall be absolute and unconditional under any and all circumstances and
irrespective of the occurrence of any Default or Event of Default or any
condition precedent whatsoever or any setoff, counterclaim or defense to
payment which the Borrower may have or have had against the Administrative
Agent, any Lender or any beneficiary of a Letter of Credit.  The Borrower further agrees with the
Administrative Agent and the Lenders that the Administrative Agent and the
Lenders shall not be responsible for, and the Borrower’s Reimbursement
Obligations under §2.9.6 shall not be affected by, among other things, the
validity or genuineness of documents or of any endorsements thereon, even if
such documents should in fact prove to be in any or all respects invalid,
fraudulent or forged, or any dispute between or among the Borrower, the
beneficiary of any Letter of Credit or any financing institution or other party
to which any Letter of Credit may be transferred or any claims or defenses
whatsoever of the Borrower against the beneficiary of any Letter of Credit or
any such transferee.  The Administrative
Agent and the Lenders shall not be liable for any error, omission, interruption
or delay in transmission, dispatch or delivery of any message or advice, however
transmitted, in connection with any Letter of Credit.  The Borrower agrees that any action taken or
omitted by the Administrative Agent or any Lender under or in connection with
each Letter of Credit and the related drafts and documents, if done in good faith,
shall be binding upon the Borrower and shall not result in any liability on the
part of the Administrative Agent or any Lender to the Borrower.


 


2.9.9. 
Reliance by Issuer.  To the extent not inconsistent with §2.9.8,
the Administrative Agent shall be entitled to rely, and shall be fully
protected in relying upon, any Letter of Credit, draft, writing, resolution,
notice, consent, certificate, affidavit, letter, cablegram, telegram, telecopy,
telex or teletype message, statement, order or other document believed by it to
be genuine and correct and to have been signed, sent or made by the proper
Person or Persons and upon advice and statements of legal counsel, independent
accountants and other experts selected by the Administrative Agent.  The Administrative Agent shall be fully
justified in failing or refusing to take any action 


 


24

















 


under this
Credit Agreement unless it shall first have received such advice or concurrence
of the Required Lenders as it reasonably deems appropriate or it shall first be
indemnified to its reasonable satisfaction by the Lenders against any and all
liability and expense which may be incurred by it by reason of taking or
continuing to take any such action.  The
Administrative Agent shall in all cases be fully protected in acting, or in
refraining from acting, under this Credit Agreement in accordance with a
request of the Required Lenders, and such request and any action taken or
failure to act pursuant thereto shall be binding upon the Lenders and all
future holders of the Notes or of a Letter of Credit Participation.


 


2.9.10. 
Letter of Credit Fee.  The Borrower shall pay a fee (in each case, a
“Letter of Credit Fee”) to the Administrative Agent in respect of each
Letter of Credit in an amount equal to the product of (a) the LIBOR Rate multiplied
by (b) the face amount of such standby Letter of Credit, with such Letter
of Credit Fee being payable in advance at the time each such Letter of Credit
is issued.  In respect of each Letter of
Credit, the Borrower shall also pay to the Administrative Agent for the
Administrative Agent’s own account, at such other time or times as such charges
are customarily made by the Administrative Agent, the Administrative Agent’s
customary issuance, amendment, negotiation or document examination and other
administrative fees as in effect from time to time.


 


2.10.                     Increase in Commitment.


 


2.10.1. 
Request for Increase.  Provided there exists no Default, upon notice
to the Administrative Agent (which shall promptly notify the Lenders), the
Borrower may on a one-time basis, request an increase in the Total Commitment
by an amount not exceeding $20,000,000 (the “Increase Option”); provided
that any such request for an increase shall be in a minimum amount of
$5,000,000.  At the time of sending such
notice, the Borrower (in consultation with the Administrative Agent) shall
specify the time period within which each Lender is requested to respond (which
shall in no event be less than fourteen (14) Business Days from the date of
delivery of such notice to the Lenders).


 


2.10.2. 
Lender Elections to Increase.  Each Lender shall notify the Administrative
Agent within such time period whether or not it agrees to increase its
Commitment and, if so, whether by an amount equal to, greater than, or less
than its applicable percentage of such requested increase.  Any Lender not responding within such time
period shall be deemed to have declined to increase its Commitment Percentage.


 


2.10.3. 
Notification by Administrative Agent; Additional Lenders.  The Administrative Agent shall notify the
Borrower and each Lender of the Lenders’ responses to each request made
hereunder.  To achieve the full amount of
a requested increase, and subject to the approval of the Administrative Agent,
the Borrower may also invite additional Eligible Assignees to become Lenders
pursuant to a joinder agreement in form and substance satisfactory to the
Administrative Agent and its counsel.


 


25
















 


2.10.4.  Effective Date and Allocations.  If
the Commitment is increased in accordance with this Section, the Administrative
Agent and the Borrower shall determine the effective date (the “Increase
Effective Date”) and the final allocation of such increase.  The Administrative Agent shall promptly
notify the Borrower and the Lenders of the final allocation of such increase
and the Increase Effective Date.


 


2.10.5.  Conditions to Effectiveness of Increase.  As a
condition precedent to such increase, the Borrower shall deliver to the
Administrative Agent (a) a certificate dated as of the Increase Effective
Date (in sufficient copies for each Lender) signed by a Responsible Officer of
the Borrower (i) certifying and attaching the resolutions adopted by the
Borrower approving or consenting to such increase, and (ii) certifying
that, before and after giving effect to such increase, (A) the
representations and warranties contained in Article VI and the other Loan
Documents are true and correct on and as of the Increase Effective Date, except
to the extent that such representations and warranties specifically refer to an
earlier date, in which case they are true and correct as of such earlier date,
and except that for purposes of this §2.10, the representations and warranties
contained in §6.4.2 shall be deemed to refer to the most recent statements
furnished pursuant to clauses (a) and (b), respectively, of §7.4, and (B) no
Default exists, (b) a legal opinion from Borrower’s counsel in form and
substance satisfactory to the Administrative Agent and (c) such other
documentation as the Lenders or the Administrative Agent may reasonably
request.  The Borrower shall prepay any
Loans outstanding on the Increase Effective Date (and pay any additional
amounts required pursuant to §2.7) to the extent necessary to keep the
outstanding Loans ratable with any revised Commitment percentages arising from
any nonratable increase in the Commitments under this Section.


 


2.10.6.  Conflicting Provisions.  This
Section shall supersede any provisions in §15.2 to the contrary.


 


3.                                      REPAYMENT
OF THE LOANS.


 


3.1.                            Maturity.  The
Borrower promises to pay on the Maturity Date, and there shall become
absolutely due and payable on the Maturity Date, all of the Loans outstanding
on such date, together with any and all accrued and unpaid interest, Commitment
Fees thereon and any other fees relating to the Loans.


 


3.2.                            Mandatory Repayments of Loans.  If
at any time the sum of the outstanding amount of the Loans exceeds the Total
Commitment at such time, then the Borrower shall immediately pay the amount of
such excess to the Administrative Agent for the respective accounts of the
Lenders.  Each prepayment of Loans shall
be allocated among the Lenders, in proportion, as nearly as practicable, to the
respective unpaid principal amount of each Lender’s Note, with adjustments to
the extent practicable to equalize any prior payments or repayments not exactly
in proportion.


 


3.3.                            Optional Repayments of Loans.  The
Borrower shall have the right, at its election, to repay the outstanding amount
of the Loans, as a whole or in part, at any time without penalty or premium, provided
that any full or partial prepayment of the 


 


26

















 


outstanding amount of any
LIBOR Rate Loans pursuant to this §3.3 that is not made on the last day of the
Interest Period relating thereto shall be accompanied by any amounts due under
§4.9 hereof.  The Borrower shall give the
Administrative Agent notice, no later than 11:00 a.m., Boston time, on the
date of any proposed prepayment pursuant to this §3.3 of Base Rate Loans, and
at least three (3) LIBOR Business Days notice of any proposed prepayment
pursuant to this §3.3 of LIBOR Rate Loans, in each case specifying the proposed
date of prepayment of Loans and the principal amount to be prepaid.  Each such partial prepayment of the Loans
shall be in an integral multiple of $100,000, shall be accompanied by the
payment of accrued interest on the principal prepaid to the date of prepayment
and shall be applied, in the absence of instruction by the Borrower, first to
the principal of Base Rate Loans and then to the principal of LIBOR Rate
Loans.  Each partial prepayment shall be
allocated among the Lenders, in proportion, as nearly as practicable, to the
respective unpaid principal amount of each Lender’s Note, with adjustments to
the extent practicable to equalize any prior repayments not exactly in
proportion.


 


4.                                      CERTAIN
GENERAL PROVISIONS.


 


4.1.                            Closing Fees.  The
Borrower shall pay to the Administrative Agent the closing fees and such other
fees as set forth in the Fee Letter (collectively, the “Closing Fee”).


 


4.2.                            Funds for Payments.


 


4.2.1.  Payments to Administrative Agent.  All
payments of principal, interest, Fees and any other amounts due hereunder or
under any of the other Loan Documents shall be made on the due date thereof to
the Administrative Agent in Dollars, for the respective accounts of the Lenders
and the Administrative Agent, at the Administrative Agent’s Office or at such
other place that the Administrative Agent may from time to time designate, in
each case at or about 11:00 a.m. (Boston, Massachusetts, time or other
local time at the place of payment) and in immediately available funds.


 


4.2.2.  No Offset, etc.  All
payments by the Borrower hereunder and under any of the other Loan Documents
shall be made without recoupment, setoff or counterclaim and free and clear of
and without deduction or withholding for any taxes, levies, imposts, duties,
charges, fees, deductions, withholdings, compulsory loans, restrictions or
conditions of any nature now or hereafter imposed or levied by any jurisdiction
or any political subdivision thereof or taxing or other authority therein but
excluding franchise taxes and other taxes imposed on or measured by any Lender’s
net income, profits or receipts, in the case of each such exclusion as a result
of a connection between such Lender and the relevant taxing jurisdiction other
than solely by reason of such Lender having executed, delivered or performed
its obligations under, or received payment under, or enforced this Credit
Agreement or any other Loan Document (not including by having a lending or
similar office in the relevant taxing jurisdiction such non-excluded item being
called “Taxes”), unless the Borrower is compelled by law to make such
deduction or withholding.  If any such
obligation is imposed upon the Borrower with respect to any amount payable by
it hereunder or under any of the other 


 


27

















 


Loan Documents, the Borrower will pay to the
Administrative Agent, for the account of the Lenders or (as the case may be)
the Administrative Agent, on the date on which such amount is due and payable
hereunder or under such other Loan Document, such additional amount in Dollars
as shall be necessary to enable the Lenders or the Administrative Agent to
receive the same net amount which the Lenders or the Administrative Agent would
have received on such due date had no such obligation been imposed upon the Borrower.  The Borrower will deliver promptly to the
Administrative Agent certificates  or
other valid vouchers for all taxes or other charges deducted from or paid with
respect to payments made by the Borrower hereunder or under such other Loan
Document.


 


4.2.3.  Non-U.S. Lenders.  Each
Lender and the Administrative Agent that is not a U.S. Person as defined in Section 7701(a)(30)
of the Code for federal income tax purposes (a “Non-U.S. Lender”) hereby
agrees that, if and to the extent it is legally able to do so, it shall, prior
to the date of the first payment by the Borrower hereunder to be made to such
Lender or the Administrative Agent or for such Lender’s or the Administrative
Agent’s account, deliver to the Borrower and the Administrative Agent, as applicable,
such certificates, documents or other evidence, as and when required by the
Code or Treasury Regulations issued pursuant thereto, including (a) in the
case of a Non-U.S. Lender that is a “bank” for purposes of Section 881(c)(3)(A) of
the Code, two (2) duly completed copies of Internal Revenue Service Form W-8BEN,
Form W-8ECI, Form W-8IMY and all required supporting documentation
and any other certificate or statement of exemption required by Treasury
Regulations, or any subsequent versions thereof or successors thereto, properly
completed and duly executed by such Lender or the Administrative Agent
establishing that with respect to payments of principal, interest or fees
hereunder it is (i) not subject to United States federal withholding tax
under the Code because such payment is effectively connected with the conduct
by such Lender or Administrative Agent of a trade or business in the United
States or (ii) totally exempt or partially exempt from United States
federal withholding tax under a provision of an applicable tax treaty and (b) in
the case of a Non-U.S. Lender that is not a “bank” for purposes of Section 881(c)(3)(A) of
the Code, a certificate in form and substance reasonably satisfactory to the
Administrative Agent and the Borrower and to the effect that (i) such
Non-U.S. Lender is not a “bank” for purposes of Section 881(c)(3)(A) of
the Code, is not subject to regulatory or other legal requirements as a bank in
any jurisdiction, and has not been treated as a bank for purposes of any tax, securities
law or other filing or submission made to any governmental authority, any
application made to a rating agency or qualification for any exemption from any
tax, securities law or other legal requirements, (ii) is not a ten (10) percent
shareholder of the Borrower for purposes of Section 881(c)(3)(B) of
the Code and (iii) is not a controlled foreign corporation receiving
interest from a related person for purposes of Section 881(c)(3)(C) of
the Code, together with a properly completed Internal Revenue Service Form W-8BEN,
as applicable (or successor forms).  Each
Lender or the  Administrative Agent
agrees that it shall, promptly upon a change of its lending office or the
selection of any additional lending office, to the extent the forms previously
delivered by it pursuant to this section are no longer effective, and promptly
upon the Borrower’s or the Administrative Agent’s reasonable request after the
occurrence of any other event (including the passage of time) requiring the
delivery of a Form W-8BEN, Form W-8ECI or Form W8IMY in addition
to 


 


28

















 


or in replacement of the forms previously
delivered, deliver to the  Borrower and
the Administrative Agent, as applicable, if and to the extent it is properly
entitled to do so, a properly completed and executed Form W-8BEN, Form W-8ECI
or Form W-8IMY, as applicable (or any successor forms thereto).


 


4.2.4.  Liabilities.  The
Borrower shall not be obliged to pay any additional amounts to any Lender or
the Administrative Agent pursuant to §4.2.1, or to indemnify any Lender or the
Administrative Agent pursuant to §15.3, in respect of Taxes to the extent
imposed as a result of (i) the failure of such Lender or the
Administrative Agent to deliver to the Borrower the form or forms and/or other
certificates, documents or other evidence, as applicable to such Lender or the
Administrative Agent, pursuant to §4.2.3, (ii) the information or
certifications made in such form or forms by the Lender or the Administrative
Agent being untrue or inaccurate on the date delivered in any material respect,
(iii) the Lender or the Administrative Agent designating a successor
lending office which has the effect of causing such Lender or the
Administrative Agent to become obligated for tax payments in excess of those in
effect immediately prior to such designation or (iv) such Lender or the
Administrative Agent being treated as a “conduit entity” within the meaning of
U.S. Treasury Regulations Section 1.881-3 or any successor provision; provided,
however, that the Borrower shall be obliged to pay an additional amount
to any such Lender or the Administrative Agent pursuant to §4.2.1, and to
indemnify any such Lender or the Administrative Agent pursuant to §15.3, in
respect of United States federal income or withholding taxes if (i) any
such failure to deliver a form or forms or other certificates, documents or
other evidence, or any inaccuracy or untruth contained therein resulted from a
change in any applicable statute, treaty or regulation occurring after the date
hereof, which change rendered such Lender no longer legally entitled to deliver
such form or forms or other certificates, documents or other evidence, or
rendered the information or certifications made in such form or forms or other
certificates, documents or other evidence, untrue or inaccurate in any material
respect and the Lender or the Administrative Agent so advises the Borrower and
the Administrative Agent (in the case of a Lender) promptly in writing, (ii) the
redesignation of the Lender’s or the Administrative Agent’s lending office was
made at the request of the Borrower or (iii) the obligation to pay any
additional amounts to any such Lender pursuant to §4.2.1 or to indemnify any
such Lender or the Administrative Agent pursuant to §15.3 is with respect to an
assignee lender that becomes an assignee lender as a result of an assignment
made at the request of the Borrower.


 


4.3.                            Computations.  All
computations of interest on Base Rate Loans and Fees shall be based on a 365/366
day year for the actual number of days elapsed. 
All computations of interest on LIBOR Loans shall be based on a 360-day
year and paid for the actual number of days elapsed.  Except as otherwise provided in the
definition of the term “Interest Period” with respect to LIBOR Rate
Loans, whenever a payment hereunder or under any of the other Loan Documents
becomes due on a day that is not a Business Day, the due date for such payment
shall be extended to the next succeeding Business Day, and interest shall accrue
during such extension.  The outstanding
amount of the Loans as reflected on the Note Records from time to time shall be
considered correct and binding on the Borrower, absent manifest error, unless
within sixty (60) days after receipt of any notice by the Administrative Agent
or any of the Lenders of such 


 


29

















 


outstanding amount, the
Borrower shall notify the Administrative Agent or such Lender to the contrary.


 


4.4.                            Inability to Determine LIBOR Rate.  In
the event, prior to the commencement of any Interest Period relating to any
LIBOR Rate Loan, the Administrative Agent shall determine or be notified by the
Required Lenders that adequate and reasonable methods do not exist for
ascertaining the LIBOR Rate that would otherwise determine the rate of interest
to be applicable to any LIBOR Rate Loan during any Interest Period, the
Administrative Agent shall forthwith give notice of such determination (which
shall be conclusive and binding on the Borrower and the Lenders) to the
Borrower and the Lenders.  In such event (i) any
Loan Request or Conversion Request with respect to LIBOR Rate Loans shall be
automatically withdrawn and shall be deemed a request for Base Rate Loans, (ii) each
LIBOR Rate Loan will automatically, on the last day of the then current
Interest Period relating thereto, become a Base Rate Loan, and (iii) the
obligations of the Lenders to make LIBOR Rate Loans shall be suspended until
the Administrative Agent or the Required Lenders determines that the
circumstances giving rise to such suspension no longer exist, whereupon the
Administrative Agent or, as the case may be, the Administrative Agent upon the
instruction of the Required Lenders, shall so notify the Borrower and the
Lenders.


 


4.5.                            Illegality. 
Notwithstanding any other provisions herein, if any present or future
law, regulation, treaty or directive or the interpretation or application
thereof shall make it unlawful for any Lender to make or maintain LIBOR Rate
Loans, such Lender shall forthwith give notice of such circumstances to the
Borrower and the other Lenders and thereupon (a) the commitment of such
Lender to make LIBOR Rate Loans or convert Base Rate Loans to LIBOR Rate Loans
shall forthwith be suspended and (b) such Lender’s Loans then outstanding
as LIBOR Rate Loans, if any, shall be converted automatically to Base Rate
Loans on the last day of each Interest Period applicable to such LIBOR Rate
Loans or within such earlier period as may be required by law.  The Borrower hereby agrees promptly to pay
the Administrative Agent for the account of such Lender, upon demand by such
Lender, any additional amounts necessary to compensate such Lender for any
costs incurred by such Lender in making any conversion in accordance with this
§4.5, including any interest or fees payable by such Lender to lenders of funds
obtained by it in order to make or maintain its LIBOR Rate Loans hereunder.


 


4.6.                            Additional Costs, etc.  If
any change after the Closing Date in applicable law, which expression, as used
herein, includes statutes, rules and regulations thereunder and
interpretations thereof by any Governmental Authority charged with the
administration or the interpretation thereof and requests, directives,
instructions and notices at any time or from time to time hereafter made upon
or otherwise issued to any Lender or the Administrative Agent by any central
bank or other fiscal, monetary or other authority (whether or not having the
force of law), shall:


 


(a)                                  subject any Lender or the Administrative
Agent to any tax, levy, impost, duty, charge, fee, deduction or withholding of
any nature with respect to this Credit Agreement, the other Loan Documents,
such Lender’s Commitment or the Loans (other 


 


30

















 


than taxes based upon or
measured by the income or profits of such Lender or the Administrative Agent),
or


 


(b)                                 materially change the basis of taxation
(except for changes in Taxes) of payments to any Lender of the principal of or
the interest on any Loans or any other amounts payable to any Lender or the
Administrative Agent under this Credit Agreement or any of the other Loan
Documents, or


 


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


 


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


 


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


 


(ii)                                  to reduce the amount of principal, interest
or other amount payable to such Lender or the Administrative Agent hereunder on
account of such Lender’s Commitment or any of the Loans, or


 


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


 


then, and in
each such case, the Borrower will, upon demand made by such Lender or (as the
case may be) the Administrative Agent at any time and from time to time and as
often as the occasion therefor may arise, pay to such Lender or the
Administrative Agent such additional amounts as will be sufficient to
compensate such Lender or the Administrative Agent for such additional cost,
reduction, payment or foregone interest or other sum.


 


4.7.                            Capital Adequacy.  If
after the date hereof any Lender or the Administrative Agent determines that (a) the
adoption of or change after the Closing Date in any law, governmental rule,
regulation, policy, guideline or directive (whether or not having the force of
law) regarding capital requirements for banks or bank holding companies or any
change in the interpretation or application thereof by a Governmental Authority
with appropriate jurisdiction, or (b) compliance by such Lender or the
Administrative Agent or any corporation controlling such Lender or the
Administrative Agent with any law, governmental rule, regulation, policy,
guideline or directive 


 


31

















 


(whether or not having the force
of law) of any such entity regarding capital adequacy, has the effect of
reducing the return on such Lender’s or the Administrative Agent’s commitment
with respect to any Loans to a level below that which such Lender or the
Administrative Agent could have achieved but for such adoption, change or
compliance (taking into consideration such Lender’s or the Administrative Agent’s
then existing policies with respect to capital adequacy and assuming full
utilization of such entity’s capital) by any amount deemed by such Lender or
(as the case may be) the Administrative Agent to be material, then such Lender
or the Administrative Agent may notify the Borrower of such fact.  To the extent that the amount of such reduction
in the return on capital is not reflected in the Base Rate, the Borrower and
such Lender shall thereafter attempt to negotiate in good faith, within thirty
(30) days of the day on which the Borrower receives such notice, an adjustment
payable hereunder that will adequately compensate such Lender in light of these
circumstances.  If the Borrower and such
Lender are unable to agree to such adjustment within thirty (30) days of the
date on which the Borrower receives such notice, then commencing on the date of
such notice (but not earlier than the effective date of any such increased
capital requirement), the fees payable hereunder shall increase by an amount
that will, in such Lender’s reasonable determination, provide adequate
compensation.  Each Lender shall allocate
such cost increases among its customers in good faith and on an equitable
basis.


 


4.8.                            Certificate.  A
certificate setting forth any additional amounts payable pursuant to §§4.6 or
4.7 and a brief explanation of such amounts which are due, submitted by any
Lender or the Administrative Agent to the Borrower, shall be conclusive, absent
manifest error, that such amounts are due and owing.


 


4.9.                            Indemnity.  The
Borrower agrees to indemnify each Lender and to hold each Lender harmless from
and against any loss, cost or expense (including loss of anticipated profits)
that such Lender may sustain or incur as a consequence of (a) default by
the Borrower in payment of the principal amount of or any interest on any LIBOR
Rate Loans as and when due and payable, including any such loss or expense
arising from interest or fees payable by such Lender to banks of funds obtained
by it in order to maintain its LIBOR Rate Loans, (b) default by the
Borrower in making a borrowing or conversion after the Borrower has given (or
is deemed to have given) a Loan Request or a Conversion Request relating
thereto in accordance with §2.6 or §2.7 or (c) the making of any payment
of a LIBOR Rate Loan or the making of any conversion of any such Loan to a Base
Rate Loan on a day that is not the last day of the applicable Interest Period
with respect thereto, including interest or fees payable by such Lender to
lenders of funds obtained by it in order to maintain any such Loans.


 


4.10.                     Interest After Default.


 


4.10.1.  Overdue Amounts. 
Overdue principal and (to the extent permitted by applicable law)
interest on the Loans and all other overdue amounts payable hereunder or under
any of the other Loan Documents shall bear interest compounded monthly and
payable on demand at a rate per annum equal to two percent (2%) above the rate
of interest then applicable thereto (or, if no rate of interest is then
applicable thereto, the Base Rate) until such amount shall be paid in full
(after as well as before judgment).


 


32

















 


4.10.2.  Amounts Not Overdue. 
During the continuance of an Event of Default the principal of the Loans
not overdue shall, until such Event of Default has been cured or remedied or
such Event of Default has been waived by the Required Lenders pursuant to
§15.12, bear interest at a rate per annum equal to the greater of (a) two
percent (2%) above the rate of interest otherwise applicable to such Loans
pursuant to §2.5 and (b) the rate of interest applicable to overdue
principal pursuant to §4.10.1.


 


4.11.                     Replacement of Lenders.  If
any Lender (an “Affected Lender”) (a) makes demand upon the
Borrower for (or if the Borrower is otherwise required to pay) amounts pursuant
to §§4.6 or 4.7 or other increases in the costs of the Loans, (b) is
unable to make or maintain LIBOR Rate Loans as a result of a condition
described in §4.5, (c) defaults in its obligation to make Loans in
accordance with the terms of this Credit Agreement, or (d) shall refuse to
consent to certain proposed changes, waivers, discharges or terminations as
provided in the last sentence of §15.12, the Borrower may, so long as no
Default or Event of Default has occurred and is then continuing, within thirty
(30) days of receipt of such demand, notice (or the occurrence of such other
event causing the Borrower to be required to pay such compensation or causing
§4.5 to be applicable), or default, as the case may be, by notice (a “Replacement
Notice”) in writing to the Administrative Agent and such Affected Lender (i) request
the Affected Lender to reasonably cooperate with the Borrower in obtaining a
replacement Lender reasonably satisfactory to the Administrative Agent or its
successor and the Borrower (the “Replacement Lender”); (ii) request
the non-Affected Lenders to acquire and assume all of the Affected Lender’s
Loans and Commitment as provided herein, but none of such Lenders shall be
under an obligation to do so; or (iii) designate a Replacement Lender
approved by the Administrative Agent, such approval not to be unreasonably
withheld or delayed.  If any satisfactory
Replacement Lender shall be obtained, and/or if any one or more of the
non-Affected Lenders shall agree to acquire and assume all of the Affected
Lender’s Loans and Commitment, then such Affected Lender shall assign, in
accordance with §14, all of its Commitment, Loans, Notes and other rights and
obligations under this Credit Agreement and all other Loan Documents to such
Replacement Lender or non-Affected Lenders, as the case may be, in exchange for
payment of the principal amount so assigned and all interest and fees accrued
on the amount so assigned, plus all other Obligations then due and payable to
the Affected Lender; provided, however, that (A) such
assignment shall be without recourse, representation or warranty and shall be
on terms and conditions reasonably satisfactory to such Affected Lender and
such Replacement Lender and/or non-Affected Lenders, as the case may be, and (B) prior
to any such assignment, the Borrower shall have paid to such Affected Lender
all amounts properly demanded and unreimbursed under §§4.6 and 4.7.  Upon the effective date of such assignment,
the Borrower shall issue replacement Notes to such Replacement Lender and/or
non-Affected Lenders, as the case may be, and such institution shall become a “Lender”
for all purposes under this Credit Agreement and the other Loan Documents.


 


5.                                      COLLATERAL
SECURITY AND GUARANTIES.


 


5.1.                            Security of Borrower.  The
Obligations shall be secured by (a) a perfected first priority security
interest (subject only to Permitted Liens entitled to 


 


33

















 


priority under applicable
law) in all of the assets of the Borrower, whether now owned or hereafter
acquired, pursuant to the terms of the Security Documents to which the Borrower
is a party, and (b) subject to applicable law, a pledge by the Borrower of
all of the Capital Stock of each of its directly-owned Subsidiaries, pursuant
to the terms of its Stock Pledge Agreement. 
Neither this Section 5.1 nor any other provision contained in this
Credit Agreement or any Loan Document shall be construed to require the assets
of any Insurance Subsidiary to be pledged as security for the Obligations.


 


5.2.                            Guaranties and Security of
Subsidiaries.  The Obligations shall also be guaranteed by
the Subsidiary Guarantors pursuant to the terms of the Subsidiary
Guaranty.  The obligations of the
Subsidiary Guarantors under the Subsidiary Guaranty shall be in turn secured by
(a) a perfected first priority security interest (subject only to
Permitted Liens entitled to priority under applicable law) in all of the assets
of each such Subsidiary Guarantor, whether now owned or hereafter acquired,
pursuant to the terms of the Security Documents to which such Subsidiary
Guarantor is a party, and (b) a pledge by such Subsidiary Guarantor of all
of the Capital Stock of each of its Subsidiaries owned by the Subsidiary
Guarantor pursuant to the terms of its Stock Pledge Agreement.


 


6.                                      REPRESENTATIONS
AND WARRANTIES.


 


The Borrower
represents and warrants to the Lenders and the Administrative Agent as follows:


 


6.1.                            Corporate Authority.


 


6.1.1.  Incorporation; Good Standing.  Each
of the Borrower and its Subsidiaries (a) is a corporation (or similar
business entity) duly organized, validly existing and in good standing under the
laws of its jurisdiction of incorporation or formation, (b) has all
requisite corporate (or the equivalent company) power to own its property and
conduct its business as now conducted and as presently contemplated, (c) has
all licenses, certificates, permits, franchises and other governmental
authorizations necessary to own and operate its property and to conduct its
business as now conducted and as presently contemplated, including, without
limitation, any licenses required by the Massachusetts Division of Insurance
(the “Division”) and all licenses and authorizations in all
jurisdictions which require any Person controlling one or more insurance
companies to be so licensed or authorized, except where the failure to have
such licenses or authorizations would not have a Material Adverse Effect, (d) is
in good standing as a foreign corporation (or similar business entity) and is
duly authorized to do business in each jurisdiction where such qualification is
necessary except where a failure to be so qualified would not have a Material
Adverse Effect, and (e) in the case of each Insurance Subsidiary, (i) is
duly licensed or authorized as an insurance company in its jurisdiction of
incorporation (ii) duly licensed or authorized as an insurance company,
and, where applicable, to engage in the business of reinsurance in each other
jurisdiction where it is required to be so licensed or authorized, and (iii) duly
licensed or authorized in its jurisdiction of incorporation to write or conduct
each line of its business, in each case, where the failure to be so duly
licensed or authorized would reasonably be expected to have a Material Adverse
Effect.  Each Insurance Subsidiary is,
where required, duly 


 


34

















 


licensed or authorized and appointed as a
third party administrator, insurance agency, managing general agency or similar
service provider, in its jurisdiction of incorporation and in each other
jurisdiction where it is required to be so licensed or authorized.


 


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


 


6.1.3.  Enforceability.  The
execution and delivery of this Credit Agreement and the other Loan Documents to
which the Borrower or any of its Subsidiaries is or is to become a party will
result in valid and legally binding obligations of such Person enforceable
against it in accordance with the respective terms and provisions hereof and
thereof, except as enforceability is limited by bankruptcy, insolvency,
reorganization, moratorium or other laws relating to or affecting generally the
enforcement of creditors’ rights and except to the extent that availability of
the remedy of specific performance or injunctive relief is subject to the
discretion of the court before which any proceeding therefor may be brought.


 


6.2.                            Governmental Approvals.  The
execution, delivery and performance by the Borrower and any of its Subsidiaries
of this Credit Agreement and the other Loan Documents to which such Person is
or is to become a party and the transactions contemplated hereby and thereby do
not require the approval or consent of, or filing with, any Governmental
Authority other than the filing of UCC financing statements or other than the
filing by the Borrower’s Insurance Subsidiaries to be made pursuant to
Massachusetts General Laws, Chapter 175, Section 206C(a)(1) or those
already obtained.


 


6.3.                            Title to Properties; Leases. 
Except as indicated on Schedule  6.3 hereto, and after
giving effect to the transactions contemplated hereby, the Borrower and its
Subsidiaries own all of the assets reflected in the pro forma consolidated
balance sheet of the Borrower and its Subsidiaries as at the Closing Date or
acquired since that date (except property and assets sold or otherwise disposed
of in the ordinary course of business since that date), subject to no Liens or
other rights of others, except Permitted Liens.


 


6.4.                            Financial Statements and
Projections.


 


6.4.1.  Fiscal Year.  The
Borrower and each of its Subsidiaries has a fiscal year which is the twelve
months ending on December 31 of each calendar year.


 


35

















 


6.4.2.  Financial Statements.  The
Borrower has delivered to the Administrative Agent copies of the financial
statements of the Borrower and its Subsidiaries for the fiscal year ended December 31,
2007 and the fiscal quarter ended March 31, 2008.  Such financial statements present fairly the
financial position of the Borrower and its Subsidiaries as of the respective
dates of such financial statements and the results of the Borrower and its
Subsidiaries for the periods covered by such financial statements.  The Annual Statutory Financial Statements of
the Insurance Subsidiaries for the fiscal year ended December 31, 2007
comply in all material respects with applicable accounting requirements of the rules and
regulations of the Division with respect thereto and have been prepared in
accordance with the rules and regulations of the Division as such rules and
regulations were in effect at the time of preparation and submission thereof.


 


6.4.3.  Projections.  The
projections of the annual operating budgets of the Borrower and its
Subsidiaries on a consolidated basis, balance sheets and cash flow statements
for the 2008 to 2009 fiscal years, copies of which have been delivered to the
Administrative Agent, have been made in good faith on the basis of information
available to the Borrower at the time such projections were furnished to the
Administrative Agent.  The projections
were based upon good faith estimates and assumptions believed to be reasonable
when made, it being acknowledged by the Lenders that such projections as to
future events are not to be viewed as facts and that actual results during the
period or periods covered thereby may differ significantly from the projected
results.


 


6.5.                            No Material Adverse Changes, etc. 
Except as set forth on Schedule  6.5 hereto, since the
Balance Sheet Date there has been no event or occurrence which has had a
Material Adverse Effect on the Borrower and its Subsidiaries.


 


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


 


6.7.                            Litigation. 
Except for the defense of claims asserted by insureds in the ordinary
course of business against any Insurance Subsidiary’s business and as set forth
in Schedule 6.7 hereto, there are no
actions, suits, proceedings or investigations of any kind pending or threatened
against the Borrower or any of its Subsidiaries before any Governmental
Authority, that, (a) if adversely determined, might, either in any case or
in the aggregate, (i) have a Material Adverse Effect or (ii) materially
impair the right of the Borrower and its Subsidiaries, considered as a whole,
to carry on business substantially as now conducted by them, or (iii) result
in any substantial liability not adequately covered by insurance for which
adequate reserves are not maintained on the consolidated balance sheet of the
Borrower and its Subsidiaries in accordance with GAAP, or for which adequate
reserves are not maintained on the consolidated balance sheet of the Borrower and
its Subsidiaries, or (b) which question the validity of this Credit
Agreement or any of the other Loan Documents, or any action taken or to be
taken pursuant hereto or thereto.


 


36
















 


6.8.                            No Materially Adverse Contracts,
etc.  Neither the Borrower nor any of its
Subsidiaries is subject to any Governing Document or other legal restriction,
or any judgment, decree, order, law, statute, rule or regulation that has
or is reasonably expected in the future to have a Material Adverse Effect.  Neither the Borrower nor any of its
Subsidiaries is a party to any contract or agreement that has or is reasonably
expected, in the judgment of the Borrower’s officers, to have any Material
Adverse Effect.


 


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


 


6.10.                     Tax Status.  Each
of the Borrower and its Subsidiaries (a) has made or filed all material
federal, state and foreign income and all other tax returns, reports and
declarations required by any jurisdiction to which any of them is subject, (b) has
paid all taxes and other governmental assessments and charges shown or
determined to be due on such returns, reports and declarations, except those
being contested in good faith and by appropriate proceedings or which are
immaterial in amount and (c) has set aside on their books provisions
reasonably adequate for the payment of all taxes for periods subsequent to the
periods to which such returns, reports or declarations apply.  There are no unpaid taxes in any material
amount claimed to be due by the taxing authority of any jurisdiction, and none
of the officers of the Borrower know of any basis for any such claim.


 


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


 


6.12.                     Investment Company Act. 
Neither the Borrower nor any of its Subsidiaries is an “investment
company”, or an “affiliated company” or a “principal underwriter” of an “investment
company”, as such terms are defined in the Investment Company Act of 1940.


 


6.13.                     Absence of Financing Statements,
etc.  Except with respect to Permitted Liens, there
is no financing statement, security agreement, chattel mortgage, real estate
mortgage or other document filed or recorded with any filing records, registry
or other public office, that purports to cover, affect or give notice of any
present or possible future Lien on any assets or property of the Borrower or
any of its Subsidiaries or any rights relating thereto.


 


6.14.                     Perfection of Security Interest.  All
filings, assignments, pledges and deposits of documents or instruments have
been made and all other actions have been taken that are necessary or
advisable, under applicable law, to establish and perfect the Administrative
Agent’s security interest in the Collateral. 
Except for the approval of Insurance Regulatory Authorities, if
applicable, prior to the Administrative Agent’s exercise of its rights with
respect to the shares of the Insurance Subsidiaries’ Capital 


 


37

















 


Stock owned by the Borrower
and pledged pursuant to the Security Documents, the Collateral and the
Administrative Agent’s rights with respect to the Collateral are not subject to
any setoff, claims, withholdings or other defenses.  The Borrower or one of its Subsidiaries, as
specified in the Security Documents, is the owner of the Collateral free from
any Lien, except for Permitted Liens.


 


6.15.                     Certain Transactions. 
Except as set forth on Schedule  6.15 hereto, and for arm’s
length transactions pursuant to which the Borrower or any of its Subsidiaries
makes payments in the ordinary course of business upon terms no less favorable
than the Borrower or such Subsidiary could obtain from third parties, none of
the officers, directors, or employees of the Borrower or any of its
Subsidiaries is presently a party to any transaction with the Borrower or any
of its Subsidiaries (other than for services as employees, officers and
directors), including any contract, agreement or other arrangement providing
for the furnishing of services to or by, providing for rental of real or
personal property to or from, or otherwise requiring payments to or from any
officer, director or such employee or, to the knowledge of the Borrower, any
corporation, partnership, trust or other entity in which any officer, director,
or any such employee has a substantial ownership interest or is an officer,
director, trustee or partner.


 


6.16.                     Employee Benefit Plans.


 


6.16.1.  In General.  Each
Employee Benefit Plan and each Guaranteed Pension Plan has been maintained and
operated in compliance in all material respects with the provisions of ERISA
and the Code. The Borrower has heretofore delivered to the Administrative Agent
the most recently completed annual report, Form 5500, with all required
attachments, and actuarial statement required to be submitted under §103(d) of
ERISA, with respect to each Guaranteed Pension Plan.


 


6.16.2.  Terminability of Welfare Plans.  No
Employee Benefit Plan, which is an employee welfare benefit plan within the
meaning of §3(1) or §3(2)(B) of ERISA, provides benefit coverage
subsequent to termination of employment, except as required by Title I, Part 6
of ERISA or the applicable state insurance laws. The Borrower may terminate
each such Plan at any time (or at any time subsequent to the expiration of any
applicable bargaining agreement) in the discretion of the Borrower without
liability to any Person other than for claims arising prior to termination.


 


6.16.3.  Guaranteed Pension Plans.  Each
contribution required to be made to a Guaranteed Pension Plan, whether required
to be made to avoid the incurrence of an accumulated funding deficiency or the
notice or lien provisions of §302(f) of ERISA, has been timely made.  No waiver of an accumulated funding
deficiency or extension of amortization periods has been received with respect
to any Guaranteed Pension Plan, and neither the Borrower nor any ERISA
Affiliate is obligated to or has posted security in connection with an
amendment to a Guaranteed Pension Plan pursuant to §307 of ERISA or §401(a)(29)
of the Code.  No liability to the PBGC
(other than required insurance premiums, all of which that are due have been
paid) has been incurred by the Borrower or any ERISA Affiliate with respect to
any Guaranteed Pension Plan and there has not been any ERISA Reportable Event
(other than an ERISA Reportable Event 


 


38

















 


as to which the requirement of thirty (30)
days notice has been waived), or any other event or condition which presents a
material risk of termination of any Guaranteed Pension Plan by the PBGC. Based
on the latest valuation of each Guaranteed Pension Plan (which in each case
occurred within twelve months of the date of this representation), and on the
actuarial methods and assumptions employed for that valuation, the aggregate
benefit liabilities of all such Guaranteed Pension Plans within the meaning of
§4001 of ERISA did not exceed the aggregate value of the assets of all such
Guaranteed Pension Plans, disregarding for this purpose the benefit liabilities
and assets of any Guaranteed Pension Plan with assets in excess of benefit
liabilities.


 


6.16.4.  Multiemployer Plans. 
Neither the Borrower nor any ERISA Affiliate has incurred any material
liability (including secondary liability) to any Multiemployer Plan as a result
of a complete or partial withdrawal from such Multiemployer Plan under §4201 of
ERISA or as a result of a sale of assets described in §4204 of ERISA.  Neither the Borrower nor any ERISA Affiliate
has been notified that any Multiemployer Plan is in reorganization or insolvent
under and within the meaning of §4241 or §4245 of ERISA or is at risk of
entering reorganization or becoming insolvent, or that any Multiemployer Plan
intends to terminate or has been terminated under §4041A of ERISA.


 


6.17.                     Use of Proceeds.


 


6.17.1.  General.  The
proceeds of the Loans shall be used for working capital and general corporate
purposes by the Borrower and its Subsidiaries.


 


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


 


6.18.                     Environmental Compliance.  To
the Borrower’s knowledge, except as disclosed on Schedule  6.18
hereto:


 


(a)                                  none of the Borrower or its Subsidiaries is
in violation, or alleged violation, of any judgment, decree, order, law,
license, rule or regulation pertaining to environmental matters, including
without limitation, those arising under the Resource Conservation and Recovery
Act (“RCRA”), the Comprehensive Environmental Response, Compensation and
Liability Act of 1980 as amended (“CERCLA”), the Superfund Amendments
and Reauthorization Act of 1986 (“SARA”), the Federal Clean Water Act,
the Federal Clean Air Act, the Toxic Substances Control Act, or any state,
local or foreign law, statute, regulation, ordinance, order or decree relating
to health, safety or the environment (hereinafter “Environmental Laws”),
which violation would have a Material Adverse Effect;


 


(b)                                 neither the Borrower nor any of its
Subsidiaries has received written notice from any third party including,
without limitation, any Governmental Authority, (i) that any one of them
has been identified by the United States Environmental Protection 


 


39

















 


Agency (“EPA”) as a
potentially responsible party under CERCLA with respect to a site listed on the
National Priorities List, 40 C.F.R. Part 300 Appendix B; (ii) that
any hazardous waste, as defined by 42 U.S.C. §6903(5), any hazardous substances
as defined by 42 U.S.C. §9601(14), any pollutant or contaminant as defined by
42 U.S.C. §9601(33) and any toxic substances, oil or hazardous materials or
other chemicals or substances regulated by any Environmental Laws (“Hazardous
Substances”) which any one of them has generated, transported or disposed
of has been found at any site at which a Governmental Authority has conducted
or has ordered that any Borrower or any of its Subsidiaries conduct a remedial
investigation, removal or other response action pursuant to any Environmental
Law; or (iii) that it is or shall be a named party to any material claim,
action, cause of action, complaint, or legal or administrative proceeding (in
each case, contingent or otherwise) arising out of any third party’s incurrence
of costs, expenses, losses or damages of any kind whatsoever in connection with
the release of Hazardous Substances;


 


(c)                                  (i) no portion of the Real Estate has
been used by the Borrower or its Subsidiaries for the handling, processing,
storage or disposal of Hazardous Substances except in accordance with
applicable Environmental Laws; and no underground tank or other underground
storage receptacle for Hazardous Substances is located on any portion of the
Real Estate; (ii) in the course of any activities conducted by the
Borrower or its Subsidiaries, no Hazardous Substances have been generated or
are being used on the Real Estate except in accordance with applicable
Environmental Laws; (iii) there have been no releases (i.e. any past or
present releasing, spilling, leaking, pumping, pouring, emitting, emptying,
discharging, injecting, escaping, disposing or dumping) or threatened releases
of Hazardous Substances on, upon, into or from the properties of the Borrower
or its Subsidiaries, which releases would have a Material Adverse Effect; (iv) there
have been no releases on, upon, from or into any real property in the vicinity
of any of the Real Estate which, through soil or groundwater contamination, may
have come to be located on, and which would have a Material Adverse Effect; and
(v) in addition, any Hazardous Substances that have been generated on any
of the Real Estate have been transported offsite only by carriers having an
identification number issued by the EPA (or the equivalent thereof in any
foreign jurisdiction), treated or disposed of only by treatment or disposal
facilities maintaining valid permits as required under applicable Environmental
Laws, which transporters and facilities have been and are operating in
compliance with such permits and applicable Environmental Laws; and


 


(d)                                 none of the Borrower and its Subsidiaries is
subject to any applicable Environmental Law requiring the performance of
Hazardous Substances site assessments, or the removal or remediation of
Hazardous Substances, or the giving of notice to any Governmental Authority or
the recording or delivery to other Persons of an environmental disclosure
document or statement by virtue of the transactions set forth herein and
contemplated hereby, or as a condition to the effectiveness of any other
transactions contemplated hereby.


 


6.19.                     Subsidiaries, etc.  As
of the Closing Date, the only Subsidiaries of the Borrower are as set forth on Schedule
6.19.  Neither the Borrower nor
any Subsidiary of the Borrower is engaged in any joint venture or partnership
with any other Person.  The 


 


40

















 


jurisdiction of
incorporation/formation and principal place of business of each Subsidiary of
the Borrower is listed on Schedule  6.19 hereto.


 


6.20.                     Distribution Restrictions. 
Except as set forth in Massachusetts General Laws, Chapter 175, Section 206C(r) (or
any successor statute) and for any other restrictions under applicable law,
there are no restrictions on the payment of Distributions (without prior
regulatory approval) by any of the Insurance Subsidiaries to the Borrower.


 


6.21.                     Insurance Regulatory Matters.  No
license of any Insurance Subsidiary, the loss of which would reasonably be expected
to have a Material Adverse Effect, is the subject of a proceeding for
suspension or revocation.  To the
knowledge of the Borrower, there is no sustainable basis for such suspension or
revocation, and no such suspension or revocation has been threatened by any
Governmental Authority.


 


6.22.                     Reinsurance. 
There have been no material changes to the reinsurance and coinsurance
arrangements of any Insurance Subsidiary since October 16, 2001.


 


6.23.                     Disclosure.  No
representation or warranty made by the Borrower or any Subsidiary in this
Credit Agreement or any of the other Loan Documents contains any untrue
statement of a material fact or omits to state a material fact necessary in
order to make the statements herein or therein not misleading in light of the
circumstances in which they are made. 
There is no fact known to the Borrower or any of its Subsidiaries which
has a Material Adverse Effect, or which is reasonably likely in the future to
have a Material Adverse Effect, exclusive of effects resulting from changes in
general economic conditions, legal standards or regulatory conditions.


 


7.                                      AFFIRMATIVE
COVENANTS.


 


The Borrower
covenants and agrees that, so long as any Loan or Note is outstanding or any
Lender has any obligation to make any Loans:


 


7.1.                            Punctual Payment.  The
Borrower will duly and punctually pay or cause to be paid the principal and
interest on the Loans, the Fees and all other amounts provided for in this
Credit Agreement and the other Loan Documents to which the Borrower or any of
its Subsidiaries is a party, all in accordance with the terms of this Credit
Agreement and such other Loan Documents.


 


7.2.                            Maintenance of Office.  The
Borrower will maintain its chief executive office at 20 Custom House Street,
Boston, Massachusetts 02110 or at such other place in the United States of
America as such Person shall designate upon written notice to the
Administrative Agent, where notices, presentations and demands to or upon such
Person in respect of the Loan Documents to which such Person is a party may be
given or made.


 


7.3.                            Records and Accounts.  The
Borrower will, and the Borrower will cause its Subsidiaries to, (a) keep,
and cause each of its Subsidiaries to keep, true and accurate records and books
of account in which full, true and correct entries will be made in accordance
with GAAP and SAP, as applicable, (b) maintain adequate accounts and
reserves for all taxes (including income taxes), depreciation, depletion,
obsolescence and 


 


41

















 


amortization of its
properties and the properties of its Subsidiaries, contingencies, and other
reserves, and (c) at all times engage PricewaterhouseCoopers LLP or other
independent certified public accountants reasonably satisfactory to the
Administrative Agent as the independent certified public accountants of the
Borrower and its Subsidiaries and will not permit more than sixty (60) days to
elapse between the cessation of such firm’s (or any successor firm’s)
engagement as the independent certified public accountants of the Borrower and
its Subsidiaries and the appointment in such capacity of a successor firm as
shall be reasonably satisfactory to the Administrative Agent.


 


7.4.                            Financial Statements,
Certificates and Information.  The Borrower will deliver to
the Administrative Agent:


 


(a)                                  (i)  as soon as practicable, but in any
event not later than one hundred twenty (120) days after the end of each fiscal
year of the Borrower, (A) the consolidated balance sheet of the Borrower
and its Subsidiaries and the consolidating balance sheet of the Borrower, each
as at the end of such year, and the related consolidated statement of income
and consolidated statement of cash flow and consolidating statement of income
and consolidating statement of cash flow for such year, each setting forth in
comparative form the figures for the previous fiscal year and all such
consolidated and consolidating statements to be in reasonable detail, prepared
in accordance with GAAP, and solely in respect of the consolidated statements,
certified, without qualification and without an expression of uncertainty as to
the ability of the Borrower or any of its Subsidiaries to continue as going
concerns, and in respect of the consolidating financial statements, certified
consistent with past practices, by PricewaterhouseCoopers LLP or by other
independent certified public accountants reasonably satisfactory to the
Administrative Agent, and (B) the Statutory Annual Financial Statements of
each Insurance Subsidiary for such fiscal year, in each case to be delivered to
the Administrative Agent simultaneously with the delivery of such financial
statements to the Insurance Regulatory Authorities, and (ii) simultaneously
with delivery to the Insurance Regulatory Authorities and in any event not
later than one hundred eighty (180) days after the end of each fiscal year of
the Borrower, the audited Statutory Annual Financial Statements of each
Insurance Subsidiary for such fiscal year, together with an actuarial opinion
and management discussion and analysis for each such Insurance Subsidiary;


 


(b)                                 as soon as practicable, but in any event not
later than sixty (60) days after the end of the first three fiscal quarters of
each fiscal year of the Borrower (i) copies of (A) the unaudited
consolidated balance sheet of the Borrower and its Subsidiaries and the
unaudited consolidating balance sheet of the Borrower, each as at the end of
such quarter, and the related consolidated statement of income and consolidated
statement of cash flow and consolidating statement of income and consolidating
statement of cash flow for the portion of the Borrower’s fiscal year then
elapsed, all in reasonable detail and prepared in accordance with GAAP (except
for provisions for footnotes, reserves and accruals and subject to year-end adjustments),
and (B) the Statutory Quarterly Financial Statements of each Insurance
Subsidiary for such fiscal quarter, together with a certification by the
principal financial or accounting officer of the Borrower that the information
contained in such financial statements fairly presents the financial position
of the Borrower and its Subsidiaries on the date thereof (except for provisions
for footnotes, reserves and 


 


42

















 


accruals and subject to
year-end adjustments), in each case to be delivered to the Administrative Agent
simultaneously with the delivery of such financial statements to the Insurance
Regulatory Authorities, and (ii) a summary of all Portfolio Investments,
together with valuations for such Portfolio Investments as of the end of such
fiscal quarter;


 


(c)                                  simultaneously with the delivery of the
financial statements referred to in subsections (a) and (b) above, (i) a
statement certified by the principal financial or accounting officer of the
Borrower in substantially the form of Exhibit C hereto (a “Compliance
Certificate”) and setting forth in reasonable detail computations
evidencing compliance with the covenants contained in §9 as of the end of the
period then ended and (if applicable) reconciliations to reflect changes in
GAAP since the Balance Sheet Date, and (ii) a summary of all material
changes to reinsurance coverage during the period covered by such financial
statements;


 


(d)                                 within ten (10) days of the filing or
mailing thereof, copies of each annual report, proxy or financial statement or
other report or communication sent to the stockholders of the Borrower, and
copies of all annual, regular, periodic and special reports and registration
statements which the Borrower may file or be required to file with Securities
and Exchange Commission or sent to the stockholders of Borrower;


 


(e)                                  not later than sixty (60) days after the
beginning of each fiscal year of the Borrower, the annual budget of the
Borrower and its Subsidiaries;


 


(f)                                    not later than one hundred twenty (120) days
after the beginning of each fiscal year of the Borrower, an actuarial opinion
(accompanied by reasonably sufficient detail) as to the adequacy of the
Reserves of Safety Insurance, and, if any other Insurance Subsidiary represents
twenty percent (20%) or more of the Aggregate Statutory Surplus, of such
Insurance Subsidiary, as at the last day of such fiscal year.  Each such opinion shall be prepared and
delivered by PricewaterhouseCoopers LLP or such other actuary of recognized
national standing chosen by the Borrower and reasonably acceptable to the
Administrative Agent.  Each such opinion
shall be in scope and detail reasonably satisfactory to the Administrative
Agent;


 


(g)                                 within ten (10) days of the receipt
thereof, copies of all accountants’ management letters; and


 


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


 


7.5.                            Notices.


 


7.5.1.  Default. 
Promptly, and in any event within five (5) Business Days after
becoming aware of the occurrence of any Default or Event of Default, the
Borrower will notify the Administrative Agent in writing, together with a
reasonably detailed description thereof. 
If any Person shall give any notice or take any other action in respect
of a claimed default (whether or not constituting an Event of Default) under
this Credit 


 


43

















 


Agreement or any other note, evidence of
indebtedness, indenture or other obligation to which or with respect to which
the Borrower or any of its Subsidiaries is a party or obligor, whether as
principal, guarantor, surety or otherwise, the Borrower shall forthwith give
written notice thereof to the Administrative Agent, describing the notice or
action and the nature of the claimed default.


 


7.5.2.  Environmental Events.  The
Borrower will promptly give notice to the Administrative Agent (a) of any
material violation of any Environmental Law that the Borrower or any of its
Subsidiaries reports in writing or is reportable by such Person in writing (or
for which any written report supplemental to any oral report is made) to any
Governmental Authority and (b) upon becoming aware thereof, of any
inquiry, proceeding, investigation, or other action, including a notice from
any agency of potential environmental liability, of any Governmental Authority
that could have a Material Adverse Effect.


 


7.5.3.  Notification of Claim against Collateral.  The
Borrower will, promptly upon becoming aware thereof, notify the Administrative
Agent in writing of any setoff, claims (including, with respect to the Real
Estate, material environmental claims), withholdings or other defenses to which
any of the Collateral, or the Administrative Agent’s rights with respect to the
Collateral, are subject.


 


7.5.4.  Notice of Litigation and Judgments. 
Except for litigation and proceedings asserted by insureds in the
ordinary course of business against any Insurance Subsidiary’s business, the Borrower
will, and will cause each of its Subsidiaries to, give notice to the
Administrative Agent in writing within ten (10) Business Days of becoming
aware of any litigation or proceedings threatened in writing or any pending
litigation and proceedings affecting the Borrower or any of its Subsidiaries or
to which the Borrower or any of its Subsidiaries is or becomes a party
involving an uninsured claim against the Borrower or any of its Subsidiaries
that could reasonably be expected to have a Material Adverse Effect and stating
the nature and status of such litigation or proceedings.  The Borrower will, and will cause each of its
Subsidiaries to, give notice to the Administrative Agent, in writing, in form
and detail reasonably satisfactory to the Administrative Agent, within ten (10) Business
Days of any judgment not covered by insurance, final or otherwise, against the
Borrower or any of its Subsidiaries in an amount in excess of $5,000,000.


 


7.5.5.  Notice of Change in Rating.  The
Borrower will, promptly upon becoming aware thereof, notify the Administrative
Agent in writing of any change in the rating (as rated by A.M. Best
Company) of any Insurance Subsidiary.


 


7.5.6.  Notice of Material Adverse Effect. 
Promptly, and in any event within five (5) Business Days after
becoming aware of anything which would reasonably be expected to have a
Material Adverse Effect, the Borrower will notify the Administrative Agent in
writing, together with a reasonably detailed description thereof.


 


7.6.                            Legal Existence; Maintenance of
Properties.  The Borrower will do or cause to be done all
things necessary to preserve and keep in full force and effect its legal 


 


44

















 


existence, rights and
franchises and those of its Subsidiaries except as permitted by §8.5.1 hereof
or the dissolution of any Subsidiary of the Borrower whose operation has been
discontinued if such dissolution is, in the judgment of the Borrower, desirable
in the conduct of its business and would not reasonably be expected to have a
Material Adverse Effect.  The Borrower
will not, and will not cause or permit any of its Subsidiaries to, convert to a
limited liability company or a limited liability partnership.  The Borrower (a) will cause all of its
properties and those of its Subsidiaries used or useful in the conduct of its
business or the business of its Subsidiaries to be maintained and kept in good
condition, repair and working order and supplied with all necessary equipment, (b) will
cause to be made all necessary repairs, renewals, replacements, betterments and
improvements thereof, all as in the judgment of the Borrower may be necessary
so that the business carried on in connection therewith may be properly and
advantageously conducted at all times, and (c) will, and will cause each
of its Subsidiaries to, continue to engage primarily in the businesses now
conducted by them and in related businesses; provided  that
nothing in this §7.6 shall prevent the Borrower from discontinuing the
operation and maintenance of any of its properties or any of those of its
Subsidiaries if such discontinuance is, in the judgment of the Borrower,
desirable in the conduct of its or their business and that do not in the
aggregate have a Material Adverse Effect.


 


7.7.                            Insurance; Reinsurance.  (a) 
The Borrower will, and will cause each of its Subsidiaries to, maintain with
financially sound and reputable insurers insurance with respect to its
properties and business against such casualties and contingencies as shall be
in accordance with the general practices of businesses engaged in similar
activities in similar geographic areas and in amounts, containing such terms,
in such forms and for such periods as may be reasonable and prudent and in
accordance with the terms of the Security Agreements.  The Borrower and each of its Subsidiaries
shall maintain at all times reinsurance coverage reasonably satisfactory to the
Administrative Agent and will provide evidence of such reinsurance coverage at
the request of the Administrative Agent.


 


(b)                                 Any Insurance Subsidiary may enter into any
reinsurance agreement or retrocession agreement in the ordinary course of
business in accordance with its normal underwriting, indemnity and retention
policies, provided, however, that no Insurance Subsidiary shall
enter into any loss portfolio transfer or any surplus relief transaction
(within the meanings prescribed by SAP) through assumption, reinsurance,
cancellation and rewriting of insurance business or otherwise, if after giving
effect thereto, the aggregate segregated surplus or enhancement to surplus of
all Insurance Subsidiaries under SAP resulting from all such transfers entered
into by all Insurance Subsidiaries after the date hereof would exceed
$2,500,000.


 


7.8.                            Taxes.  The
Borrower will, and will cause each of its Subsidiaries to, duly pay and
discharge, or cause to be paid and discharged, before the same shall become
overdue, all taxes, assessments and other governmental charges imposed upon it
and its Real Estate, sales and activities, or any part thereof, or upon the
income or profits therefrom, as well as all claims for labor, materials, or
supplies that if unpaid might by law become a Lien or charge upon any of its
property; provided  that any such tax, assessment, charge, levy or
claim need not be paid if the validity or amount thereof shall 


 


45

















 


currently be contested in
good faith by appropriate proceedings and if the Borrower or such Subsidiary
shall have set aside on its books adequate reserves with respect thereto; and provided
further that the Borrower and each Subsidiary of the Borrower will pay
all such taxes, assessments, charges, levies or claims forthwith upon the
commencement of proceedings to foreclose any Lien that may have attached as
security therefor.


 


7.9.                            Inspection of Properties and
Books, etc.


 


7.9.1.  General.  The
Borrower shall permit the Lenders, through the Administrative Agent or any  designated representative of the
Administrative Agent, to visit and inspect any of the properties of the
Borrower and of its Subsidiaries, to examine the books of account of the
Borrower and its Subsidiaries (and to make copies thereof and extracts
therefrom), and to discuss the affairs, finances and accounts of the Borrower
and its Subsidiaries with, and to be advised as to the same by, its and their
officers, and to conduct examinations and verifications (whether by internal
commercial finance examiners or independent auditors) of assets, all at such
reasonable times and intervals as the Administrative Agent or any Lender may
reasonably request, provided, however that so long as no Event of
Default shall have occurred or be continuing, no more than $30,000 in the
aggregate per annum of the expenses relating to such examinations and
verifications shall be at the expense of the Borrower.


 


7.9.2.  Appraisals.  If
an Event of Default shall have occurred and be continuing, upon the request of
the Administrative Agent, the Borrower will obtain and deliver to the
Administrative Agent appraisal reports in form and substance and from
appraisers reasonably satisfactory to the Administrative Agent, stating the
then current business value of each of the Borrower and its Subsidiaries.  All such appraisals shall be conducted and
made at the expense of the Borrower.


 


7.9.3.  Communications with Accountants.  The
Borrower authorizes the Administrative Agent and, if accompanied by the
Administrative Agent, the Lenders to communicate directly with the Borrower’s
independent certified public accountants and authorizes such accountants to
disclose to the Administrative Agent and the Lenders any and all financial
statements and other supporting financial documents and schedules including
copies of any management letter with respect to the business, financial condition
and other affairs of the Borrower or any of its Subsidiaries.  At the request of the Administrative Agent,
the Borrower shall deliver a letter addressed to such accountants instructing
them to comply with the provisions of this §7.9.3.


 


7.10.                     Compliance with Laws, Contracts,
Licenses, and Permits.  The Borrower will, and will cause each of its
Subsidiaries to, comply with (a) the applicable laws and regulations
wherever its business is conducted, including all Environmental Laws, (b) the
provisions of its Governing Documents, (c) all agreements and instruments
by which it or any of its properties may be bound and (d) all applicable
decrees, orders, and judgments, in each case, to the extent that the failure to
so comply would not reasonably be expected to have a Material Adverse
Effect.  If any authorization, consent,
approval, permit or license from any officer, agency or instrumentality of any
government (including, without limitation, any Insurance Regulatory Authority)
shall 


 


46

















 


become necessary or required
in order that the Borrower or any of its Subsidiaries may fulfill any of its
obligations hereunder or any of the other Loan Documents to which the Borrower
or such Subsidiary is a party, the Borrower will, or (as the case may be) will
cause such Subsidiary to, immediately take or cause to be taken all reasonable
steps within the power of such Person to obtain such authorization, consent,
approval, permit or license and furnish the Administrative Agent and the
Lenders with evidence thereof.


 


7.11.                     Employee Benefit Plans.  The
Borrower will (a) promptly upon filing the same with the Department of
Labor or Internal Revenue Service upon request of the Administrative Agent,
furnish to the Administrative Agent a copy of the most recent actuarial
statement required to be submitted under §103(d) of ERISA and Annual
Report, Form 5500, with all required attachments, in respect of each
Guaranteed Pension Plan, and (b) promptly upon receipt or dispatch,
furnish to the Administrative Agent any notice, report or demand sent or
received in respect of a Guaranteed Pension Plan under §§302, 4041, 4042, 4043,
4063, 4066 and 4068 of ERISA, or in respect of a Multiemployer Plan, under
§§4041A, 4202, 4219, 4242, or 4245 of ERISA.


 


7.12.                     Use of Proceeds.  The
Borrower will use the proceeds of the Loans solely for the purposes set forth
in §6.17.1.


 


7.13.                     Insurance Regulatory Filings;
Examination Reports.


 


(a)                                  The Borrower will cause each of its Insurance
Subsidiaries to furnish to the Administrative Agent promptly (i) each
material registration, filing or submission made by or on behalf of any such
Insurance Subsidiary with any Insurance Regulatory Authority, (ii) each
material examination report or other similar material report submitted to any
such Insurance Subsidiary by any Insurance Regulatory Authority, (iii) each
notice of any material violation by the Borrower or any of its Subsidiaries of,
or any material deficiency of the Borrower or any of its Subsidiaries under,
any applicable laws relating to insurance companies or to persons controlling
insurance companies, and (iv) any other material notice received by the
Borrower or any of its Subsidiaries from any Insurance Regulatory Authority.


 


(b)                                 The Borrower will cause each of its Insurance
Subsidiaries to furnish to the Administrative Agent all material information
which the Administrative Agent may from time to time request with respect to
the nature or status of any material deficiencies or violations reflected on
any such examination report or other similar report or notice furnished to the
Administrative Agent pursuant to §7.13(a) hereof.


 


(c)                                  The Borrower will cause each Insurance
Subsidiary of the Borrower to establish and maintain on its books Reserves
which shall at all times be adequate, under Statutory Accounting Practices, to
cover the total amount of all of its reasonably anticipated liabilities under
all issued and outstanding policies under which it has or may have any
liability.  The Borrower will also cause
each Insurance Subsidiary of the Borrower at all times to own assets qualifying
as reserve assets under applicable laws in an aggregate amount at least equal
to all of its Reserves.


 


47
















 


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


 


8.                                      CERTAIN
NEGATIVE COVENANTS.


 


The Borrower
covenants and agrees that, so long as any Loan or Note is outstanding or any
Lender has any obligation to make any Loans:


 


8.1.                            Restrictions on Indebtedness.  The
Borrower will not, nor will the Borrower permit any of its Subsidiaries to,
create, incur, assume, guarantee or be or remain liable, contingently or
otherwise, with respect to any Indebtedness other than:


 


(a)                                  Indebtedness to the Lenders and the
Administrative Agent arising under any of the Loan Documents;


 


(b)                                 endorsements for collection, deposit or
negotiation and warranties of products or services, in each case incurred in
the ordinary course of business;


 


(c)                                  Indebtedness incurred in connection with the
acquisition after the date hereof of any real or personal property by the
Borrower or such Subsidiary or under any Capitalized Lease, provided  that
the aggregate principal amount of such Indebtedness of the Borrower and its
Subsidiaries shall not exceed the aggregate amount of $10,000,000 at any one
time;


 


(d)                                 Indebtedness in respect of Interest Rate
Agreements;


 


(e)                                  Indebtedness existing on the date hereof and
listed and described on Schedule  8.1 hereto;


 


(f)                                    Indebtedness of the Borrower under the Tax
Sharing Agreement;


 


(g)                                 Indebtedness in respect of the Distributions
permitted by §8.4;


 


(h)                                 Indebtedness of the Borrower or any of its
Subsidiaries in respect of Incentive Arrangements;


 


(i)                                     in the case of any Insurance Subsidiary,
reserves for losses and loss adjustment expenses, reserves for unearned
premiums, reinsurance balances, funds withheld, agents’ balances payable,
liabilities for retrospective rate adjustments, liabilities for final premium
adjustments and contingent commissions payable, incurred or assumed by such
Insurance Subsidiary in the ordinary course of business;


 


(j)                                     Indebtedness in respect of taxes,
assessments, governmental charges or levies and claims for labor, worker’s
compensation, materials and supplies to the extent 


 


48

















 


that payment therefor shall
not at the time be required to be made in accordance with the provisions of
§7.8;


 


(k)                                  Indebtedness in respect of judgments or
awards that have been in force for less than the applicable period for taking
an appeal so long as execution is not levied thereunder or in respect of which
the Borrower or such Subsidiary shall at the time in good faith be prosecuting
an appeal or proceedings for review and in respect of which a stay of execution
shall have been obtained pending such appeal or review;


 


(l)                                     Indebtedness in respect of performance,
surety, statutory, insurance, appeal or similar bonds obtained in the ordinary
course of business;


 


(m)                               Indebtedness of the Borrower or any of its
Subsidiaries incurred to refinance or replace Indebtedness of such Person
otherwise permitted under this §8.1, provided, that (i) the
principal amount (or committed principal amount) of such refinancing
Indebtedness shall not exceed the outstanding principal amount (or committed
principal amount) of the Indebtedness being refinanced, (ii) the terms of
such refinancing Indebtedness, taken as a whole, are not more onerous to the
Borrower or such Subsidiary, as applicable, than the terms of the Indebtedness
being refinanced, and (iii) the Administrative Agent shall have consented
to the incurrence of such refinancing Indebtedness, such consent not to be
unreasonably withheld;


 


(n)                                 (i) other unsecured Indebtedness, and (ii) other
Indebtedness (including, without limitation, the assumption or issuance of
unsecured seller paper) existing at the time a Person is merged into or
consolidated with the Borrower or any Subsidiary of the Borrower or becomes a
wholly-owned Subsidiary of the Borrower in compliance with §8.5.1; provided
that such Indebtedness (other than the assumption or issuance of
unsecured seller paper) was not created in contemplation of such merger or
consolidation or acquisition; and provided  further that
Indebtedness permitted under this paragraph (n)(i) and (ii) shall not
exceed $10,000,000 in the aggregate in principal amount outstanding;


 


(o)                                 Indebtedness of the Borrower or any
Subsidiary Guarantor in respect of intercompany loans, advances, obligations or
similar transfers evidenced by an intercompany note among the Borrower and the
Subsidiary Guarantors, provided  that such intercompany notes are
pledged and delivered by the Borrower or such Subsidiary Guarantor to the Administrative
Agent for the benefit of the Administrative Agent and the Lenders as collateral
security for the Obligations; and


 


(p)                                 Indebtedness of any Insurance Subsidiary in
connection with Investments in the ordinary course of business made in
accordance with the Safety Insurance Investment Policy.


 


8.2.                            Restrictions on Liens.


 


8.2.1.  Permitted Liens.  The
Borrower will not, nor will the Borrower permit any of its Subsidiaries to, (a) create
or incur or suffer to be created or incurred or to exist any Lien upon any of
its property or assets of any character whether now owned 


 


49

















 


or hereafter acquired, or upon the income or
profits therefrom; (b) transfer any of such property or assets or the
income or profits therefrom for the purpose of subjecting the same to the
payment of Indebtedness or performance of any other obligation in priority to
payment of its general creditors; (c) acquire, or agree or have an option
to acquire, any property or assets upon conditional sale or other title
retention or purchase money security agreement, device or arrangement; (d) suffer
to exist for a period of more than thirty (30) days after the same shall have
been incurred any Indebtedness or claim or demand against it that if unpaid
might by law or upon bankruptcy or insolvency, or otherwise, be given any
priority whatsoever over its general creditors; or (e) sell, assign,
pledge or otherwise transfer any “receivables” as defined in clause (g) of
the definition of the term “Indebtedness,” with or without recourse; provided
that the Borrower or any of its Subsidiaries may create or incur or
suffer to be created or incurred or to exist:


 


(i)                                     Liens in favor of the Borrower on all or part
of the assets of Subsidiaries of the Borrower securing Indebtedness owing by
Subsidiaries of the Borrower to the Borrower;


 


(ii)                                  Liens to secure taxes, assessments and other
government charges in respect of obligations not overdue or being contested in
good faith or Liens on properties to secure claims for labor, materials or
supplies in respect of obligations not overdue or being contested in good
faith;


 


(iii)                               deposits or pledges made in connection with,
or to secure payment of, workmen’s compensation, unemployment insurance, old
age pensions or other social security obligations;


 


(iv)                              Liens on properties in respect of judgments
or awards that have been in force for less than the applicable period for
taking an appeal so long as execution is not levied thereunder or in respect of
which the Borrower or such Subsidiary shall at the time in good faith be
prosecuting an appeal or proceedings for review and in respect of which a stay
of execution shall have been obtained pending such appeal or review;


 


(v)                                 Liens of carriers, warehousemen, mechanics
and materialmen, and other like Liens on properties, in existence less than 120
days from the date of creation thereof in respect of obligations not overdue or
being contested in good faith;


 


(vi)                              encumbrances on Real Estate consisting of
easements, rights of way, zoning restrictions, restrictions on the use of real
property and defects and irregularities in the title thereto, landlord’s or
lessor’s liens and other minor Liens, provided that none of such Liens (A) interferes
materially with the use of the property affected in the ordinary conduct of the
business of the Borrower and its Subsidiaries, and (B) individually or in
the aggregate have a Material Adverse Effect;


 


(vii)                           Liens existing on the date hereof and listed
on Schedule  8.2 hereto;


 


50

















 


(viii)                        (i) Liens to secure Capitalized Lease
obligations of the type and amount permitted by §8.1(c), so long as such Liens
cover only the property subject to such Capitalized Leases, and (ii) purchase
money security interests in or purchase money mortgages on real or personal
property acquired after the date hereof to secure purchase money Indebtedness
of the type and amount permitted by §8.1(c), incurred in connection with the
acquisition of such property, which security interests or mortgages cover only
the real or personal property so acquired to the extent of the amount borrowed;


 


(ix)                                Liens in favor of the Administrative Agent
for the benefit of the Lenders and the Administrative Agent under the Loan
Documents;


 


(x)                                   Liens in favor of the counterparties under
any Interest Rate Agreements not to exceed $10,000,000 in the aggregate;


 


(xi)                                purchase money liens on personal property or
mortgage liens on real property of a Person existing at the time such Person is
merged into or consolidated with the Borrower or any Subsidiary of the Borrower
or becomes a wholly-owned Subsidiary of the Borrower in compliance with §8.5.1;
provided that such Liens were not created in contemplation of such
merger, consolidation or acquisition and do not extend to any assets other than
those subject to such Liens and to the extent of the amount borrowed prior to
such merger, consolidation or acquisition, and secure Indebtedness permitted by
§8.1(n)(ii) (other than the assumption of seller paper);


 


(xii)                             the replacement, extension or renewal
(without increase in amount) of any Lien permitted by clauses (vii) or (viii) of
this §8.2.1 upon or in the same property theretofore subject thereto, so long
as such Liens do not extend to cover any assets other than those being
refinanced.


 


8.2.2.  Restrictions on Negative Pledges and
Upstream Limitations.  The Borrower will not, nor will the Borrower
permit any of its Subsidiaries to (a) enter into or permit to exist any
arrangement or agreement (excluding this Credit Agreement and the other Loan
Documents) which directly or indirectly prohibits the Borrower or any of its
Subsidiaries from creating, assuming or incurring any Lien upon its properties,
revenues or assets or those of any of its Subsidiaries whether now owned or
hereafter acquired (except for purchase money security interests or liens on
assets securing such purchase money security interests and Indebtedness assumed
pursuant to Permitted Acquisitions to the extent permitted under §8.1
hereunder), or (b) enter into any agreement, contract or arrangement
(excluding this Credit Agreement and the other Loan Documents) restricting the
ability of any Subsidiary of the Borrower to pay or make Distributions in cash
or kind to the Borrower, to make loans, advances or other payments of
whatsoever nature to the Borrower, or to make transfers or distributions of all
or any part of its assets to the Borrower; in each case other than (i) restrictions
on specific assets which assets are the subject of purchase money security
interests to the extent permitted under §8.2.1, (ii) customary
anti-assignment provisions contained in leases and licensing 


 


51

















 


agreements entered into by the Borrower or
such Subsidiary in the ordinary course of its business, and (iii) restrictions
in connection with Permitted Acquisitions.


 


8.3.                            Restrictions on Investments.  The
Borrower will not, nor will the Borrower permit any of its Subsidiaries to,
make or permit to exist or to remain outstanding any Investment except:


 


(a)                                  marketable
direct or guaranteed obligations of the United States of America that mature
within one (1) year from the date of purchase;


 


(b)                                 demand
deposits, certificates of deposit, bank acceptances and time deposits of United
States banks having total assets in excess of $500,000,000;


 


(c)                                  securities
commonly known as “commercial paper” issued by a corporation organized and
existing under the laws of the United States of America or any state thereof
that at the time of purchase have been rated and the ratings for which are not
less than “P-1” if rated by Moody’s, and not less than “A-1” if rated by
S&P;


 


(d)                                 repurchase
agreements secured by one or more of the foregoing;


 


(e)                                  Investments
existing on the date hereof and listed on Schedule
8.3 hereto;


 


(f)                                    Investments
consisting of the Subsidiary Guaranty or Investments by the Borrower in
Subsidiaries of the Borrower existing on the Closing Date;


 


(g)                                 Investments
by the Borrower or any of its Subsidiaries made in connection with any
Indebtedness permitted under §8.1(c) hereof;


 


(h)                                 Investments
by the Borrower or any Subsidiary in connection with Permitted Acquisitions;


 


(i)                                     Investments
consisting of promissory notes or other instruments received as proceeds of
asset dispositions permitted by §8.5.2;


 


(j)                                     Investments
by the Borrower or any of its Subsidiaries in Cash Equivalents;


 


(k)                                  Investments
by any Insurance Subsidiary pursuant to and in accordance with the Safety
Insurance Investment Policy, as in effect on the Closing Date, or as amended,
modified or supplemented in compliance with the provisions of §8.12 hereof; and


 


(l)                                     any
other Investment not otherwise permitted by this §8.3, so long as the aggregate
amount of such other Investments made by the Borrower and its Subsidiaries
while any Commitment or Obligations are outstanding does not exceed
$10,000,000.


 


provided,
however, that, with the exception of demand deposits referred to in §8.3(b) and
Investments permitted by §8.3(g) and (k), all such Investments by the
Borrower or any 


 


52

















 


Subsidiary
Guarantor will be considered Investments permitted by this §9.3 only if all
actions have been taken to the reasonable satisfaction of the Administrative
Agent to provide to the Administrative Agent, for the benefit of the Lenders
and the Administrative Agent, a first priority perfected security interest in
all of such Investments free of all Liens other than Permitted Liens.


 


8.4.                            Restricted Payments.  The
Borrower will not, nor will the Borrower permit any of its Subsidiaries to,
make any Restricted Payments other than dividends or payments:


 


(a)                                  reserved;


 


(b)                                 by any Subsidiary of the Borrower to the
Borrower, provided that the Borrower shall cause each Insurance
Subsidiary, to the extent not otherwise prohibited by any applicable laws or
regulations or otherwise paid, to pay dividends to the Borrower in an amount
sufficient to satisfy the payment requirements hereunder;


 


(c)                                  by the Borrower, so long as no Default or
Event of Default under §§12.1(a), (b) or (c) (only with regard to a
failure to comply with §9) has occurred and is continuing (i) to
repurchase shares of its common stock for cash from employees or former
employees; provided, however, that the aggregate amount of all
payments made in cash during the term of this Credit Agreement pursuant to this
§8.4(c)(i) shall not exceed $2,000,000, and (ii) to permit the
payment of Incentive Arrangements; and


 


(d)                                 to the extent not otherwise permitted by the
foregoing §§8.4(a) through (c), any Restricted Payment by the Borrower so
long as (i) no Default or Event of Default shall have occurred and be
continuing at the time such Restricted Payment is made or shall arise from such
Restricted Payment and (ii) such Restricted Payment, together with all
other Restricted Payments made during a given fiscal year, shall not, in the
aggregate, exceed fifty percent (50%) of the net income of the Borrower and its
Subsidiaries for the immediately preceding fiscal year as reported on the
financial statements delivered pursuant to §7.4(a).


 


8.5.                            Merger, Consolidation and
Disposition of Assets.


 


8.5.1.  Mergers and Acquisitions.  The
Borrower will not, nor will the Borrower permit any of its Subsidiaries to,
become a party to any merger, amalgamation or consolidation, or agree to or
effect any asset acquisition or stock acquisition (other than the acquisition
of assets in the ordinary course of business consistent with past practices)
except so long as no Default or Event of Default has occurred or is continuing,
or would exist after giving effect thereto,


 


(a)                                  the merger or consolidation of one or more of
the Subsidiaries of the Borrower with and into the Borrower, or the merger or
consolidation of two or more Subsidiaries of the Borrower; and


 


(b)                                 other asset or stock acquisitions of Persons
predominantly in the business of property and casualty insurance or other
businesses 


 


53

















 


already conducted by the
Borrower on the Closing Date (a “Permitted Acquisition”) where (i) the
Borrower has provided the Administrative Agent with five (5) Business Days
prior written notice of such Permitted Acquisition, which notice shall include
a reasonably detailed description of such Permitted Acquisition; (ii) such
Permitted Acquisition is non-hostile in nature; (iii) the Borrower or a
Subsidiary of the Borrower would be the surviving entity in such Permitted
Acquisition (iv) the business to be acquired operates within the United
States; (v) the business and assets to be acquired in such Permitted
Acquisition shall be acquired by the Borrower or such Subsidiary free and clear
of all liens (other than Permitted Liens) and all Indebtedness (other than
Permitted Indebtedness); (vi) no contingent obligations or liabilities
will be incurred or assumed in connection with such Permitted Acquisition which
would reasonably be expected to have a Material Adverse Effect; (vii) the
Borrower has provided the Administrative Agent with such other information as
has been reasonably requested by the Administrative Agent; (viii) the
Borrower has taken or caused to be taken all necessary actions to grant to the
Administrative Agent a first priority perfected lien in all assets and stock to
be acquired in connection with such Permitted Acquisition subject to applicable
law and provided that any acquired Person which would be an Insurance
Subsidiary shall not be required to grant a Lien on any assets other than
Non-Admitted Assets; (ix) the Borrower has demonstrated to the reasonable
satisfaction of the Administrative Agent, based on a pro forma Compliance
Certificate, compliance with §9 on a pro forma basis immediately prior to and
after giving effect to such Permitted Acquisition; (x) the aggregate
purchase price (including assumed debt and seller paper) for Permitted
Acquisitions does not exceed $10,000,000 for any particular Permitted
Acquisition individually, or $30,000,000 in the aggregate during the term of
this Credit Agreement and (xi) the Borrower has delivered to the Administrative
Agent a certificate of the chief financial officer of the Borrower to the
effect that (1) the Borrower will be solvent upon the consummation of the
Permitted Acquisition; (2) the pro forma Compliance Certificate fairly
presents the financial condition of the Borrower and its Subsidiaries as of the
date thereof and after giving effect to such Permitted Acquisition and (3) no
Default or Event of Default then exists or would result after giving effect to
the Permitted Acquisition.


 


In the event any new Subsidiary
is formed as a result of or in connection with any Permitted Acquisition,
simultaneously therewith, the Loan Documents shall be amended and/or
supplemented as necessary to make the terms and conditions of the Loan
Documents applicable to such Subsidiary. 
In the case of the Borrower forming or purchasing such Subsidiary, such
Subsidiary (other than any Insurance Subsidiary) shall become a Subsidiary
Guarantor hereunder, and shall grant to the Administrative Agent for the
benefit of the Lenders a perfected, first priority security interest in its
assets, in accordance with the terms of the Security Agreement and the other
Security Documents.


 


54

















 


8.5.2.  Disposition of Assets.  The
Borrower will not, nor will the Borrower permit any of its Subsidiaries to,
become a party to or agree to or effect any disposition of assets, other than (a) the
sale, lease, license or other disposition of assets in the ordinary course of
business consistent with past practices, (b) the disposition of Portfolio
Investments in the ordinary course of business, (c) the disposition of any
and all of its assets (upon voluntary liquidation or otherwise) to the Borrower
or any Subsidiary Guarantor, (d) the sale of property, plants and
equipment in an amount not to exceed $1,000,000 in the aggregate, and (e) the
sale or disposition of assets used in the operation of the business (other than
any sale of stock or the sale of all or substantially all of the assets of any
Subsidiary), the proceeds of which are reinvested in the Borrower or any
Subsidiary Guarantor within one hundred eighty (180) days of the receipt of
such proceeds).


 


8.6.                            Sale and Leaseback.  The
Borrower will not, nor will the Borrower permit any of its Subsidiaries to,
enter into any arrangement, directly or indirectly, whereby the Borrower or
such Subsidiary shall sell or transfer any property owned by it in order then
or thereafter to lease such property or lease other property that the Borrower
or any Subsidiary intends to use for substantially the same purpose as the
property being sold or transferred.


 


8.7.                            Compliance with Environmental
Laws.  The Borrower will not, nor will the Borrower
permit any of its Subsidiaries to, (a) use any of the Real Estate or any
portion thereof for the handling, processing, storage or disposal of Hazardous
Substances, (b) cause or permit to be located on any of the Real Estate
any underground tank or other underground storage receptacle for Hazardous
Substances, (c) generate any Hazardous Substances on any of the Real
Estate, (d) conduct any activity at any Real Estate or use any Real Estate
in any manner so as to cause a release (i.e. releasing, spilling, leaking,
pumping, pouring, emitting, emptying, discharging, injecting, escaping,
leaching, disposing or dumping) or threatened release of Hazardous Substances
on, upon or into the Real Estate or (e) otherwise conduct any activity at
any Real Estate or use any Real Estate in any manner that would violate any
Environmental Law or bring such Real Estate in violation of any Environmental
Law, in each case, to the extent that such violation could reasonably be
expected to have a Material Adverse Effect.


 


8.8.                            Employee Benefit Plans. 
Neither the Borrower nor any ERISA Affiliate will:


 


(a)                                  engage in any “prohibited transaction” within
the meaning of §406 of ERISA or §4975 of the Code which would reasonably be
expected to result in a material liability for the Borrower or any of its
Subsidiaries; or


 


(b)                                 permit any Guaranteed Pension Plan to incur
an “accumulated funding deficiency”, as such term is defined in §302 of ERISA,
whether or not such deficiency is or may be waived; or


 


(c)                                  fail to contribute to any Guaranteed Pension
Plan to an extent which, or terminate any Guaranteed Pension Plan in a manner
which, would reasonably be 


 


55

















 


expected to result in the
imposition of a lien or encumbrance on the assets of the Borrower or any of its
Subsidiaries pursuant to §302(f) or §4068 of ERISA; or


 


(d)                                 amend any Guaranteed Pension Plan in
circumstances requiring the posting of security pursuant to §307 of ERISA or
§401(a)(29) of the Code; or


 


(e)                                  permit or take any action which would result
in the aggregate benefit liabilities (with the meaning of §4001 of ERISA) of
all Guaranteed Pension Plans exceeding the value of the aggregate assets of
such Plans by more than $2,500,000, disregarding for this purpose the benefit
liabilities and assets of any such Plan with assets in excess of benefit
liabilities.


 


8.9.                            Business Activities; Non-Admitted
Assets.  The Borrower will not, and will not permit
any of its Subsidiaries to, engage directly or indirectly (whether through
Subsidiaries or otherwise) in any type of business other than the businesses
conducted or proposed to be conducted by them on the Closing Date and in
related businesses.  The Borrower will
not permit any Insurance Subsidiary to own any material amount of Non-Admitted
Assets.


 


8.10.                     Fiscal Year.  The
Borrower will not, nor will the Borrower permit any of its Subsidiaries to,
change the date of the end of its fiscal year from that set forth in §6.4.1.


 


8.11.                     Change in Terms of Capital Stock.  The
Borrower will not, nor will the Borrower permit any of its Subsidiaries to
effect or permit any change in or amendment to any document or instrument
pertaining to the terms of such Person’s capital stock unless such change or
amendment is of an immaterial or ministerial nature that would not have any
material adverse effect on the Administrative Agent’s or the Lenders’ rights or
interests under the Loan Documents or the Borrower’s Obligations under the Loan
Documents.


 


8.12.                     Modification of Documents.  The
Borrower will not consent to or agree to any amendment, supplement or other
modification to the Tax Sharing Agreement which affects, in a manner materially
adverse to the Borrower, the amount or timing of payments required to be made
by the Borrower thereunder, or if such amendment, supplement or modification
could reasonably be expected to materially adversely affect the Administrative
Agent’s or the Lenders’ rights or interests or materially impact the Borrower’s
abilities to fulfill its obligations under the Loan Documents.  The Borrower will not, nor will the Borrower
permit any Insurance Subsidiary to, modify, amend or supplement the Safety
Insurance Investment Policy in any material respect, except as may be required
by Insurance Regulatory Authorities from time to time, without the prior
written consent of the Administrative Agent, which consent will not be
unreasonably withheld or delayed.


 


8.13.                     Transactions with Affiliates. 
Except as set forth on Schedule 6.15
hereto, the Borrower will not, nor will the Borrower permit any of its
Subsidiaries to, engage in any transaction with any Affiliate (other than for
services as employees, 


 


56

















 


officers and directors),
including any contract, agreement or other arrangement providing for the
furnishing of services to or by, providing for rental of real or personal
property to or from, or otherwise requiring payments to or from any such
Affiliate or, to the knowledge of the Borrower, any corporation, partnership,
trust or other entity in which any such Affiliate has a substantial interest or
is an officer, director, trustee or partner, on terms more favorable to such
Person than would have been obtainable on an arm’s-length basis in the ordinary
course of business, provided, however, that nothing contained in
this §8.13 shall prohibit the Borrower from making payments otherwise permitted
by §8.4 hereof.


 


9.                                      FINANCIAL
COVENANTS.


 


The Borrower
covenants and agrees that, so long as any Loan or Note is outstanding or any
Lender has any obligation to make any Loans:


 


9.1.                            Risk Based Capital.  The
Borrower will not permit (a) the Risk Based Capital Ratio of Safety
Insurance to be less than 350% at any time, and (b) the Risk Based Capital
Ratio of Safety Indemnity to be less than 325% at any time.


 


9.2.                            Net Premiums to Statutory Surplus.  The
Borrower will not permit the ratio of (a) Net Premiums Written of
Insurance Subsidiaries as at the end of any Reference Period, to (b) the
Aggregate Statutory Surplus of the Insurance Subsidiaries for such Reference
Period to be greater than 3.00:1.00 at any time.


 


9.3.                            Minimum Statutory Surplus.  The
Borrower will not cause or permit the Statutory Surplus of Safety Insurance at
any time to be less than the sum of (a) $419,552,276, plus (b) (i) 80%
of positive Statutory Net Income of Safety Insurance (with no deduction for any
year in which Statutory Net Income is a negative number) for each fiscal
quarter ending after March 31, 2008  minus (ii) cumulative
Distributions paid to the Borrower on or after March 31, 2008, plus (c) cumulative
contributions to Statutory Surplus made by the Borrower from Loans or otherwise
on or after March 31, 2008.


 


10.                               CLOSING
CONDITIONS.


 


The
obligations of the Lenders to make the initial Loans shall be subject to the
satisfaction of the following conditions precedent on or prior to the Closing
Date:


 


10.1.                     Loan
Documents.  Each of the this
Agreement, the Omnibus Amendment and Reaffirmation Agreement and any other Loan
Documents shall have been duly executed and delivered by the respective parties
thereto, shall be in full force and effect and shall be in form and substance
reasonably satisfactory to each of the Lenders. 
Each Lender shall have received a fully executed copy of each such
document.


 


10.2.                     Certified Copies of Governing
Documents.  The Administrative Agent shall have received
from the Borrower copies, certified by a duly authorized officer of the
Borrower to be true and complete on the Closing Date, of the Governing
Documents for each of the Borrower and each of its Subsidiaries as in effect on
such date of certification.


 


57

















 


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


 


10.4.                     Incumbency Certificate.  The
Administrative Agent shall have received from the Borrower and each of its
Subsidiaries an incumbency certificate, dated as of the Closing Date, signed by
a duly authorized officer of such Person, and giving the name and bearing a
specimen signature of each individual who shall be authorized: (a) to
sign, in the name and on behalf of the Borrower and each such Subsidiary, each
of the Loan Documents to which the Borrower or such Subsidiary is or is to
become a party; (b) in the case of the Borrower, to make Loan Requests and
Conversion Requests; and (c) to give notices and to take other action on
its behalf under the Loan Documents.


 


10.5.                     Validity of Liens.  The
Security Documents shall be effective to create in favor of the Administrative
Agent a legal, valid and enforceable first (except for Permitted Liens entitled
to priority under applicable law) security interest in and Lien upon the
Collateral.  All filings, recordings,
deliveries of instruments and other actions necessary or desirable in the
opinion of the Administrative Agent to protect and preserve such security
interests shall have been duly effected. 
The Administrative Agent shall have received evidence thereof in form
and substance reasonably satisfactory to the Administrative Agent.


 


10.6.                     Perfection Certificates and UCC
Search Results.  The Administrative Agent shall have received
from the Borrower and each of the Subsidiaries a completed and fully executed
Perfection Certificate and the results of UCC, tax and judgment lien searches
(and the equivalent thereof in all applicable foreign jurisdictions) with
respect to the Collateral owned by the Borrower and the Subsidiary Guarantors,
indicating no Liens other than Permitted Liens and otherwise in form and
substance reasonably satisfactory to the Administrative Agent.


 


10.7.                     Certificates of Insurance.  The Administrative
Agent shall have received a certificate of insurance from an independent
insurance broker dated as of the Closing Date, identifying insurers, types of
insurance, insurance limits, and policy terms, and otherwise describing the
insurance obtained in accordance with the provisions of the Security
Agreements.


 


10.8.                     Solvency Certificate.  The
Administrative Agent shall have received an officer’s certificate of the
Borrower dated as of the Closing Date as to the solvency of the Borrower and
its Subsidiaries following the consummation of the transactions contemplated
herein and in form and substance reasonably satisfactory to the Lenders.


 


10.9.                     Opinion of Counsel.  The
Administrative Agent shall have received favorable legal opinions addressed to the
Lenders and the Administrative Agent, dated as of the Closing Date, in form and
substance reasonably satisfactory to the Lenders and the 


 


58

















 


Administrative Agent, from
Dewey & LeBoeuf LLP, counsel to the Borrower and its Subsidiaries.


 


10.10.              Payment of Fees.  The
Borrower shall have paid to the Administrative Agent the Closing Fee plus any
other fees and expenses required to be paid to the Administrative Agent
or the Lenders.


 


10.11.              No Material Adverse Change.  The
Administrative Agent shall be satisfied that there shall have occurred no
material adverse change in the business, operations, assets, properties,
financial condition or income of the Borrower and its Subsidiaries taken as a
whole since the Balance Sheet Date.


 


10.12.              No Litigation.  No
litigation, inquiry, injunction or restraining order shall be pending, entered
or threatened that, in the reasonable opinion of the Administrative Agent,
could reasonably be expected to have a material adverse effect on (i) the
transactions contemplated hereby, (ii) the business, assets, liabilities
(actual or contingent) operations, condition (financial or otherwise) of the
Borrower and its Subsidiaries, taken as a whole, (iii) the ability of the
Borrower or any of its Subsidiaries to perform their obligations under the Loan
Documents, (iv) the rights and remedies of the Administrative Agent and
the Lenders under the Loan Documents, or (v) the perfection or priority of
any security interests granted to the Administrative Agent under the Loan
Documents.


 


10.13.              Consents and Approvals.  The
Administrative Agent shall have received evidence that all material
governmental and third-party approvals necessary or advisable in connection
with the credit facilities contemplated hereby and the continuing operations of
the Borrower shall have been obtained and shall be in full force and effect,
and all applicable waiting periods shall have expired without any action being
taken or threatened by any competent authority that would restrain, prevent or
otherwise impose materially adverse conditions on the Borrower and its
Subsidiaries taken as a whole, or the credit facilities contemplated hereby.


 


10.14.              Rating.  The
Administrative Agent shall have received evidence that each Insurance
Subsidiary of the Borrower shall have received a rating of at least A- (as
rated by A.M. Best Company).


 


10.15.              Financial Tests.  On
the Closing Date, the Aggregate Statutory Surplus of the Insurance Subsidiaries
shall not be less than $500,000,000.


 


10.16.              Reinsurance.  The
Administrative Agent and the Lenders shall have received evidence that the
Borrower and its Subsidiaries maintain reinsurance coverage consistent with its
past practices.


 


10.17.              Proceedings and Documents.  All
proceedings in connection with the transactions contemplated by this Credit
Agreement, the other Loan Documents and all other documents incident thereto
shall be reasonably satisfactory in substance and in form to the Lenders and to
the Administrative Agent and the Administrative Agent’s Special Counsel, and
the Lenders, the Administrative Agent and such counsel shall have received 


 


59

















 


all information and such
counterpart originals or certified or other copies of such documents as the
Administrative Agent may reasonably request.


 


11.                               CONDITIONS
TO ALL BORROWINGS.


 


The
obligations of the Lenders to make any Loan, in each case whether on or after
the Closing Date, shall also be subject to the satisfaction of the following
conditions precedent:


 


11.1.                     Representations True; No Event of
Default.  Each of the representations and warranties of
any of the Borrower and its Subsidiaries contained in this Credit Agreement,
the other Loan Documents or in any document or instrument delivered pursuant to
or in connection with this Credit Agreement shall be true in all material
respects as of the date as of which they were made and shall also be true in
all material respects at and as of the time of the making of such Loan, with
the same effect as if made at and as of that time (except to the extent of
changes resulting from transactions contemplated or permitted by this Credit
Agreement and the other Loan Documents and changes occurring in the ordinary
course of business that singly or in the aggregate are not materially adverse,
and to the extent that such representations and warranties relate expressly to
an earlier date) and no Default or Event of Default shall have occurred and be
continuing.


 


11.2.                     No Legal Impediment.  No
change shall have occurred in any law or regulations thereunder or
interpretations thereof that in the reasonable opinion of any Lender would make
it illegal for such Lender to make such Loan.


 


12.                               EVENTS
OF DEFAULT; ACCELERATION; ETC.


 


12.1.                     Events of Default and Acceleration.  If
any of the following events (“Events of Default” or, if the giving of
notice or the lapse of time or both is required, then, prior to such notice or
lapse of time, “Defaults”) shall occur:


 


(a)                                  the Borrower shall fail to pay any principal
of the Loans when the same shall become due and payable, whether at the stated
date of maturity or any accelerated date of maturity or at any other date fixed
for payment;


 


(b)                                 the Borrower or any of its Subsidiaries shall
fail to pay any interest on the Loans, any Fees, or other sums due hereunder or
under any of the other Loan Documents, within five (5) Business Days of
when the same shall become due and payable, whether at the stated date of
maturity or any accelerated date of maturity or at any other date fixed for
payment;


 


(c)                                  the Borrower shall fail to comply with any of
its covenants contained in §7.5.1, the first sentence of §7.6, or §§7.12, 8 or
9;


 


(d)                                 (i) the Borrower shall fail to comply
with any of its covenants contained in §§7.4, 7.5.2-7.5.6, 7.9.1, 7.9.2 or
7.9.3 for fifteen (15) days after written notice of such failure has been given
to the Borrower by the Administrative Agent, or (ii) the Borrower or any
of its Subsidiaries shall fail to perform any term, covenant or agreement
contained 


 


60

















 


herein or in any of the
other Loan Documents (other than those specified elsewhere in this §12.1) for
thirty (30) days after written notice of such failure has been given to the
Borrower by the Administrative Agent;


 


(e)                                  any representation or warranty of the
Borrower or any of its Subsidiaries in this Credit Agreement or any of the
other Loan Documents or in any other document or instrument delivered pursuant
to or in connection with this Credit Agreement shall prove to have been false
in any material respect upon the date when made or deemed to have been made or
repeated;


 


(f)                                    the Borrower or any of its Subsidiaries shall
(i) fail to pay at maturity, or within any applicable period of grace, any
obligation for borrowed money or credit received or in respect of any
Capitalized Leases in an aggregate amount in excess of $10,000,000, or (ii) fail
to observe or perform any material term, covenant or agreement contained in any
agreement by which it is bound, evidencing or securing borrowed money or credit
received or in respect of any Capitalized Leases in an aggregate amount in
excess of $10,000,000 for such period of time as would permit (assuming the
giving of appropriate notice if required) the holder or holders thereof or of
any obligations issued thereunder to accelerate the maturity thereof, or any
such holder or holders shall rescind or shall have a right to rescind the
purchase of any such obligations;


 


(g)                                 the Borrower or any of its Subsidiaries shall
make an assignment for the benefit of creditors, or admit in writing its
inability to pay or generally fail to pay its debts as they mature or become
due, or shall petition or apply for the appointment of a trustee or other
custodian, liquidator or receiver of such Person or of any substantial part of
the assets of such Person or shall commence any case or other proceeding
relating to such Person under any bankruptcy, reorganization, arrangement,
insolvency, readjustment of debt, dissolution or liquidation or similar law of
any jurisdiction, now or hereafter in effect, or shall take any action to
authorize any of the foregoing, or if any such petition or application shall be
filed or any such case or other proceeding shall be commenced against such
Person and such Person shall indicate its approval thereof, consent thereto or
acquiescence therein or such petition or application shall not have been
dismissed within sixty (60) days following the filing thereof;


 


(h)                                 a decree or order is entered appointing any
such trustee, custodian, liquidator or receiver or adjudicating the Borrower or
any of its Subsidiaries bankrupt or insolvent, or approving a petition in any
such case or other proceeding, or a decree or order for relief is entered in
respect of such Person in an involuntary case under federal bankruptcy laws as
now or hereafter constituted;


 


(i)                                     other than claims asserted by insureds in the
ordinary course of business against any Insurance Subsidiary, there shall
remain in force, undischarged, unsatisfied and unstayed, for more than thirty
(30) days, whether or not consecutive, any final judgment (not bonded or
covered by insurance) against the Borrower or any of its Subsidiaries that
exceeds $10,000,000, or together with other outstanding final judgments, undischarged,
against such Person exceeds in the aggregate, $20,000,000;


 


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(j)                                     reserved;


 


(k)                                  the Borrower engages in any material business
activity, except its ownership of the Subsidiaries and its performance from
time to time of its obligations under the Material Documents and each other
agreement, instrument, or document contemplated hereby, whether or not executed
on or before the Closing Date;


 


(l)                                     if any of the Loan Documents shall be
cancelled, terminated, revoked or rescinded or the Administrative Agent’s
security interests, mortgages or liens in a substantial portion of the
Collateral shall cease to be perfected, or shall cease to have the priority
contemplated by the Security Documents, in each case otherwise than in
accordance with the terms thereof or with the express prior written agreement,
consent or approval of the Lenders, or any action at law, suit or in equity or
other legal proceeding to cancel, revoke or rescind any of the Loan Documents
shall be commenced by or on behalf of the Borrower or any of its Subsidiaries
party thereto or any of their respective stockholders, or any court or any
other governmental or regulatory authority or agency of competent jurisdiction
shall make a determination that, or issue a judgment, order, decree or ruling
to the effect that, any one or more of the Loan Documents is illegal, invalid
or unenforceable in accordance with the terms thereof;


 


(m)                               the Borrower or any ERISA Affiliate incurs
any liability to the PBGC or a Guaranteed Pension Plan pursuant to Title IV of
ERISA in an aggregate amount exceeding $10,000,000, the Borrower or any ERISA
Affiliate is assessed withdrawal liability pursuant to Title IV of ERISA by a
Multiemployer Plan requiring aggregate annual payments exceeding $10,000,000,
or any of the following occurs with respect to a Guaranteed Pension Plan: (i) an
ERISA Reportable Event, or a failure to make a required installment or other
payment (within the meaning of §302(f)(1) of ERISA), provided that
the Administrative Agent determines in its reasonable discretion that such
event (A) would reasonably be expected to result in liability of the
Borrower or any of its Subsidiaries to the PBGC or such Guaranteed Pension Plan
in an aggregate amount exceeding $10,000,000 and (B) could constitute
grounds for the termination of such Guaranteed Pension Plan by the PBGC, for
the appointment by the appropriate United States District Court of a trustee to
administer such Guaranteed Pension Plan or for the imposition of a lien in
favor of such Guaranteed Pension Plan; or (ii) the appointment by a United
States District Court of a trustee to administer such Guaranteed Pension Plan;
or (iii) the institution by the PBGC of proceedings to terminate such
Guaranteed Pension Plan;


 


(n)                                 the Borrower or any of its Subsidiaries shall
be enjoined, restrained or in any way prevented by the order of any
Governmental Authority from conducting any material part of its business and
such order shall continue in effect for more than thirty (30) days and would
have a Material Adverse Effect;


 


(o)                                 there shall occur any material damage to, or
loss, theft or destruction of, any Collateral, whether or not insured, or any
strike, lockout, labor dispute, embargo, condemnation, act of God or public
enemy, or other casualty, which in any such case causes, for more than thirty
(30) consecutive days, the cessation or substantial curtailment 


 


62

















 


of revenue producing
activities at any facility of the Borrower or any of its Subsidiaries if such
event or circumstance is not covered by business interruption insurance and
would have a Material Adverse Effect;


 


(p)                                 there shall occur (i) the loss,
suspension or revocation of any Material Insurance License or any license to
sell homeowners insurance or personal passenger automobile insurance or the
failure to renew or reissue any Material Insurance License or such license to
sell homeowners insurance or personal passenger automobile insurance within
ninety (90) days of the expiration thereof, or (ii) the loss, suspension
or revocation of, or failure to renew, any other license or permit now held or
hereafter acquired by the Borrower or any of its Subsidiaries if such loss,
suspension, revocation or failure to renew would have a Material Adverse
Effect;


 


(q)                                 reserved;


 


(r)                                    during any period of twenty-four (24)
consecutive calendar months,  Continuing
Directors shall cease to constitute a majority of the Board of Directors of the
Borrower; or


 


(s)                                  any person or group of persons (within the
meaning of Section 13 or 14 of the Securities Exchange Act of 1934) shall
have acquired beneficial ownership (within the meaning of Rule 13d-3
promulgated by the Securities and Exchange Commission under said Act), directly
or indirectly, of thirty percent (30%) or more of the Voting Stock of the
Borrower;


 


then, and in
any such event, so long as the same may be continuing, the Administrative Agent
may, and upon the request of the Required Lenders shall, by notice in writing
to the Borrower declare all amounts owing with respect to this Credit
Agreement, the Notes and the other Loan Documents to be, and they shall
thereupon forthwith become, immediately due and payable without presentment,
demand, protest or other notice of any kind, all of which are hereby expressly
waived by the Borrower; provided that in the event of any Event of
Default specified in §§12.1(g) or 12.1(h), all such amounts shall become
immediately due and payable automatically and without any requirement of notice
from the Administrative Agent or any Lender.


 


12.2.                     Termination of Commitments.  If
any one or more of the Events of Default specified in §12.1(g) or §12.1(h) shall
occur, any unused portion of the credit hereunder shall forthwith terminate and
each of the Lenders shall be relieved of all further obligations to make Loans
to the Borrower.  If any other Event of
Default shall have occurred and be continuing, the Administrative Agent may
and, upon the request of the Required Lenders, shall, by notice to the
Borrower, terminate the unused portion of the credit hereunder, and upon such
notice being given such unused portion of the credit hereunder shall terminate
immediately and each of the Lenders shall be relieved of all further
obligations to make Loans.  No
termination of the credit hereunder shall relieve the Borrower or any of its
Subsidiaries of any of the Obligations.


 


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12.3.                     Remedies.  In
case any one or more of the Events of Default shall have occurred and be
continuing, and whether or not the Lenders shall have accelerated the maturity
of the Loans pursuant to §12.1, each Lender, if owed any amount with respect to
the Loans, may, with the consent of the Required Lenders but not otherwise,
proceed to protect and enforce its rights by suit in equity, action at law or
other appropriate proceeding, whether for the specific performance of any
covenant or agreement contained in this Credit Agreement and the other Loan
Documents or any instrument pursuant to which the Obligations to such Lender
are evidenced, including as permitted by applicable law the obtaining of the ex
parte appointment of a receiver, and, if such amount shall have become
due, by declaration or otherwise, proceed to enforce the payment thereof or any
other legal or equitable right of such Lender. 
No remedy herein conferred upon any Lender or the Administrative Agent
or the holder of any Note is intended to be exclusive of any other remedy and
each and every remedy shall be cumulative and shall be in addition to every
other remedy given hereunder or now or hereafter existing at law or in equity
or by statute or any other provision of law.


 


12.4.                     Distribution of Collateral
Proceeds.  In the event that, following the occurrence
or during the continuance of any Default or Event of Default, the
Administrative Agent or any Lender, as the case may be, receives any monies in
connection with the enforcement of any the Security Documents, or otherwise
with respect to the realization upon any of the Collateral, such monies shall
be distributed for application as follows:


 


(a)                                  First, to the payment of, or (as the case may
be) the reimbursement of the Administrative Agent for or in respect of all
reasonable costs, expenses, disbursements and losses which shall have been
incurred or sustained by the Administrative Agent in connection with the
collection of such monies by the Administrative Agent, for the exercise,
protection or enforcement by the Administrative Agent of all or any of the
rights, remedies, powers and privileges of the Administrative Agent under this
Credit Agreement or any of the other Loan Documents or in respect of the
Collateral or in support of any provision of adequate indemnity to the
Administrative Agent against any taxes or liens which by law shall have, or may
have, priority over the rights of the Administrative Agent to such monies;


 


(b)                                 Second, to all other Obligations in such
order or preference as the Required Lenders may determine; provided, however,
that (i) distributions shall be made with respect to each type of
Obligation owing to the Lenders, such as interest, principal, fees and
expenses, among the Lenders pro  rata, and (ii) the
Administrative Agent may in its discretion make proper allowance to take into
account any Obligations not then due and payable;


 


(c)                                  Third, upon payment and satisfaction in full
or other provisions for payment in full satisfactory to the Lenders and the
Administrative Agent of all of the Obligations, to the payment of any
obligations required to be paid pursuant to §9-608(a)(1)(C) or 9 615(a)(3) of
the Uniform Commercial Code of the Commonwealth of Massachusetts; and


 


64

















 


(d)                                 Fourth, the excess, if any, shall be returned
to the Borrower or to such other Persons as are entitled thereto.


 


13.                               THE
ADMINISTRATIVE AGENT.


 


13.1.                     Authorization.


 


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


 


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


 


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


 


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


 


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


 


13.4.                     No Representations.


 


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


 


13.4.2.  Closing Documentation, etc.  For
purposes of determining compliance with the conditions set forth in §10, each
Lender that has executed this Credit Agreement shall be deemed to have
consented to, approved or accepted, or to be satisfied with, each document and
matter either sent, or made available, by the Administrative Agent to such
Lender for consent, approval, acceptance or satisfaction, or required thereunder
to be to be consent to or approved by or acceptable or satisfactory to such
Lender, unless an officer of the Administrative Agent active upon the Borrower’s
account shall have received notice from such Lender prior to the Closing Date
specifying such Lender’s objection thereto and such objection shall not have
been withdrawn by notice to the Administrative Agent to such effect on or prior
to the Closing Date.


 


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13.5.                     Payments.


 


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


 


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


 


13.5.3.  Delinquent Lenders. 
Notwithstanding anything to the contrary contained in this Credit
Agreement or any of the other Loan Documents, any Lender that fails (a) to
make available to the Administrative Agent its pro rata share of any Loan or (b) to
comply with the provisions of §15.1 with respect to making dispositions and
arrangements with the other Lenders, where such Lender’s share of any payment
received, whether by setoff or otherwise, is in excess of its pro rata share of
such payments due and payable to all of the Lenders, in each case as, when and
to the full extent required by the provisions of this Credit Agreement, shall
be deemed delinquent (a “Delinquent Lender”) and shall be deemed a
Delinquent Lender until such time as such delinquency is satisfied.  A Delinquent Lender shall be deemed to have
assigned any and all payments due to it from the Borrower, whether on account
of outstanding Loans, interest, fees or otherwise, to the remaining
nondelinquent Lenders for application to, and reduction of, their respective
pro rata shares of all outstanding Loans. 
The Delinquent Lender hereby authorizes the Administrative Agent to
distribute such payments to the nondelinquent Lenders in proportion to their
respective pro rata shares of all outstanding Loans.  A Delinquent Lender shall be deemed to have
satisfied in full a delinquency when and if, as a result of application of the
assigned payments to all outstanding Loans of the nondelinquent Lenders, the
Lenders’ respective pro rata shares of all outstanding Loans have returned to
those in effect immediately prior to such delinquency and without giving effect
to the nonpayment causing such delinquency.


 


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


 


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13.7.                     Indemnity.  The
Lenders ratably agree hereby to indemnify and hold harmless the Administrative
Agent and its affiliates from and against any and all claims, actions and suits
(whether groundless or otherwise), losses, damages, costs, expenses (including
any expenses for which the Administrative Agent or such affiliate has not been
reimbursed by the Borrower as required by §15.2), and liabilities of every
nature and character arising out of or related to this Credit Agreement, the
Notes, or any of the other Loan Documents or the transactions contemplated or
evidenced hereby or thereby, or the Administrative Agent’s actions taken
hereunder or thereunder, except to the extent that any of the same shall be
directly caused by the Administrative Agent’s willful misconduct or gross
negligence.


 


13.8.                     Administrative Agent as Lender.  In
its individual capacity, RBS Citizens shall have the same obligations and the
same rights, powers and privileges in respect to its Commitment and the Loans
made by it, and as the holder of any of the Notes, as it would have were it not
also the Administrative Agent.


 


13.9.                     Resignation.  The
Administrative Agent may resign at any time by giving sixty (60) days prior
written notice thereof to the Lenders and the Borrower.  Upon any such resignation, the Required
Lenders shall have the right to appoint a successor Administrative Agent.  Unless a Default or Event of Default shall
have occurred and be continuing, such successor Administrative Agent shall be
reasonably acceptable to the Borrower. 
If no successor Administrative Agent shall have been so appointed by the
Required Lenders and shall have accepted such appointment within thirty (30)
days after the retiring Administrative Agent’s giving of notice of resignation,
then the retiring Administrative Agent may, on behalf of the Lenders, appoint a
successor Administrative Agent, which shall be a financial institution having a
rating of not less than A or its equivalent by S&P.  Upon the acceptance of any appointment as
Administrative Agent hereunder by a successor Administrative Agent, such
successor Administrative Agent shall thereupon succeed to and become vested
with all the rights, powers, privileges and duties of the retiring
Administrative Agent, and the retiring Administrative Agent shall be discharged
from its duties and obligations hereunder. 
After any retiring Administrative Agent’s resignation, the provisions of
this Credit Agreement and the other Loan Documents shall continue in effect for
its benefit in respect of any actions taken or omitted to be taken by it while
it was acting as Administrative Agent.


 


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


 


13.11.              Duties in the Case of Enforcement.  In case
one of more Events of Default have occurred and shall be continuing, and
whether or not acceleration of the Obligations shall have occurred, the
Administrative Agent shall, if (a) so requested by the Required Lenders
and (b) the Lenders have provided to the Administrative Agent such
additional indemnities and assurances against expenses and liabilities as the
Administrative Agent may reasonably request, proceed to enforce the provisions
of the 


 


68

















 


Security Documents
authorizing the sale or other disposition of all or any part of the Collateral
and exercise all or any such other legal and equitable and other rights or
remedies as it may have in respect of such Collateral.  The Required Lenders may direct the
Administrative Agent in writing as to the method and the extent of any such
sale or other disposition, the Lenders hereby agreeing to indemnify and hold
the Administrative Agent, harmless from all liabilities incurred in respect of
all actions taken or omitted in accordance with such directions, provided
that the Administrative Agent need not comply with any such direction to the
extent that the Administrative Agent reasonably believes the Administrative
Agent’s compliance with such direction to be unlawful or commercially
unreasonable in any applicable jurisdiction.


 


14.                               ASSIGNMENT
AND PARTICIPATION.


 


14.1.                     Conditions to Assignment by
Lenders.  Except as provided herein, each Lender may
assign to one or more Eligible Assignees, all or a portion of its interests,
rights and obligations under this Credit Agreement (including all or a portion
of its Commitment Percentage and Commitment and the same portion of the Loans
at the time owing to it, the Notes held by it); provided that (a) each
of the Administrative Agent and, unless an Event of Default shall have occurred
and be continuing, the Borrower shall have given its prior written consent to
such assignment, which consent, in the case of the Borrower, will not be
unreasonably withheld; except that the consent of the Borrower or the
Administrative Agent shall not be required in connection with any assignment by
a Lender to (i) an existing Lender or (ii) a Lender Affiliate of such
Lender, (b) each assignment (or, in the case of assignments by a Lender to
its Lender Affiliates, the aggregate holdings of such Lender and its Lender
Affiliates after giving effect to such assignments), shall be in an amount of
not less than $2,500,000 (or such lesser amount as shall constitute the
aggregate holdings of such Lender) and (c) the parties to such assignment
shall execute and deliver to the Administrative Agent, for recording in the
Register (as hereinafter defined), an Assignment and Acceptance, substantially
in the form of Exhibit D hereto (an “Assignment and Acceptance”),
together with any Notes subject to such assignment.  Upon such execution, delivery, acceptance and
recording, from and after the effective date specified in each Assignment and
Acceptance, which effective date shall be at least five (5) Business Days
after the execution thereof, (y) the assignee thereunder shall be a party
hereto and, to the extent provided in such Assignment and Acceptance, have the
rights and obligations of a Lender hereunder, and (z) the assigning Lender
shall, to the extent provided in such assignment and upon payment to the
Administrative Agent of the registration fee referred to in §14.3, be released
from its obligations under this Credit Agreement.  The Administrative Agent shall provide the
Borrower with five (5) Business Days prior written notice of any
assignment not requiring the consent of the Borrower.


 


14.2.                     Certain Representations and
Warranties; Limitations; Covenants.  By executing and delivering an
Assignment and Acceptance, the parties to the assignment thereunder confirm to
and agree with each other and the other parties hereto as follows:


 


(a)                                  other than the representation and warranty
that it is the legal and beneficial owner of the interest being assigned
thereby free and clear of any adverse claim, the 


 


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assigning Lender makes no
representation or warranty, express or implied, and assumes no responsibility
with respect to any statements, warranties or representations made in or in
connection with this Credit Agreement or the execution, legality, validity,
enforceability, genuineness, sufficiency or value of this Credit Agreement, the
other Loan Documents or any other instrument or document furnished pursuant
hereto or the attachment, perfection or priority of any security interest or
mortgage,


 


(b)                                 the assigning Lender makes no representation
or warranty and assumes no responsibility with respect to the financial
condition of the Borrower and its Subsidiaries or any other Person primarily or
secondarily liable in respect of any of the Obligations, or the performance or
observance by the Borrower and its Subsidiaries or any other Person primarily
or secondarily liable in respect of any of the Obligations of any of their
obligations under this Credit Agreement or any of the other Loan Documents or
any other instrument or document furnished pursuant hereto or thereto;


 


(c)                                  such assignee confirms that it has received a
copy of this Credit Agreement, together with copies of the most recent
financial statements referred to in §6.4 and §7.4 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;


 


(d)                                 such assignee will, independently and without
reliance upon the assigning Lender, the Administrative Agent 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 Credit Agreement;


 


(e)                                  such assignee represents and warrants that it
is an Eligible Assignee and that, on the effective date of such Assignment and
Acceptance, the circumstances described in §§4.5, 4.6 and 4.7 hereto are not
applicable to such assignee;


 


(f)                                    such assignee appoints and authorizes the
Administrative Agent to take such action as agent on its behalf and to exercise
such powers under this Credit Agreement and the other Loan Documents as are
delegated to the Administrative Agent by the terms hereof or thereof, together
with such powers as are reasonably incidental thereto;


 


(g)                                 such assignee agrees that it will perform in
accordance with their terms all of the obligations that by the terms of this
Credit Agreement are required to be performed by it as a Lender;


 


(h)                                 such assignee represents and warrants that it
is legally authorized to enter into such Assignment and Acceptance; and


 


(i)                                     such assignee acknowledges that it has
complied with the provisions of §4.2.3 to the extent applicable.


 


14.3.                     Register.  The
Administrative Agent shall maintain a copy of each Assignment and Acceptance
delivered to it and a register or similar list (the “Register”) for the
recordation of the names and addresses of the Lenders and the Commitment 


 


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Percentage of, and principal
amount of the Loans owing to the Lenders from time to time. The entries in the
Register shall be conclusive, in the absence of manifest error, and the
Borrower, the Administrative Agent and the Lenders may treat each Person whose
name is recorded in the Register as a Lender hereunder for all purposes of this
Credit Agreement.  The Register shall be
available for inspection by the Borrower and the Lenders at any reasonable time
and from time to time upon reasonable prior notice. Upon each such recordation,
the assigning Lender (unless such assignment is to an Affiliate of such Lender)
agrees to pay to the Administrative Agent a registration fee in the sum of
$3,500.


 


14.4.                     New Notes.  Upon
its receipt of an Assignment and Acceptance executed by the parties to such
assignment, together with each Note subject to such assignment, the
Administrative Agent shall (a) record the information contained therein in
the Register, and (b) give prompt notice thereof to the Borrower and the
Lenders (other than the assigning Lender). Within five (5) Business Days
after receipt of such notice, the Borrower, at its own expense, shall execute
and deliver to the Administrative Agent, in exchange for each surrendered Note,
a new Note to the order of such Eligible Assignee in an amount equal to the
amount assumed by such Eligible Assignee pursuant to such Assignment and
Acceptance and, if the assigning Lender has retained some portion of its
obligations hereunder, a new Note to the order of the assigning Lender in an
amount equal to the amount retained by it hereunder.  Such new Notes shall provide that they are
replacements for the surrendered Notes, shall be in an aggregate principal
amount equal to the aggregate principal amount of the surrendered Notes, shall
be dated the effective date of such Assignment and Acceptance and shall
otherwise be in substantially the form of the assigned Notes.  Within five (5) days of issuance of any
new Notes pursuant to this §14.4, the Borrower shall deliver upon the request
of the assignee Lender an opinion of counsel, addressed to the Lenders and the
Administrative Agent, relating to the due authorization, execution and delivery
of such new Notes and the legality, validity and binding effect thereof, in
form and substance reasonably satisfactory to the Lenders.  The surrendered Notes shall be cancelled and
returned to the Borrower.


 


14.5.                     Participations.  Each
Lender may sell participations to one or more Lenders or other entities in all
or a portion of such Lender’s rights and obligations under this Credit
Agreement and the other Loan Documents; provided that (a) each such
participation shall be in an amount of not less than $2,500,000, (b) any
such sale or participation shall not affect the rights and duties of the selling
Lender hereunder to the Borrower and (c) the only rights granted to the
participant pursuant to such participation arrangements with respect to
waivers, amendments or modifications of the Loan Documents shall be the rights
to approve waivers, amendments or modifications that would reduce the principal
of or the interest rate on any Loans, extend the term or increase the amount of
the Commitment of such Lender as it relates to such participant, reduce the
amount of any Commitment Fee to which such participant is entitled or extend
any regularly scheduled payment date for principal or interest.


 


14.6.                     Assignee or Participant
Affiliated with the Borrower.  If any assignee Lender is an
Affiliate of the Borrower, then any such assignee Lender shall have no right to
vote as a Lender hereunder or under any of the other Loan Documents for
purposes of 


 


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granting consents or waivers
or for purposes of agreeing to amendments or other modifications to any of the
Loan Documents or for purposes of making requests to the Administrative Agent
pursuant to §12.1 or §12.2, and the determination of the Required Lenders shall
for all purposes of this Credit Agreement and the other Loan Documents be made
without regard to such assignee Lender’s interest in any of the Loans.  If any Lender sells a participating interest
in any of the Loans to a participant, and such participant is the Borrower or
an Affiliate of the Borrower, then such transferor Lender shall promptly notify
the Administrative Agent of the sale of such participation.  A transferor Lender shall have no right to
vote as a Lender hereunder or under any of the other Loan Documents for
purposes of granting consents or waivers or for purposes of agreeing to
amendments or modifications to any of the Loan Documents or for purposes of
making requests to the Administrative Agent pursuant to §12.1 or §12.2 to the
extent that such participation is beneficially owned by the Borrower or any
Affiliate of the Borrower, and the determination of the Required Lenders shall
for all purposes of this Credit Agreement and the other Loan Documents be made
without regard to the interest of such transferor Lender in the Loans to the
extent of such participation.


 


14.7.                     Miscellaneous Assignment
Provisions.  Any assigning Lender shall retain its rights
to be indemnified pursuant to §15.3 with respect to any claims or actions
arising prior to the date of such assignment. 
If any assignee Lender is not incorporated under the laws of the United
States of America or any state thereof, it shall, prior to the date on which
any interest or fees are payable hereunder or under any of the Loan Documents
for its account deliver to the Borrower and the Administrative Agent
certification as to its exemption from deduction of withholding of any United
States federal income taxes.  Anything
contained in this §14 to the contrary notwithstanding, any Lender may at any
time pledge or assign a security interest in all or any portion of its interest
and rights under this Credit Agreement (including all or any portion of its
Notes) to secure obligations of such Lender, including any pledge or assignment
to secure obligations to (a) any of the twelve Federal Reserve Banks
organized under §4 of the Federal Reserve Act, 12 U.S.C. §341 and (b) with
respect to any Lender that is a fund that invests in bank loans, to any lender
or any trustee for, or any other representative of, holders of obligations owed
or securities issued by such fund as security for such obligations or
securities or any institutional custodian for such fund or for such
lender.  Any foreclosure or similar
action by any Person in respect of such pledge or assignment shall be subject
to the other provisions of this §14.  No
such pledge or the enforcement thereof shall release the pledgor Lender from
its obligations hereunder or under any of the other Loan Documents, provide any
voting rights hereunder to the pledgee thereof, or affect any rights or
obligations of the Borrower or Administrative Agent hereunder.


 


14.8.                     Assignment by Borrower.  The
Borrower shall not assign or transfer any of its rights or obligations under
any of the Loan Documents without the prior written consent of each of the
Lenders.


 


15.                               PROVISIONS
OF GENERAL APPLICATIONS.


 


15.1.                     Setoff.  The
Borrower hereby grants to the Administrative Agent and each of the Lenders a
continuing lien, security interest and right of setoff as security for all 


 


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liabilities and obligations
to the Administrative Agent and each Lender, whether now existing or hereafter
arising, upon and against all deposits, credits, collateral and property, now
or hereafter in the possession, custody, safekeeping or control of the
Administrative Agent or such Lender or any Lender Affiliate and their
successors and assigns or in transit to any of them.  Regardless of the adequacy of any collateral,
if any of the Obligations are due and payable and have not been paid or any
Event of Default shall have occurred and be continuing, any deposits or other
sums credited by or due from any of the Lenders to the Borrower and any
securities or other property of the Borrower in the possession of such Lender
may be applied to or set off by such Lender against the payment of Obligations
and any and all other liabilities, direct, or indirect, absolute or contingent,
due or to become due, now existing or hereafter arising, of the Borrower to
such Lender.  ANY AND ALL
RIGHTS TO REQUIRE ANY LENDER TO EXERCISE ITS RIGHTS OR REMEDIES WITH RESPECT TO
ANY OTHER COLLATERAL WHICH SECURES THE OBLIGATIONS, PRIOR TO EXERCISING ITS
RIGHT OF SETOFF WITH RESPECT TO SUCH DEPOSITS, CREDITS OR OTHER PROPERTY OF THE
BORROWER ARE HEREBY KNOWINGLY, VOLUNTARILY AND IRREVOCABLY WAIVED.  Each of the Lenders agree with each other
Lender that (a) if an amount to be set off is to be applied to
Indebtedness of the Borrower to such Lender, other than Indebtedness evidenced
by the Notes held by such Lender owed to such Lender, such amount shall be
applied ratably to such other Indebtedness and to the Indebtedness evidenced by
all such Notes held by such Lender owed to such Lender, and (b) if such Lender
shall receive from the Borrower, whether by voluntary payment, exercise of the
right of setoff, counterclaim, cross action, enforcement of the claim evidenced
by the Notes held by such Lender by proceedings against the Borrower at law or
in equity or by proof thereof in bankruptcy, reorganization, liquidation,
receivership or similar proceedings, or otherwise, and shall retain and apply
to the payment of the Note or Notes held by such Lender any amount in excess of
its ratable portion of the payments received by all of the Lenders with respect
to the Notes held by all of the Lenders, such Lender will make such disposition
and arrangements with the other Lenders with respect to such excess, either by
way of distribution, pro  tanto assignment of claims, subrogation
or otherwise as shall result in each Lender receiving in respect of the Notes
held by it, its proportionate payment as contemplated by this Credit Agreement;
provided that if all or any part of such excess payment is thereafter
recovered from such Lender, such disposition and arrangements shall be
rescinded and the amount restored to the extent of such recovery, but without
interest.


 


15.2.                     Expenses.  The
Borrower agrees to pay (a) the reasonable and documented costs of
producing and reproducing this Credit Agreement, the other Loan Documents and
the other agreements and instruments mentioned herein, (b) any taxes
(including any interest and penalties in respect thereto) payable by the
Administrative Agent or any of the Lenders (other than taxes based upon the
Administrative Agent’s or any Lender’s net income) on or with respect to the
transactions contemplated by this Credit Agreement (the Borrower hereby
agreeing to indemnify the Administrative Agent and each Lender with respect
thereto), (c) the reasonable and documented fees, expenses and
disbursements of the Administrative Agent’s Special Counsel or any local
counsel to the Administrative Agent incurred in connection with the
preparation, syndication, 


 


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administration or
interpretation of the Loan Documents and other instruments mentioned herein,
each closing hereunder, any amendments, modifications, approvals, consents or
waivers hereto or hereunder, or the cancellation of any Loan Document upon
payment in full in cash of all of the Obligations or pursuant to any terms of
such Loan Document for providing for such cancellation, (d) the reasonable
and documented fees, expenses and disbursements of the Administrative Agent or
any of its affiliates incurred by the Administrative Agent or such affiliate in
connection with the preparation, syndication, administration or interpretation
of the Loan Documents and other instruments mentioned herein, including all
appraisal and examination charges, (e) all reasonable and documented
out-of-pocket expenses (including without limitation reasonable attorneys’ fees
and costs, which attorneys may be employees of any Lender or the Administrative
Agent, and reasonable consulting, accounting, appraisal, investment banking and
similar professional fees and charges) incurred by any Lender or the
Administrative Agent in connection with (i) the enforcement of or
preservation of rights under any of the Loan Documents against the Borrower or
any of its Subsidiaries or the administration thereof after the occurrence of a
Default or Event of Default and (ii) any litigation, proceeding or dispute
whether arising hereunder or otherwise, in any way related to any Lender’s or
the Administrative Agent’s relationship with the Borrower or any of its
Subsidiaries and (f) all reasonable and documented fees, expenses and
disbursements of any Lender or the Administrative Agent incurred in connection
with UCC searches, UCC filings, intellectual property searches, intellectual
property filings or mortgage recordings; provided, that the aggregate of
the expenses for which the Borrower shall be responsible under clauses (a) and
(d) of this Section 15.2 shall not exceed $5,000.  The covenants contained in this §15.2 shall
survive payment or satisfaction in full of all other obligations.


 


15.3.                     Indemnification.  The
Borrower agrees to indemnify and hold harmless the Administrative Agent, its
affiliates and the Lenders from and against any and all claims, actions and
suits whether groundless or otherwise, and from and against any and all
liabilities, losses, damages and expenses of every nature and character arising
out of this Credit Agreement or any of the other Loan Documents or the
transactions contemplated hereby, including, without limitation, (a) any
actual or proposed use by the Borrower or any of its Subsidiaries of the
proceeds of any of the Loans, (b) the reversal or withdrawal of any
provisional credits granted by the Administrative Agent upon the transfer of
funds from lock box, bank agency, concentration accounts or otherwise under any
cash management arrangements with the Borrower or any Subsidiary or in connection
with the provisional honoring of funds transfers, checks or other items,  (c) any actual or alleged infringement
of any patent, copyright, trademark, service mark or similar right of the
Borrower or any of its Subsidiaries comprised in the Collateral, (d) the
Borrower or any of its Subsidiaries entering into or performing this Credit
Agreement or any of the other Loan Documents or (e) with respect to the
Borrower and its Subsidiaries and their respective properties and assets, the
violation of any Environmental Law, the presence, disposal, escape, seepage,
leakage, spillage, discharge, emission, release or threatened release of any
Hazardous Substances or any action, suit, proceeding or investigation brought
or threatened with respect to any Hazardous Substances (including, but not
limited to, claims with respect to wrongful death, personal injury or damage to
property), in each case including, without limitation, the reasonable and
invoiced fees and 


 


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disbursements of counsel and
allocated costs of internal counsel incurred in connection with any such
investigation, litigation or other proceeding but excluding any of the
foregoing which result from the gross negligence or willful misconduct of the
indemnified party.  In litigation, or the
preparation therefor, the Lenders and the Administrative Agent and its
affiliates shall be entitled to select their own counsel and, in addition to
the foregoing indemnity, the Borrower agrees to pay promptly the reasonable and
invoiced fees and expenses of such counsel. 
If, and to the extent that the obligations of the Borrower under this
§15.3 are unenforceable for any reason, the Borrower hereby agrees to make the
maximum contribution to the payment in satisfaction of such obligations which
is permissible under applicable law.  The
covenants contained in this §15.3 shall survive payment or satisfaction in full
of all other Obligations.


 


15.4.                     Treatment of Certain Confidential
Information.


 


15.4.1.  Confidentiality.  Each
of the Lenders and the Administrative Agent agrees, on behalf of itself and
each of its affiliates, directors, officers, employees and representatives, to
use reasonable precautions to keep confidential, in accordance with their
customary procedures for handling confidential information of the same nature
and in accordance with safe and sound banking practices, any non-public
information supplied to it by the Borrower or any of its Subsidiaries pursuant
to this Credit Agreement or the other Loan Documents, provided that
nothing herein shall limit the disclosure of any such information (a) after
such information shall have become public other than through a violation of
this §15.4, or becomes available to any of the Lenders or the Administrative
Agent on a nonconfidential basis from a source other than the Borrower, (b) to
the extent required by statute, rule, regulation or judicial process, (c) to
counsel for any of the Lenders or the Administrative Agent, (d) to bank
examiners or any other regulatory authority having jurisdiction over any Lender
or the Administrative Agent, or to auditors or accountants, (e) to the
Administrative Agent, any Lender or any Financial Affiliate, (f) in
connection with any litigation to which any one or more of the Lenders, the
Administrative Agent or any Financial Affiliate is a party, or in connection
with the enforcement of rights or remedies hereunder or under any other Loan
Document, (g) to a Lender Affiliate or a Subsidiary or affiliate of the
Administrative Agent, (h) to any actual or prospective assignee or
participant or any actual or prospective counterparty (or its advisors) to any
swap or derivative transactions referenced to credit or other risks or events
arising under this Credit Agreement or any other Loan Document so long as such
assignee, participant or counterparty, as the case may be, agrees to be bound
by the provisions of this §15.4 or (i) with the consent of the
Borrower.  Neither the Administrative
Agent nor any Lender shall disclose such non-public information to any
competitor of the Borrower or any of its Subsidiaries, nor will the
Administrative Agent or any Lender utilize, or permit any Lender Affiliate or
Financial Affiliate to utilize, such non-public information in connection with
line of business which competes with the Borrower or any of its
Subsidiaries.  Moreover, subject to the
prior written consent of the Borrower each of the Administrative Agent, the
Lenders and any Financial Affiliate is hereby expressly permitted by the
Borrower to refer to any of the Borrower and its Subsidiaries in connection
with any advertising, promotion or marketing undertaken by the Administrative
Agent, such Lender or such Financial Affiliate and, for such purpose and after
obtaining any such consent, the Administrative Agent, such Lender or such 


 


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Financial Affiliate may utilize any trade
name, trademark, logo or other distinctive symbol associated with the Borrower
or any of its Subsidiaries or any of their businesses.


 


15.4.2.  Prior Notification. 
Unless specifically prohibited by applicable law or court order, each of
the Lenders and the Administrative Agent shall, prior to disclosure thereof,
notify the Borrower of any request for disclosure of any non-public information
referred to in §15.4.1 by any governmental agency or representative thereof
(other than any such request in connection with an examination of the financial
condition of such Lender by such governmental agency) or pursuant to legal
process.


 


15.4.3.  Other.  In
no event shall any Lender or the Administrative Agent be obligated or required
to return any materials furnished to it or any Financial Affiliate by the
Borrower or any of its Subsidiaries.  The
obligations of each Lender under this §15.4 shall supersede and replace the
obligations of such Lender under any confidentiality letter in respect of this
financing signed and delivered by such Lender to the Borrower prior to the date
hereof and shall be binding upon any assignee of, or purchaser of any
participation in, any interest in any of the Loans from any Lender.


 


15.5.                     Survival of Covenants, Etc.  All
covenants, agreements, representations and warranties made herein, in the
Notes, in any of the other Loan Documents or in any documents or other papers
delivered by or on behalf of the Borrower or any of its Subsidiaries pursuant
hereto shall be deemed to have been relied upon by the Lenders and the
Administrative Agent, notwithstanding any investigation heretofore or hereafter
made by any of them, and shall survive the making by the Lenders of any of the
Loans as herein contemplated, and shall continue in full force and effect so
long as any amount due under this Credit Agreement or the Notes or any of the
other Loan Documents remains outstanding or any Lender has any obligation to
make any Loans and for such further time as may be otherwise expressly
specified in this Credit Agreement.  All
statements contained in any certificate or other paper delivered to any Lender
or the Administrative Agent at any time by or on behalf of the Borrower or any
of its Subsidiaries pursuant hereto or in connection with the transactions
contemplated hereby shall constitute representations and warranties by the
Borrower or such Subsidiary hereunder.


 


15.6.                     Notices.  Except
as otherwise expressly provided in this Credit Agreement, all notices and other
communications made or required to be given pursuant to this Credit Agreement
or the Notes shall be in writing and shall be delivered in hand, mailed by
United States registered or certified first class mail, postage prepaid, sent
by overnight courier, or sent by facsimile and confirmed by delivery via
courier or postal service, addressed as follows:


 


(a)                                  if to the Borrower, at 20 Custom House
Street, Boston, Massachusetts 02110, Attention: William J. Begley, Jr., or
at such other address for notice as the Borrower shall last have furnished in
writing to the Person giving the notice;


 


(b)                                 if to the Administrative Agent, at 28 State
Street, 15th Floor, Boston, MA 02109, Attention: Dan Bernard, or such other
address for the notice as the Administrative Agent shall have furnished in
writing to the Person giving the notice; and


 


76
















 


(c)           if to any Lender, at such Lender’s
address set forth on Schedule 1 hereto, or
such other address for notice as such Lender shall have last furnished in
writing to the Person giving the notice.


 


Any such
notice or demand shall be deemed to have been duly given or made and to have
become effective (i) if delivered by hand, overnight courier or facsimile
to a responsible officer of the party to which it is directed, at the time of
the receipt thereof by such officer or the confirmed sending of such facsimile
and (ii) if sent by registered or certified first-class mail, postage
prepaid, on the third Business Day following the mailing thereof.


 


15.7.       Governing Law.  THIS CREDIT AGREEMENT AND, EXCEPT AS OTHERWISE SPECIFICALLY PROVIDED
THEREIN, EACH OF THE OTHER LOAN DOCUMENTS ARE CONTRACTS UNDER THE LAWS OF THE
COMMONWEALTH OF MASSACHUSETTS AND SHALL FOR ALL PURPOSES BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF SAID COMMONWEALTH OF MASSACHUSETTS
(EXCLUDING THE LAWS APPLICABLE TO CONFLICTS OR CHOICE OF LAW).  THE BORROWER AGREES THAT ANY SUIT FOR THE
ENFORCEMENT OF THIS CREDIT AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS MAY BE
BROUGHT IN THE COURTS OF THE COMMONWEALTH OF MASSACHUSETTS OR ANY FEDERAL COURT
SITTING THEREIN AND CONSENTS TO THE NONEXCLUSIVE JURISDICTION OF SUCH COURT AND
SERVICE OF PROCESS IN ANY SUCH SUIT BEING MADE UPON THE BORROWER BY MAIL AT THE
ADDRESS SPECIFIED IN §15.6.  THE BORROWER
HEREBY WAIVES ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE VENUE
OF ANY SUCH SUIT OR ANY SUCH COURT OR THAT SUCH SUIT IS BROUGHT IN AN
INCONVENIENT COURT.


 


15.8.       Headings.  The
captions in this Credit Agreement are for convenience of reference only and
shall not define or limit the provisions hereof.


 


15.9.       Counterparts.  This
Credit Agreement and any amendment hereof may be executed in several
counterparts and by each party on a separate counterpart, each of which when
executed and delivered shall be an original, and all of which together shall
constitute one instrument.  In proving
this Credit Agreement it shall not be necessary to produce or account for more
than one such counterpart signed by the party against whom enforcement is
sought.  Delivery by facsimile by any of
the parties hereto of an executed counterpart hereof or of any amendment or
waiver hereto shall be as effective as an original executed counterpart hereof
or of such amendment or waiver and shall be considered a representation that an
original executed counterpart hereof or such amendment or waiver, as the case
may be, will be delivered.


 


15.10.     Entire Agreement, Etc.  The
Loan Documents and any other documents executed in connection herewith or
therewith express the entire understanding of the parties with respect to the
transactions contemplated hereby. Neither this Credit 


 


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Agreement nor any term
hereof may be changed, waived, discharged or terminated, except as provided in
§15.12.


 


15.11.     Waiver of Jury Trial.  THE BORROWER HEREBY WAIVES ITS RIGHT TO A JURY TRIAL WITH RESPECT TO
ANY ACTION OR CLAIM ARISING OUT OF ANY DISPUTE IN CONNECTION WITH THIS CREDIT
AGREEMENT, THE NOTES OR ANY OF THE OTHER LOAN DOCUMENTS, ANY RIGHTS OR
OBLIGATIONS HEREUNDER OR THEREUNDER OR THE PERFORMANCE OF SUCH RIGHTS AND
OBLIGATIONS OR ANY COURSE OF CONDUCT, COURSE OF DEALINGS, STATEMENTS (WHETHER
VERBAL OR WRITTEN) OR ACTIONS OF ANY PARTY, INCLUDING ANY COURSE OF CONDUCT,
COURSE OF DEALINGS, STATEMENTS OR ACTIONS OF THE ADMINISTRATIVE AGENT OR ANY
LENDER RELATING TO THE ADMINISTRATION OF THE LOANS OR ENFORCEMENT OF THE LOAN
DOCUMENTS AND AGREES THAT IT WILL NOT SEEK TO CONSOLIDATE ANY SUCH ACTION WITH
ANY OTHER ACTION IN WHICH A JURY TRIAL CANNOT BE OR HAS NOT BEEN WAIVED.  Except as prohibited by law, the Borrower
hereby waives any right it may have to claim or recover in any litigation
referred to in the preceding sentence any special, exemplary, punitive or
consequential damages or any damages other than, or in addition to, actual
damages.  The Borrower (a) certifies
that no representative, agent or attorney of any Lender or the Administrative
Agent has represented, expressly or otherwise, that such Lender or the
Administrative Agent would not, in the event of litigation, seek to enforce the
foregoing waivers and (b) acknowledges that the Administrative Agent and
the Lenders have been induced to enter into this Credit Agreement, the other
Loan Documents to which it is a party by, among other things, the waivers and
certifications contained herein.


 


15.12.     Consents, Amendments, Waivers, Etc.  Any
consent or approval required or permitted by this Credit Agreement to be given
by the Lenders may be given, and any term of this Credit Agreement, the other
Loan Documents or any other instrument related hereto or mentioned herein may
be amended, and the performance or observance by the Borrower or any of its
Subsidiaries of any terms of this Credit Agreement, the other Loan Documents or
such other instrument or the continuance of any Default or Event of Default may
be waived (either generally or in a particular instance and either
retroactively or prospectively) with, but only with, the written consent of the
Borrower and the written consent of the Required Lenders. Notwithstanding the
foregoing, no amendment, modification or waiver shall:


 


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


 


(i)            reduce or forgive the principal
amount of any Loans, or reduce the rate of interest on the Notes or the amount
of the Commitment Fee (other than interest accruing pursuant to §4.10.2
following the effective date of any waiver by the Required Lenders of the
Default or Event of Default relating thereto);


 


78

















 


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


 


(iii)          postpone or extend the Maturity Date
or any other regularly scheduled dates for payments of principal of, or
interest on, the Loans or any Fees or other amounts payable to such Lender (it
being understood that (A) a waiver of the application of the default rate
of interest pursuant to §4.10.2, (B) any vote to rescind (i) any
acceleration made pursuant to §12.1 of amounts owing with respect to the Loans
and other Obligations or (ii) for the avoidance of doubt, any related
termination of Commitments pursuant to §12.2 and (C) any modifications of
the provisions relating to amounts, timing or application of prepayments of
Loans and other Obligations, shall require only the approval of the Required
Lenders); and


 


(iv)          other than pursuant to a transaction
permitted by the terms of this Credit Agreement or any other Loan Document,
release all or substantially all of the Collateral or release any of the
Subsidiary Guarantors from their guaranty obligations under the Subsidiary Guaranty
(excluding, if the Borrower or any Subsidiary of a Borrower becomes a debtor
under the federal Bankruptcy Code, the release of “cash collateral”, as defined
in Section 363(a) of the federal Bankruptcy Code pursuant to a cash
collateral stipulation with the debtor approved by the Required Lenders);


 


(b)           without the written consent of all of
the Lenders, amend or waive this §15.12 or the definition of Required Lenders;
or


 


(c)           without the written consent of the
Administrative Agent, amend or waive §13 or any other provision applicable to
the Administrative Agent.


 


No waiver shall extend to or
affect any obligation not expressly waived or impair any right consequent
thereon.  No course of dealing or delay
or omission on the part of the Administrative Agent or any Lender in exercising
any right shall operate as a waiver thereof or otherwise be prejudicial
thereto.  No notice to or demand upon the
Borrower shall entitle the Borrower to other or further notice or demand in
similar or other circumstances.


 


If in connection with any
proposed change, waiver, discharge or termination to any of the provisions of
this Credit Agreement as contemplated by this §15.12 (other than with respect
to increasing the amount of the applicable Commitments of any of the Lenders),
the consent of the Required Lenders is obtained, but the consent of one or more
other Lenders whose consent is required for such action is not obtained, then
the Borrower shall have the right to replace each such non-consenting Lender or
Lenders with one or more Replacement Lenders pursuant to and in accordance with
the provisions of §4.11 so long as at the time of such replacement, each such
Replacement Lender consents to the proposed change, waiver, discharge or
termination and the other applicable provisions of §4.11 with respect thereto
are complied with in connection with such replacement.


 


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15.13.     Severability.  The
provisions of this Credit Agreement are severable and if any one clause or
provision hereof shall be held invalid or unenforceable in whole or in part in
any jurisdiction, then such invalidity or unenforceability shall affect only
such clause or provision, or part thereof, in such jurisdiction, and shall not
in any manner affect such clause or provision in any other jurisdiction, or any
other clause or provision of this Credit Agreement in any jurisdiction.


 


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IN WITNESS
WHEREOF, the undersigned have duly executed this Credit Agreement as a sealed
instrument as of the date first set forth above.


 


	
   

  	
  SAFETY INSURANCE GROUP, INC.,

  
	
   

  	
  a Delaware corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/William J. Begley, Jr.

  
	
   

  	
  Name: William J. Begley, Jr.

  
	
   

  	
  Title: Vice President, Secretary, and Chief

  
	
   

  	
  Financial Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  RBS CITIZENS, N.A.,
  successor by merger to

  
	
   

  	
  Citizens Bank of Massachusetts, as a

  
	
   

  	
  Lender and as Administrative Agent

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/Daniel Bernard

  
	
   

  	
  Name: Daniel Bernard

  
	
   

  	
  Title: Senior Vice President

  
				



 

















 


SCHEDULE  1


 


	
  Lender

  	
   

  	
  Commitment

  	
   

  	
  Commitment

  Percentage

  	
   

  
	
  RBS Citizens, N.A.

  28 State Street, 15th Floor

  Boston, MA 02109

  Attn: Dan Bernard

  Phone: (617) 994-7170

  Fax: (617) 263-0439

  	
   

  	
  $

  	
  30,000,000.00

  	
   

  	
  100

  	
  %