exhibit10-30creditline.htm


EXECUTION COPY


 






















U.S. $150,000,000


 


CREDIT AGREEMENT


 


Dated as of August 15, 2011


 


Among


 


EVEREST REINSURANCE HOLDINGS, INC.


as Borrower


 


and


 


THE INITIAL LENDERS NAMED HEREIN


as Initial Lenders


 


and


 


WELLS FARGO BANK, NATIONAL ASSOCIATION


as Syndication Agent







and


 


DEUTSCHE BANK SECURITIES INC.


AND


HSBC BANK USA, NATIONAL ASSOCIATION


as Documentation Agents







and


 


CITIBANK, N.A.


as Administrative Agent


 



	 





 







CITIGROUP GLOBAL MARKETS INC.







as Sole Arranger and Sole Bookrunner







  





  











  








 



TABLE OF CONTENTS



	
  

	
ARTICLE I







 



	
  

	
SECTION 1.01.  Certain Defined Terms 

	 1





 



	
  

	
SECTION 1.02.  Computation of Time Periods

	 15





 



	
  

	
SECTION 1.03.  Accounting Terms

	 16





 



	
  

	
ARTICLE II







 



	
  

	
SECTION 2.01.  The Advances and Letters of Credit

	 16





 



	
  

	
SECTION 2.02.  Making the Advances

	 16





 



	
  

	
SECTION 2.03.  Issuance of and Drawings and Reimbursement Under Letters of

	
 








	 	Credit	17





 



	
  

	
SECTION 2.04.  Fees

	 19





 



	
  

	
SECTION 2.05.  Termination or Reduction of the Commitments

	 20





 



	
  

	
SECTION 2.06.  Repayment of Advances and Letter of Credit Drawings

	 20





 



	
  

	
SECTION 2.07.  Interest on Advances

	 21





 



	
  

	
SECTION 2.08.  Interest Rate Determination

	 22





 



	
  

	
SECTION 2.09.  Optional Conversion of Advances

	 23





 



	
  

	
SECTION 2.10.  Optional Prepayments of Advances

	 23





 



	
  

	
SECTION 2.11.  Increased Costs

	 23





 



	
  

	
SECTION 2.12.  Illegality

	 25





 



	
  

	
SECTION 2.13.  Payments and Computations

	 25





 



	
  

	
SECTION 2.14.  Taxes

	 26





 



	
  

	
SECTION 2.15.  Sharing of Payments, Etc.

	 27





 



	
  

	
SECTION 2.16.  Evidence of Debt

	 28





 



	
  

	
SECTION 2.17.  Use of Proceeds

	 28





 






  





i


 





  




-ii-










	
  

	
SECTION 2.18.  Replacement of Lenders

	 28





 



	
  

	
SECTION 2.19.  Defaulting Lenders

	 29





 



	
  

	
SECTION 2.20.  Extension of Termination Date

	 31





 



	
  

	
ARTICLE III







 



	
  

	
SECTION 3.01.  Conditions Precedent to Effectiveness of Section 2.01

	 32





 



	
  

	
SECTION 3.02.  Conditions Precedent to Each Borrowing and Issuance.

	 33





 



	
  

	
SECTION 3.03.  Determinations Under Section 3.01

	 34





 



	
  

	
ARTICLE IV







 



	
  

	
SECTION 4.01.  Representations and Warranties of the Borrower

	 34





 



	
  

	
ARTICLE V







 



	
  

	
SECTION 5.01.  Affirmative Covenants

	 36





 



	
  

	
SECTION 5.02.  Negative Covenants

	 40





 



	
  

	
SECTION 5.03.  Financial Covenants

	 43





 



	
  

	
ARTICLE VI







 



	
  

	
SECTION 6.01.  Events of Default

	 44





 



	
  

	
SECTION 6.02.  Actions in Respect of the Letters of Credit upon Default or 

	
 









	 	Termination	46





 




 



	
  

	
ARTICLE VII







 



	
  

	
SECTION 7.01.  Appointment and Authority

	 47





 



	
  

	
SECTION 7.02.  Rights as a Lender

	 47





 



	
  

	
SECTION 7.03.  Exculpatory Provisions

	 47





 



	
  

	
SECTION 7.04.  Reliance by Agent

	 48





 



	
  

	
SECTION 7.05.  Indemnification

	 48





 



	
  

	
SECTION 7.06.  Delegation of Duties

	 49





 






  





ii


 





  




-iii-










	
  

	
SECTION 7.07.  Resignation of Agent

	 49





 



	
  

	
SECTION 7.08.  Non-Reliance on Agent and Other Lenders.

	 50





 



	
  

	
SECTION 7.09.  Other Agents.

	 50





 



	
  

	
ARTICLE VIII







 



	
  

	
SECTION 8.01.  Amendments, Etc.

	 50





 



	
  

	
SECTION 8.02.  Notices, Etc.

	 51





 



	
  

	
SECTION 8.03.  No Waiver; Remedies

	 52





 



	
  

	
SECTION 8.04.  Costs and Expenses

	 52





 



	
  

	
SECTION 8.05.  Right of Set-off

	 53





 



	
  

	
SECTION 8.06.  Binding Effect

	 54





 



	
  

	
SECTION 8.07.  Assignments and Participations

	 54





 



	
  

	
SECTION 8.08.  Confidentiality

	 57





 



	
  

	
SECTION 8.09.  Governing Law

	 58





 



	
  

	
SECTION 8.10.  Execution in Counterparts

	 58





 



	
  

	
SECTION 8.11.  Jurisdiction, Etc.

	 58





 



	
  

	
SECTION 8.12.  No Liability of the Issuing Banks

	 58





 



	
  

	
SECTION 8.13.  Patriot Act Notice

	 59





 



	
  

	
SECTION 8.14.  No Fiduciary Duties

	 59





 



	
  

	
SECTION 8.15.  Waiver of Jury Trial

	 60









  





iii


 





  




-iv-












Schedules


 


Schedule I - List of Applicable Lending Offices


 


Schedule 3.01(b) - Disclosed Litigation


 


Schedule 4.01(j) - Licenses


 


Schedule 5.02(a) - Existing Liens


 


Exhibits


 


Exhibit A    -       Form of Note


 


Exhibit B    -       Form of Notice of Borrowing


 


Exhibit C    -       Form of Assignment and Assumption


 


Exhibit D    -       Form of Opinion of Counsel for the Borrower


 






  





iv











  











CREDIT AGREEMENT


 


Dated as of August 15, 2011


 


 


EVEREST REINSURANCE HOLDINGS, INC., a Delaware corporation (the “Borrower”), the banks, financial institutions and other institutional lenders (the “Initial Lenders”) and issuers of letters of credit (“Initial Issuing Banks”) listed on Schedule I hereto, and CITIBANK, N.A. (“Citibank”), as administrative agent (the “Agent”) for the Lenders (as hereinafter defined), agree as follows:


 


ARTICLE I


 


DEFINITIONS AND ACCOUNTING TERMS


 


SECTION 1.01.  Certain Defined Terms.  As used in this Agreement, the following terms shall have the following meanings (such meanings to be equally applicable to both the singular and plural forms of the terms defined):


 


“Administrative Questionnaire” means an Administrative Questionnaire in a form supplied by the Agent.


 


“Advance” means an advance by a Lender to the Borrower as part of a Borrowing and refers to a Base Rate Advance or a Eurodollar Rate Advance (each of which shall be a “Type” of Advance).


 


“Affiliate” means, as to any Person, any other Person that, directly or indirectly, controls, is controlled by or is under common control with such Person or is a director or officer of such Person.  For purposes of this definition, the term “control” (including the terms “controlling”, “controlled by” and “under common control with”) of a Person means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of Voting Stock, by contract or otherwise.


 


“Agent’s Account” means the account of the Agent maintained by the Agent at Citibank at its office at 1615 Brett Road, Building #3, New Castle, Delaware  19720, Account No. 36852248, Attention:  Bank Loan Syndications.


 


“Anniversary Date” has the meaning specified in Section 2.20(a).


 


“Applicable Lending Office” means, with respect to each Lender, such Lender’s Domestic Lending Office in the case of a Base Rate Advance and such Lender’s Eurodollar Lending Office in the case of a Eurodollar Rate Advance.


 


“Applicable Margin” means as of any date, a percentage per annum determined by reference to the Public Debt Rating in effect on such date as set forth below:








	
Public Debt Rating


S&P/Moody’s

	
Applicable Margin for


Eurodollar Rate Advances

	
Applicable Margin for


Base Rate Advances


	
Level 1


A+ / A1 or above

	
 


1.000%

	
 


0.000%







 




  





  











  






 









	
Level 2


A / A2

	
 


1.125%

	
 


0.125%


	
Level 3


A- / A3

	
 


1.250%

	
 


0.250%


	
Level 4


BBB+ / Baa1

	
 


1.500%

	
 


0.500%


	
Level 5


BBB / Baa2 or below

	
 


1.750%

	
 


0.750%









 




 


“Applicable Percentage” means, as of any date a percentage per annum determined by reference to the Public Debt Rating in effect on such date as set forth below:








	
Public Debt Rating


S&P/Moody’s

	
Applicable


Percentage


	
Level 1


A+ / A1 or above

	
 


0.125%


	
Level 2


A / A2

	
 


0.150%


	
Level 3


A- / A3

	
 


0.200%


	
Level 4


BBB+ / Baa1

	
 


0.250%


	
Level 5


BBB / Baa2 or below

	
 


0.30%












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


 


“Assignment and Assumption” means an assignment and assumption entered into by a Lender and an Eligible Assignee (with the consent of any party whose consent is required by Section 8.07), and accepted by the Agent, in substantially the form of Exhibit C or any other form approved by the Agent.


 


“Assuming Lender” has the meaning specified in Section 2.20(d).


 


“Assumption Agreement” has the meaning specified in Section 2.20(d).


 


“Available Amount” of any Letter of Credit means, at any time, the maximum amount available to be drawn under such Letter of Credit at such time (assuming compliance at such time with all conditions to drawing).


 


“Base Rate” means a fluctuating interest rate per annum in effect from time to time, which rate per annum shall at all times be equal to the highest of:


 


(a)           the rate of interest announced publicly by Citibank in New York, New York, from time to time, as Citibank’s base rate;


 


(b)           1⁄2 of one percent per annum above the Federal Funds Rate; and


 




  





2











  






 


(c)           the British Bankers Association Interest Settlement Rate applicable to Dollars for a period of one month (“One Month LIBOR”) plus 1.00% (for the avoidance of doubt, the One Month LIBOR for any day shall be based on the rate appearing on Reuters LIBOR01 Page (or other commercially available source providing such quotations as designated by the Agent from time to time) at approximately 11:00 a.m. London time on such day).


 


“Base Rate Advance” means an Advance that bears interest as provided in Section 2.07(a)(i).


 


“Borrowing” means a borrowing consisting of simultaneous Advances of the same Type made by each of the Lenders.


 


“Business Day” means a day of the year on which banks are not required or authorized by law to close in New York City and, if the applicable Business Day relates to any Eurodollar Rate Advances, on which dealings are carried on in the London interbank market and banks are open for business in London.


 


“Cash Collateralize” means, in respect of an obligation, provide and pledge (as a first priority perfected security interest) cash collateral in US Dollars, at a location and pursuant to documentation in form and substance satisfactory to the Agent and each Issuing Bank (and “Cash Collateralization” has a corresponding meaning).


 


“Code” means the Internal Revenue Code of 1986, as amended from time to time, and the regulations promulgated and rulings issued thereunder.


 


“Commitments” means the Revolving Credit Commitments and the Letter of Credit Commitments.


 


“Communications” has the meaning specified in Section 8.02(d)(ii).


 


“Consolidated” refers to the consolidation of accounts in accordance with GAAP.


 


“Consolidated Indebtedness” shall mean, as of the last day of any fiscal quarter, the aggregate (without duplication) of all Debt (whether or not reflected on the Borrower’s or any Subsidiary’s balance sheet) of the Borrower and its Subsidiaries, determined on a Consolidated basis in accordance with GAAP, excluding (i) reimbursement obligations in respect of letters of credit issued for the benefit of any Insurance Subsidiary or the Borrower in the ordinary course of its business to support the payment of obligations arising under insurance and reinsurance contracts and weather and similar swap agreements, but only in each case to the extent such letters of credit (A) are not drawn upon and (B) are collateralized by cash or cash equivalents and (ii) the aggregate redemption value of all Trust Preferred Securities to the extent such aggregate redemption value is equal to or less than fifteen percent (15%) of Total Capitalization.


 


“Consolidated Net Worth” shall mean, as of any date of determination, the net worth of the Borrower and its Subsidiaries as of such date, determined on a consolidated basis in accordance with GAAP, but excluding any Disqualified Capital Stock.


 


“Convert”, “Conversion” and “Converted” each refers to a conversion of Advances of one Type into Advances of the other Type pursuant to Section 2.08 or 2.09.


 




  





3











  






 


 


“Debt” of any Person means, without duplication, (a) all indebtedness of such Person for borrowed money, (b) all obligations of such Person for the deferred purchase price of property or services, (c) all obligations of such Person evidenced by notes, bonds, debentures or other similar instruments, (d) all obligations of such Person created or arising under any conditional sale or other title retention agreement with respect to property acquired by such Person (even though the rights and remedies of the seller or lender under such agreement in the event of default are limited to repossession or sale of such property), (e) all obligations of such Person as lessee under leases that have been or should be, in accordance with GAAP, recorded as capital leases, (f) all obligations, contingent or otherwise, of such Person in respect of acceptances, letters of credit or similar extensions of credit, (g) the net termination obligations of such Person in respect of Hedge Agreements, calculated as of any date as if such agreement or arrangement were terminated as of such date, (h) all Disqualified Capital Stock issued by such Person, with the amount of Debt represented by such Disqualified Capital Stock being equal to the greater of its voluntary or involuntary liquidation preference and its maximum fixed repurchase price, but excluding accrued dividends, if any (for the purposes hereof, the “maximum fixed repurchase price” of any Disqualified Capital Stock that does not have a fixed repurchase price shall be calculated in accordance with the terms of such Disqualified Capital Stock as if such Disqualified Capital Stock were purchased on any date on which Debt shall be required to be determined pursuant to this Agreement, and if such price is based upon, or measured by, the fair market value of such Disqualified Capital Stock, such fair market value shall be determined reasonably and in good faith by the board of directors or other governing body of the issuer of such Disqualified Capital Stock), (i) all Debt of others referred to in clauses (a) through (h) above or clause (j) below and other payment obligations (collectively, “Guaranteed Debt”) guaranteed directly or indirectly in any manner by such Person, or in effect guaranteed directly or indirectly by such Person through an agreement (1) to pay or purchase such Guaranteed Debt or to advance or supply funds for the payment or purchase of such Guaranteed Debt, (2) to purchase, sell or lease (as lessee or lessor) property, or to purchase or sell services, primarily for the purpose of enabling the debtor to make payment of such Guaranteed Debt or to assure the holder of such Guaranteed Debt against loss, (3) to supply funds to or in any other manner invest in the debtor (including any agreement to pay for property or services irrespective of whether such property is received or such services are rendered) or (4) otherwise to assure a creditor against loss, and (j) all Debt referred to in clauses (a) through (i) above (including Guaranteed Debt) secured by (or for which the holder of such Debt has an existing right, contingent or otherwise, to be secured by) any Lien on property (including, without limitation, accounts and contract rights) owned by such Person, even though such Person has not assumed or become liable for the payment of such Debt.


 


“Default” means any Event of Default or any event that would constitute an Event of Default but for the requirement that notice be given or time elapse or both.


 


“Defaulting Lender” means at any time, subject to Section 2.19(c), (i) any Lender that has failed for three or more Business Days to comply with its obligations under this Agreement to make an Advance, make a payment to an Issuing Bank in respect of drawing under a Letter of Credit or make any other payment due hereunder (each, a “funding obligation”), unless such Lender has notified the Agent and the Borrower in writing that such failure is the result of such Lender’s determination that one or more conditions precedent to funding has not been satisfied (which conditions precedent, together with the applicable default, if any, will be specifically identified in such writing), (ii) any Lender that has notified the Agent, the Borrower or an Issuing Bank in writing, or has stated publicly, that it does not intend to comply with its funding obligations hereunder, unless such writing or statement states that such position is based on such Lender’s determination that one or more conditions precedent to funding cannot be satisfied (which conditions precedent, together with the applicable default, if any, will be specifically


 




  





4











  






 


identified in such writing or public statement), (iii) any Lender that has defaulted on its funding obligations under other loan agreements or credit agreements generally under which it has commitments to extend credit or that has notified, or whose Parent Company has notified, the Agent or the Borrower in writing, or has stated publicly, that it does not intend to comply with its funding obligations under loan agreements or credit agreements generally, (iv) any Lender that has, for three or more Business Days after written request of the Agent or the Borrower, failed to confirm in writing to the Agent and the Borrower that it will comply with its prospective funding obligations hereunder (provided that such Lender will cease to be a Defaulting Lender pursuant to this clause (iv) upon the Agent’s and the Borrower’s receipt of such written confirmation), or (v) any Lender with respect to which a Lender Insolvency Event has occurred and is continuing with respect to such Lender or its Parent Company; provided that a Lender Insolvency Event shall not be deemed to occur with respect to a Lender or its Parent Company solely as a result of the acquisition or maintenance of an ownership interest in such Lender or Parent Company by a governmental authority or instrumentality thereof where such action does not result in or provide such Lender with immunity from the jurisdiction of courts within the United States or from the enforcement of judgments or writs of attachment on its assets or permit such Lender (or such Governmental Authority or instrumentality) to reject, repudiate, disavow or disaffirm any contracts or agreements made with such Lender.  Any determination by the Agent that a Lender is a Defaulting Lender under any of clauses (i) through (v) above will be conclusive and binding absent manifest error, and such Lender will be deemed to be a Defaulting Lender (subject to Section 2.19(c)) upon notification of such determination by the Agent to the Borrower, the Issuing Banks and the Lenders.


 


“Disclosed Litigation” has the meaning specified in Section 3.01(b).


 


“Disqualified Capital Stock” shall mean, with respect to any Person, any equity interests of such Person that, by its terms (or by the terms of any security into which it is convertible or for which it is exchangeable), or upon the happening of any event or otherwise, (i) matures or is mandatorily redeemable or subject to any mandatory repurchase requirement, pursuant to a sinking fund obligation or otherwise, (ii) is redeemable or subject to any mandatory repurchase requirement at the sole option of the holder thereof, or (iii) is convertible into or exchangeable for (whether at the option of the issuer or the holder thereof) (a) debt securities or (b) any equity interests referred to in (i) or (ii) above, in each case under (i), (ii) or (iii) above at any time on or prior to the first anniversary of the latest Termination Date; provided, however, that only the portion of equity interests that so matures or is mandatorily redeemable, is so redeemable at the option of the holder thereof, or is so convertible or exchangeable on or prior to such date shall be deemed to be Disqualified Capital Stock.


 


“Domestic Lending Office” means, with respect to any Lender, the office of such Lender specified as its “Domestic Lending Office” in its Administrative Questionnaire delivered to the Agent, or such other office of such Lender as such Lender may from time to time specify to the Borrower and the Agent.


 


“Effective Date” has the meaning specified in Section 3.01.


 


“Eligible Assignee” means any Person that meets the requirements to be an assignee under Section 8.07(b)(iii), (v) and (vi) (subject to such consents, if any, as may be required under Section 8.07(b)(iii)).


 


“Environmental Action” means any action, suit, demand, demand letter, claim, notice of non-compliance or violation, notice of liability or potential liability, investigation, proceeding,


 




  





5











  






 


consent order or consent agreement relating in any way to any Environmental Law, Environmental Permit or Hazardous Materials or arising from alleged injury or threat of injury to health, safety or the environment, including, without limitation, (a) by any governmental or regulatory authority for enforcement, cleanup, removal, response, remedial or other actions or damages and (b) by any governmental or regulatory authority or any third party for damages, contribution, indemnification, cost recovery, compensation or injunctive relief.


 


“Environmental Law” means any federal, state, local or foreign statute, law, ordinance, rule, regulation, code, order, judgment, decree or judicial or agency interpretation, policy or guidance relating to pollution or protection of the environment, health, safety or natural resources, including, without limitation, those relating to the use, handling, transportation, treatment, storage, disposal, release or discharge of Hazardous Materials.


 


“Environmental Permit” means any permit, approval, identification number, license or other authorization required under any Environmental Law.


 


“ERISA” means the Employee Retirement Income Security Act of 1974, as amended from time to time, and the regulations promulgated and rulings issued thereunder.


 


“ERISA Affiliate” means any Person that for purposes of Title IV of ERISA is a member of the Borrower’s controlled group, or under common control with the Borrower, within the meaning of Section 414 of the Code.


 


“ERISA Event” means (a) (i) the occurrence of a reportable event, within the meaning of Section 4043 of ERISA, with respect to any Plan unless the 30-day notice requirement with respect to such event has been waived by the PBGC, or (ii) the requirements of subsection (1) of Section 4043(b) of ERISA (without regard to subsection (2) of such Section) are met with respect to a contributing sponsor, as defined in Section 4001(a)(13) of ERISA, of a Plan, and an event described in paragraph (9), (10), (11), (12) or (13) of Section 4043(c) of ERISA is reasonably expected to occur with respect to such Plan within the following 30 days; (b) the application for a minimum funding waiver with respect to a Plan; (c) the provision by the administrator of any Plan of a notice of intent to terminate such Plan pursuant to Section 4041(a)(2) of ERISA (including any such notice with respect to a plan amendment referred to in Section 4041(e) of ERISA); (d) the cessation of operations at a facility of the Borrower or any ERISA Affiliate in the circumstances described in Section 4062(e) of ERISA; (e) the withdrawal by the Borrower or any ERISA Affiliate from a Multiple Employer Plan during a plan year for which it was a substantial employer, as defined in Section 4001(a)(2) of ERISA; (f) the conditions for the imposition of a lien under Section 303(k) of ERISA shall have been met with respect to any Plan; (g) a determination is made that any Plan is in “at risk” status (within the meaning of Section 303 of ERISA); or (h) the institution by the PBGC of proceedings to terminate a Plan pursuant to Section 4042 of ERISA, or the occurrence of any event or condition described in Section 4042 of ERISA that constitutes grounds for the termination of, or the appointment of a trustee to administer, a Plan.


 


“Eurocurrency Liabilities” has the meaning assigned to that term in Regulation D of the Board of Governors of the Federal Reserve System, as in effect from time to time.


 


“Eurodollar Lending Office” means, with respect to any Lender, the office of such Lender specified as its “Eurodollar Lending Office” in its Administrative Questionnaire delivered to the Agent, or such other office of such Lender as such Lender may from time to time specify to the Borrower and the Agent.


 




  





6











  






 


“Eurodollar Rate” means, for any Interest Period for each Eurodollar Rate Advance comprising part of the same Borrowing, an interest rate per annum equal to the rate per annum (rounded upward to the nearest whole multiple of 1/16 of 1% per annum) appearing on Reuters LIBOR01 Page (or any successor page) as the London interbank offered rate for deposits in U.S. dollars at approximately 11:00 A.M. (London time) two Business Days prior to the first day of such Interest Period for a term comparable to such Interest Period or, if for any reason such rate is not available, the average (rounded upward to the nearest whole multiple of 1/16 of 1% per annum, if such average is not such a multiple) of the rate per annum at which deposits in U.S. dollars is offered by the principal office of each of the Reference Banks in London, England to prime banks in the London interbank market at 11:00 A.M. (London time) two Business Days before the first day of such Interest Period in an amount substantially equal to such Reference Bank’s Eurodollar Rate Advance comprising part of such Borrowing to be outstanding during such Interest Period and for a period equal to such Interest Period.  If the Reuters LIBOR01 Page (or any successor page) is unavailable, the Eurodollar Rate for any Interest Period for each Eurodollar Rate Advance comprising part of the same Borrowing shall be determined by the Agent on the basis of applicable rates furnished to and received by the Agent from the Reference Banks two Business Days before the first day of such Interest Period, subject, however, to the provisions of Section 2.08.


 


“Eurodollar Rate Advance” means an Advance that bears interest as provided in Section 2.07(a)(ii).


 


“Eurodollar Rate Reserve Percentage”, as to any Lender and for any Interest Period, means the reserve percentage applicable two Business Days before the first day of such Interest Period under regulations issued from time to time by the Board of Governors of the Federal Reserve System (or any successor) for determining the reserve requirement (including, without limitation, any emergency, supplemental or other marginal reserve requirement) applicable to such Lender with respect to liabilities or assets consisting of or including Eurocurrency Liabilities (or with respect to any other category of liabilities that includes deposits by reference to which the interest rate on Eurodollar Rate Advances is determined) having a term equal to such Interest Period.


 


“Events of Default” has the meaning specified in Section 6.01.


 


“Everest Re” means Everest Reinsurance Company, a Delaware corporation.


 


“Excluded Taxes” means, with respect to any Lender, the Agent, or any other recipient of any payment to be made by or on account of any obligation of the Borrower hereunder, (a) Taxes imposed on or measured by its overall net income (however denominated), and franchise Taxes imposed on it (in lieu of net income Taxes), by the jurisdiction (or any political subdivision thereof) under the laws of which such recipient is organized or in which its principal office is located or, in the case of any Lender, in which its applicable lending office is located, (b) any branch profits Taxes imposed by the United States of America, (c) in the case of a Foreign Lender (other than an assignee pursuant to a request by the Borrower under Section 2.18), any United States withholding Tax that is imposed on amounts payable to such Foreign Lender at the time such Foreign Lender becomes a party hereto (or designates a new lending office) or is attributable to such Foreign Lender’s failure or inability (other than as a result of a change in law) to comply with Section 2.14(e), except to the extent that such Foreign Lender (or its assignor, if any) was entitled, at the time of designation of a new lending office (or assignment), to receive additional amounts from the Borrower with respect to such withholding Tax pursuant to Section 2.14(a) or (e) and (d) any United States withholding tax imposed under FATCA.


 




  





7











  






 


“FATCA” means Sections 1471 though 1474 of the Code, and any regulations promulgated thereunder and official interpretations thereof.


 


“Federal Funds Rate” means, for any period, a fluctuating interest rate per annum equal for each day during such period to the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers, as published for such day (or, if such day is not a Business Day, for the next preceding Business Day) by the Federal Reserve Bank of New York, or, if such rate is not so published for any day that is a Business Day, the average of the quotations for such day on such transactions received by the Agent from three Federal funds brokers of recognized standing selected by it.


 


“Foreign Lender” means any Lender that is organized under the laws of a jurisdiction other than that the United States of America, each State thereof and the District of Columbia.


 


“Fronting Exposure” means, at any time there is a Defaulting Lender, with respect to any Issuing Bank, such Defaulting Lender’s Ratable Share of the L/C Obligations with respect to Letters of Credit issued by such Issuing Bank, other than L/C Obligations as to which such Defaulting Lender’s participation obligation has been reallocated to other Lenders or Cash Collateralized in accordance with the terms hereof.


 


“Fund” means any Person (other than a natural Person) that is (or will be) engaged in making, purchasing, holding or otherwise investing in commercial loans and similar extensions of credit in the ordinary course of its activities.


 


“GAAP” has the meaning specified in Section 1.03.


 


“Governmental Authority” means the government of the United States of America or any other nation, or of any political subdivision thereof, whether state or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government (including any supra-national bodies such as the European Union or the European Central Bank).


 


“Group” shall mean Everest Re Group, Ltd., a corporation organized under the laws of Bermuda.


 


“Hazardous Materials” means (a) petroleum and petroleum products, byproducts or breakdown products, radioactive materials, asbestos-containing materials, polychlorinated biphenyls and radon gas and (b) any other chemicals, materials or substances designated, classified or regulated as hazardous or toxic or as a pollutant or contaminant under any Environmental Law.


 


“Hedge Agreements” means interest rate swap, cap or collar agreements, interest rate future or option contracts, currency swap agreements, currency future or option contracts and other similar agreements.


 


“Indemnified Taxes” means Taxes other than Excluded Taxes.


 


“Information” has the meaning specified in Section 8.08.


 




  





8











  






 


“Information Memorandum” means the information memorandum dated July 15, 2011 used by the Agent in connection with the syndication of the Commitments.


 


“Insurance Code” shall mean, with respect to any Insurance Subsidiary, the insurance code of any state where such Insurance Subsidiary is domiciled or conducting business, as amended from time to time, and any successor statute, together with all rules and regulations from time to time promulgated thereunder.


 


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


 


“Insurance Subsidiary” shall mean Everest Re and any other Subsidiary of the Borrower the ability of which to pay dividends is regulated by an Insurance Regulatory Authority or that is otherwise required to be regulated thereby in accordance with the applicable law of its jurisdiction of domicile.


 


“Interest Period” means, for each Eurodollar Rate Advance comprising part of the same Borrowing, the period commencing on the date of such Eurodollar Rate Advance or the date of the Conversion of any Base Rate Advance into such Eurodollar Rate Advance and ending on the last day of the period selected by the Borrower pursuant to the provisions below and, thereafter, each subsequent period commencing on the last day of the immediately preceding Interest Period and ending on the last day of the period selected by the Borrower pursuant to the provisions below.  The duration of each such Interest Period shall be one, two, three or six months, and subject to clause (c) of this definition, nine or twelve months, as the Borrower may, upon notice received by the Agent not later than 11:00 A.M. (New York City time) on the third Business Day prior to the first day of such Interest Period, select; provided, however, that:


 


(a)           the Borrower may not select any Interest Period that ends after the latest Termination Date;


 


(b)           Interest Periods commencing on the same date for Eurodollar Rate Advances comprising part of the same Borrowing shall be of the same duration;


 


(c)           in the case of any such Borrowing, the Borrower shall not be entitled to select an Interest Period having duration of nine or twelve months unless, by 2:00 P.M. (New York City time) on the third Business Day prior to the first day of such Interest Period, each Lender notifies the Agent that such Lender will be providing funding for such Borrowing with such Interest Period (the failure of any Lender to so respond by such time being deemed for all purposes of this Agreement as an objection by such Lender to the requested duration of such Interest Period); provided that, if any or all of the Lenders object to the requested duration of such Interest Period, the duration of the Interest Period for such Borrowing shall be one, two, three or six months, as specified by the Borrower in the applicable Notice of Borrowing as the desired alternative to an Interest Period of nine or twelve months;


 


(d)           whenever the last day of any Interest Period would otherwise occur on a day other than a Business Day, the last day of such Interest Period shall be extended to occur on the next succeeding Business Day, provided, however, that, if such extension 


 




  





9











  




 


would cause the last day of such Interest Period to occur in the next following calendar month, the last day of such Interest Period shall occur on the next preceding Business Day; and




 


(e)           whenever the first day of any Interest Period occurs on a day of an initial calendar month for which there is no numerically corresponding day in the calendar month that succeeds such initial calendar month by the number of months equal to the number of months in such Interest Period, such Interest Period shall end on the last Business Day of such succeeding calendar month.


 


“Issuance” with respect to any Letter of Credit means the issuance, amendment, renewal or extension of such Letter of Credit.


 


“Issuing Bank” means an Initial Issuing Bank, any Eligible Assignee to which a portion of the Letter of Credit Commitment hereunder has been assigned pursuant to Section 8.07 or any other Lender that agrees to become an Issuing Bank, so long as such Eligible Assignee or other Lender expressly agrees to perform in accordance with their terms all of the obligations that by the terms of this Agreement are required to be performed by it as an Issuing Bank and notifies the Agent of its Letter of Credit Commitment and Applicable Lending Office (which information shall be recorded by the Agent in the Register), for so long as such Initial Issuing Bank, Eligible Assignee or other Lender, as the case may be, shall have a Letter of Credit Commitment.


 


“L/C Cash Collateral Account” means an interest bearing cash deposit account to be established and maintained by the Agent, over which the Agent shall have sole dominion and control, upon terms as may be satisfactory to the Agent.


 


“L/C Obligations” means, as of any date, the aggregate Available Amount of outstanding Letters of Credit and Advances made by an Issuing Bank in accordance with Section 2.03 that have not been funded by the Lenders.


 


“L/C Related Documents” has the meaning specified in Section 2.06(b)(i).


 


“Lender Insolvency Event” means that (a) a Lender or its Parent Company has become the subject of a proceeding under any debtor relief law, or is generally unable to pay its debts as they become due, or admits in writing its inability to pay its debts as they become due, or makes a general assignment for the benefit of its creditors, or (b) such Lender or its Parent Company is the subject of a bankruptcy, insolvency, reorganization, liquidation or similar proceeding, or a receiver, trustee, conservator, intervenor or sequestrator or the like has been appointed for such Lender or its Parent Company, or such Lender or its Parent Company has taken any action in furtherance of or indicating its consent to or acquiescence in any such proceeding or appointment.


 


“Lenders” means each Initial Lender, each Issuing Bank, each Assuming Lender that shall become a party hereto pursuant to Section 2.20 and each Person that shall become a party hereto pursuant to Section 8.07.


 


“Letter of Credit” has the meaning specified in Section 2.01(b).


 


“Letter of Credit Agreement” has the meaning specified in Section 2.03(a).


 


“Letter of Credit Commitment” means, with respect to each Issuing Bank, the obligation of such Issuing Bank to issue Letters of Credit for the account of the Borrower and its 


 




  





10











  




 


Subsidiaries in (a) the amount set forth opposite the Issuing Bank’s name on Schedule I hereto under the caption “Letter of Credit Commitment” or (b) in the case of a Lender or an Eligible Assignee that becomes an Issuing Bank after the date hereof, the amount set forth for such Issuing Bank in the Register maintained by the Agent pursuant to Section 8.07(c) as such Issuing Bank’s “Letter of Credit Commitment”, in each case as such amount may be reduced prior to such time pursuant to Section 2.05.




 


“Letter of Credit Facility” means, at any time, an amount equal to the lesser of (a) the aggregate amount of the Issuing Banks’ Letter of Credit Commitments at such time and (b) the aggregate amount of the Revolving Credit Commitments, as such amount may be reduced at or prior to such time pursuant to Section 2.05.


 


“Lien” means any lien, security interest or other charge or encumbrance of any kind, or any other type of preferential arrangement, including, without limitation, the lien or retained security title of a conditional vendor and any easement, right of way or other encumbrance on title to real property.


 


“Loan Documents” means this Agreement, the Notes and each Letter of Credit Agreement, together with all amendments, modifications and restatements thereof.


 


“Material Adverse Change” means any material adverse change in the business, financial condition or operations of the Borrower and its Subsidiaries taken as a whole.


 


“Material Adverse Effect” means a material adverse effect on (a) the business, financial condition or operations of the Borrower and its Subsidiaries taken as a whole, (b) the ability of the Borrower to perform its payment and other material obligations under this Agreement or any Note or (c) the rights and remedies of the Agent or any Lender under this Agreement or any Note.


 


“Material Insurance Subsidiary” shall mean each of (i) Everest Re, (ii) Everest National Insurance Company, (iii) at the relevant time of determination, any other Insurance Subsidiary having (after the elimination of intercompany accounts) (A) assets constituting at least ten percent (10%) of the aggregate assets of all of the Borrower’s Insurance Subsidiaries, or (B) gross written premiums for the four quarters most recently ended constituting at least ten percent (10%) of the aggregate gross written premiums (without duplication) of all of the Borrower’s Insurance Subsidiaries, in each case determined in accordance with SAP as of the date of the statutory financial statements most recently delivered under Section 5.01(i) prior to such time (or, with regard to determinations at any time prior to the initial delivery of financial statements under Section 5.01(i), as of the date of the most recent financial statements referred to in Section 4.01(e)) and (iv) any Subsidiary that has one of the foregoing as a Subsidiary.


 


“Moody’s” means Moody’s Investors Service, Inc.


 


“Multiemployer Plan” means a multiemployer plan, as defined in Section 4001(a)(3) of ERISA, to which the Borrower or any ERISA Affiliate is making or accruing an obligation to make contributions, or has within any of the preceding five plan years made or accrued an obligation to make contributions.


 


“Multiple Employer Plan” means a single employer plan, as defined in Section 4001(a)(15) of ERISA, that (a) is maintained for employees of the Borrower or any ERISA Affiliate and at least one Person other than the Borrower and the ERISA Affiliates or (b) was so maintained and in respect of which the Borrower or any ERISA Affiliate could have 


 




  





11











  




 


liability under Section 4064 or 4069 of ERISA in the event such plan has been or were to be terminated.




 


“Net Income” means, with respect to any Person for any period, the net income (or net loss), after extraordinary items, Taxes and all other items of expense and income of such Person for such period, determined in accordance with GAAP.


 


“Non-Consenting Lender” means any Lender that does not approve any consent, waiver or amendment that (i) requires the approval of all affected Lenders in accordance with the terms of Section 8.01 and (ii) has been approved by the Required Lenders.


 


“Non-Defaulting Lender” means, at any time, a Lender that is not a Defaulting Lender.


 


“Non-Extending Lender” has the meaning specified in Section 2.20(b).


 


“Note” means a promissory note of the Borrower payable to the order of any Lender, delivered pursuant to a request made under Section 2.16 in substantially the form of Exhibit A hereto, evidencing the aggregate indebtedness of the Borrower to such Lender resulting from the Advances made by such Lender to the Borrower.


 


“Notice Date” has the meaning specified in Section 2.20(b).


 


“Notice of Borrowing” has the meaning specified in Section 2.02(a).


 


“Notice of Issuance” has the meaning specified in Section 2.03(a).


 


“Other Taxes” means all present or future stamp or documentary Taxes or any other excise or property Taxes, charges or similar levies arising from any payment made hereunder or under any Note.


 


“Parent Company” means, with respect to a Lender, the bank holding company (as defined in Federal Reserve Board Regulation Y), if any, of such Lender, or if such Lender does not have a bank holding company, then any corporation, association, partnership or other business entity owning, beneficially or of record, directly or indirectly, a majority of the Voting Stock of such Lender.


 


“Participant” has the meaning assigned to such term in Section 8.07(d).


 


“Patriot Act” means the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, Pub. L. 107-56, signed into law October 26, 2001.


 


“PBGC” means the Pension Benefit Guaranty Corporation (or any successor).


 


“Permitted Liens” means such of the following as to which no enforcement, collection, execution, levy or foreclosure proceeding shall have been commenced:  (a) Liens for Taxes, assessments and governmental charges or levies to the extent not required to be paid under Section 5.01(b) hereof; (b) Liens imposed by law, such as materialmen’s, mechanics’, carriers’, workmen’s and repairmen’s Liens and other similar Liens arising in the ordinary course of business securing obligations that are not overdue for a period of more than 30 days or that are being contested in good faith and by proper proceedings and as to which appropriate reserves are


 




  





12











  




 


being maintained; (c) pledges or deposits to secure obligations under workers’ compensation laws or similar legislation or to secure public or statutory obligations; and (d) easements, rights of way and other encumbrances on title to real property that do not render title to the property encumbered thereby unmarketable or materially adversely affect the use of such property for its present purposes.




 


“Person” means an individual, partnership, corporation (including a business trust), joint stock company, trust, unincorporated association, joint venture, limited liability company or other entity, or a government or any political subdivision or agency thereof.


 


“Plan” means a Single Employer Plan or a Multiple Employer Plan.


 


“Public Debt Rating” means, as of any date, the rating that has been most recently announced by either S&P or Moody’s, as the case may be, for any class of non-credit enhanced long-term senior unsecured debt issued by the Borrower or, if any such rating agency shall have issued more than one such rating, the lowest such rating issued by such rating agency.  For purposes of the foregoing, (a) if only one of S&P and Moody’s shall have in effect a Public Debt Rating, the Applicable Margin and the Applicable Percentage shall be determined by reference to the available rating; (b) if neither S&P nor Moody’s shall have in effect a Public Debt Rating, the Applicable Margin and the Applicable Percentage will be set in accordance with Level 5 under the definition of “Applicable Margin” or “Applicable Percentage”, as the case may be; (c) if the ratings established by S&P and Moody’s shall fall within different levels, the Applicable Margin and the Applicable Percentage shall be based upon the higher rating unless such ratings differ by two or more levels, in which case the applicable level will be deemed to be one level above the lower of such levels; (d) if any rating established by S&P or Moody’s shall be changed, such change shall be effective as of the date on which such change is first announced publicly by the rating agency making such change; and (e) if S&P or Moody’s shall change the basis on which ratings are established, each reference to the Public Debt Rating announced by S&P or Moody’s, as the case may be, shall refer to the then equivalent rating by S&P or Moody’s, as the case may be.


 


“Qualifying Issuing Bank” means a financial institution that is included on the “Bank List” maintained by the National Association of Insurance Commissioners (“NAIC”) pursuant to the Purposes and Procedures Manual of the NAIC Securities Valuation Office (or any replacement thereof or any similar list, or set of eligibility standards, maintained by the NAIC for purposes of determining whether banks are qualified to issue or confirm letters of credit for reinsurance purposes).


 


“Ratable Share” of any amount means, with respect to any Lender at any time, the product of such amount times a fraction the numerator of which is the amount of such Lender’s Revolving Credit Commitment at such time (or, if the Revolving Credit Commitments shall have been terminated pursuant to Section 2.05 or 6.01, such Lender’s Revolving Credit Commitment as in effect immediately prior to such termination) and the denominator of which is the aggregate amount of all Revolving Credit Commitments at such time (or, if the Revolving Credit Commitments shall have been terminated pursuant to Section 2.05 or 6.01, the aggregate amount of all Revolving Credit Commitments as in effect immediately prior to such termination).


 


“Reference Banks” means Citibank, HSBC Bank USA, National Association and Wells Fargo Bank, National Association.


 


“Register” has the meaning specified in Section 8.07(c).


 




  





13











  






 


 


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


 


 “Reinsurance Agreement” means any agreement, contract, treaty, certificate or other arrangement whereby any Insurance Subsidiary agrees to transfer, cede or retrocede to another insurer to reinsure all or part of the liability assumed or assets held by such Insurance Subsidiary under a policy or policies of insurance issued by such Insurance Subsidiary or under a reinsurance agreement assumed by such Insurance Subsidiary.


 


“Required Lenders” means at any time Lenders owed at least a majority in interest of the then aggregate unpaid principal amount of the Advances and the amount of the L/C Obligations, or, if no such principal amount is then outstanding, Lenders having at least a majority in interest of the Revolving Credit Commitments; provided that if any Lender shall be a Defaulting Lender at such time, there shall be excluded from the determination of Required Lenders at such time the Revolving Credit Commitments of such Defaulting Lender at such time.


 


“Responsible Officer” means, with respect to the Borrower, the president, the chief executive officer, the chief financial officer, any executive officer or any other financial officer of the Borrower, and any other officer of similar official thereof responsible for the administration of the obligations of the Borrower in  respect of this Agreement.


 


“Revolving Credit Commitment” means as to any Lender (a) the amount set forth opposite such Lender’s name on Schedule I hereto as such Lender’s “Revolving Credit Commitment”, (b) if such Lender has become a Lender hereunder pursuant to an Assumption Agreement, the amount set forth in such Assumption Agreement or (c) if such Lender has entered into an Assignment and Assumption, the amount set forth for such Lender in the Register maintained by the Agent pursuant to Section 8.07(c), as such amount may be reduced pursuant to Section 2.05.


 


“S&P” means Standard & Poor’s, a division of The McGraw-Hill Companies, Inc.


 


“SAP” means, with respect to any Insurance Subsidiary, the statutory accounting practices prescribed or permitted by the relevant Insurance Regulatory Authority of its jurisdiction of domicile, consistently applies and maintained and in conformity with those applied in the preparation of the financial statements referred to in Section 4.01(e)(iii).


 


“Single Employer Plan” means a single employer plan, as defined in Section 4001(a)(15) of ERISA, that (a) is maintained for employees of the Borrower or any ERISA Affiliate and no Person other than the Borrower and the ERISA Affiliates or (b) was so maintained and in respect of which the Borrower or any ERISA Affiliate could have liability under Section 4069 of ERISA in the event such plan has been or were to be terminated.


 


“Subsidiary” of any Person means any corporation, partnership, joint venture, limited liability company, trust or estate of which (or in which) more than 50% of (a) the issued and outstanding capital stock having ordinary voting power to elect a majority of the Board of Directors of such corporation (irrespective of whether at the time capital stock of any other class or classes of such corporation shall or might have voting power upon the occurrence of any contingency), (b) the interest in the capital or profits of such limited liability company, partnership or joint venture or (c) the beneficial interest in such trust or estate is at the time 


 




  





14











  




 


directly or indirectly owned or controlled by such Person, by such Person and one or more of its other Subsidiaries or by one or more of such Person’s other Subsidiaries.




 


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


 


“Termination Date” means the earlier of August 15, 2014 and the date of termination in whole of the Commitments pursuant to Section 2.05 or 6.01; provided, however, that the Termination Date of any Lender that is a Non-Extending Lender to any requested extension pursuant to Section 2.20 shall be the Termination Date in effect immediately prior to the applicable Extension Date for all purposes of this Agreement.


 


“Total Capitalization” shall mean, as of any date of determination, the sum of (i) Consolidated Net Worth as of such date, (ii) Consolidated Indebtedness as of such date (excluding, to the extent otherwise included, the Trust Preferred Securities) and (iii) the aggregate redemption value of all Trust Preferred Securities.


 


“Trust Preferred Securities” shall mean the 7.85% Trust Preferred Securities issued by Everest Re Capital Trust, the 6.20% Trust Preferred Securities issued by Everest Re Capital Trust II and any other preferred securities offered by a special purpose business trust of which the Borrower or any of its respective Subsidiaries is the grantor, the proceeds of which are or have been used principally to purchase subordinated debentures issued by the Borrower or any Subsidiary of the Borrower.


 


“Type” has the meaning specified in the definition of “Advance”.


 


“Unissued Letter of Credit Commitment” means, with respect to any Issuing Bank, the obligation of such Issuing Bank to issue Letters of Credit for the account of the Borrower or its specified Subsidiaries in an amount equal to the excess of (a) the amount of its Letter of Credit Commitment over (b) the aggregate Available Amount of all Letters of Credit issued by such Issuing Bank.


 


“Unused Commitment” means, with respect to each Lender at any time, (a) such Lender’s Revolving Credit Commitment at such time minus (b) the sum of (i) the aggregate principal amount of all Advances made by such Lender (in its capacity as a Lender) and outstanding at such time, plus (ii) such Lender’s Ratable Share of (A) the aggregate Available Amount of all the Letters of Credit outstanding at such time and (B) the aggregate principal amount of all Advances made by each Issuing Bank pursuant to Section 2.03(c) that have not been ratably funded by such Lender and outstanding at such time.


 


“Voting Stock” means capital stock issued by a corporation, or equivalent interests in any other Person, the holders of which are ordinarily, in the absence of contingencies, entitled to vote for the election of directors (or persons performing similar functions) of such Person, even if the right so to vote has been suspended by the happening of such a contingency.


 


SECTION 1.02.  Computation of Time Periods.  In this Agreement in the computation of periods of time from a specified date to a later specified date, the word “from”  means “from and including” and the words “to” and “until” each mean “to but excluding”.


 




  





15











  






 


SECTION 1.03.  Accounting Terms.  All accounting terms not specifically defined herein shall be construed in accordance with generally accepted accounting principles consistent with those applied in the preparation of the financial statements referred to in Section 4.01(e)(i) (“GAAP”) (or, to the extent such terms apply solely to any Insurance Subsidiary or it otherwise expressly required, in accordance with SAP).


 


ARTICLE II


 


AMOUNTS AND TERMS OF THE ADVANCES AND LETTERS OF CREDIT


 


SECTION 2.01.  The Advances and Letters of Credit.  (a)  The Advances.  Each Lender severally agrees, on the terms and conditions hereinafter set forth, to make Advances to the Borrower from time to time on any Business Day during the period from the Effective Date until the Termination Date applicable to such Lender in an amount not to exceed such Lender’s Unused Commitment.  Each Borrowing shall be in an amount not less than $3,000,000 or an integral multiple of $1,000,000 in excess thereof and shall consist of Advances of the same Type made on the same day by the Lenders ratably according to their respective Revolving Credit Commitments.  Within the limits of each Lender’s Revolving Credit Commitment, the Borrower may borrow under this Section 2.01(a), prepay pursuant to Section 2.10 and reborrow under this Section 2.01(a).


 


(b)           Letters of Credit.  Each Issuing Bank agrees, on the terms and conditions hereinafter set forth, in reliance upon the agreements of the other Lenders set forth in this Agreement, to issue letters of credit (each, a “Letter of Credit”) for the account of the Borrower and its Subsidiaries from time to time on any Business Day during the period from the Effective Date until 30 days before the latest Termination Date in an aggregate Available Amount (i) for all Letters of Credit issued by each Issuing Bank not to exceed at any time the lesser of (x) the Letter of Credit Facility at such time and (y) such Issuing Bank’s Letter of Credit Commitment at such time and (ii) for each such Letter of Credit not to exceed an amount equal to the Unused Commitments of the Lenders for which the applicable Termination Date is later than the expiration date of such Letter of Credit at such time.  No Letter of Credit shall have an expiration date (including all rights of the Borrower or the beneficiary to require renewal) later than the earlier of (A) one year after the date of issuance thereof, provided that any Letter of Credit which provides for automatic one-year extensions(s) of such expiration date shall be deemed to comply with the foregoing requirement if the applicable Issuing Bank has the unconditional right to prevent any such automatic extension from taking place (and such Issuing Bank shall prevent any such automatic extension from taking place at any time the conditions set forth in Section 3.02 are not satisfied, as notified to such Issuing Bank by any Lender in writing prior to such extension) and (B) the first anniversary of the latest Termination Date.  Within the limits referred to above, the Borrower may from time to time request the Issuance of Letters of Credit under this Section 2.01(b).  Each letter of credit listed on Schedule 2.01(b) shall be deemed to constitute a Letter of Credit issued hereunder, and each Lender that is an issuer of such a Letter of Credit shall, for purposes of Section 2.03, be deemed to be an Issuing Bank for each such letter of credit, provided than any renewal or replacement of any such letter of credit shall be issued by an Issuing Bank pursuant to the terms of this Agreement.


 


SECTION 2.02.  Making the Advances.  (a)  Except as otherwise provided in Section 2.03(c), each Borrowing shall be made on notice, given not later than (x) 11:00 A.M. (New York City time) on the third Business Day prior to the date of the proposed Borrowing in the case of a Borrowing consisting of Eurodollar Rate Advances or (y) 11:00 A.M. (New York City time) on the date of the proposed Borrowing in the case of a Borrowing consisting of Base Rate Advances, by the Borrower to the Agent, which shall give to each Lender prompt notice thereof by telecopier.  Each such notice of a Borrowing (a “Notice of Borrowing”) shall be by telephone, confirmed immediately in writing, or telecopier in substantially the form of Exhibit B hereto, specifying therein the requested (i) date of such 




  





16











  




 


Borrowing, (ii) Type of Advances comprising such Borrowing, (iii) aggregate amount of such Borrowing, and (iv) in the case of a Borrowing consisting of Eurodollar Rate Advances, initial Interest Period for each such Advance.  Each Lender shall, before 1:00 P.M. (New York City time) on the date of such Borrowing, make available for the account of its Applicable Lending Office to the Agent at the Agent’s Account, in same day funds, such Lender’s ratable portion of such Borrowing.  After the Agent’s receipt of such funds and upon fulfillment of the applicable conditions set forth in Article III, the Agent will make such funds available to the Borrower at the Agent’s address referred to in Section 8.02.




 


(b)           Anything in subsection (a) above to the contrary notwithstanding, (i) the Borrower may not select Eurodollar Rate Advances for any Borrowing if the aggregate amount of such Borrowing is less than $3,000,000 or if the obligation of the Lenders to make Eurodollar Rate Advances shall then be suspended pursuant to Section 2.08 or 2.12 and (ii) the Eurodollar Rate Advances may not be outstanding as part of more than ten separate Borrowings.


 


(c)           Each Notice of Borrowing shall be irrevocable and binding on the Borrower.  In the case of any Borrowing that the related Notice of Borrowing specifies is to be comprised of Eurodollar Rate Advances, the Borrower shall indemnify each Lender against any loss, cost or expense incurred by such Lender as a result of any failure to fulfill on or before the date specified in such Notice of Borrowing for such Borrowing the applicable conditions set forth in Article III, including, without limitation, any loss (excluding loss of anticipated profits), cost or expense incurred by reason of the liquidation or reemployment of deposits or other funds acquired by such Lender to fund the Advance to be made by such Lender as part of such Borrowing when such Advance, as a result of such failure, is not made on such date.


 


(d)           Unless the Agent shall have received notice from a Lender prior to the time of any Borrowing that such Lender will not make available to the Agent such Lender’s ratable portion of such Borrowing, the Agent may assume that such Lender has made such portion available to the Agent on the date of such Borrowing in accordance with subsection (a) of this Section 2.02 and the Agent may, in reliance upon such assumption, make available to the Borrower on such date a corresponding amount.  If and to the extent that such Lender shall not have so made such ratable portion available to the Agent, such Lender and the Borrower severally agree to repay to the Agent forthwith on demand such corresponding amount together with interest thereon, for each day from the date such amount is made available to the Borrower until the date such amount is repaid to the Agent, at (i) in the case of the Borrower, the interest rate applicable at the time to the Advances comprising such Borrowing and (ii) in the case of such Lender, the Federal Funds Rate.  If such Lender shall repay to the Agent such corresponding amount, such amount so repaid shall constitute such Lender’s Advance as part of such Borrowing for purposes of this Agreement.


 


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


 


SECTION 2.03.  Issuance of and Drawings and Reimbursement Under Letters of Credit.  (a)  Request for Issuance.  (i) Each Letter of Credit shall be issued upon notice, given not later than 11:00 A.M. (New York City time) on the fifth Business Day prior to the date of the proposed Issuance of such Letter of Credit (or on such shorter notice as the applicable Issuing Bank may agree), by the Borrower to any Issuing Bank, and such Issuing Bank shall give the Agent, prompt notice thereof.  Each such notice by the Borrower of Issuance of a Letter of Credit (a “Notice of Issuance”) shall be by telecopier or telephone, confirmed immediately in writing, specifying therein the requested (A) date of such Issuance (which shall be a Business Day), (B) Available Amount of such Letter of Credit, 




  





17











  




 


(C) expiration date of such Letter of Credit, (D) name and address of the beneficiary of such Letter of Credit and (E) form of such Letter of Credit, such Letter of Credit shall be issued pursuant to such application and agreement for letter of credit as such Issuing Bank and the Borrower shall agree for use in connection with such requested Letter of Credit (a “Letter of Credit Agreement”).  If the requested form of such Letter of Credit is acceptable to such Issuing Bank in its reasonable discretion (it being understood that any such form shall have only explicit documentary conditions to draw and shall not include discretionary conditions), such Issuing Bank will, upon fulfillment of the applicable conditions set forth in Section 3.02, make such Letter of Credit available to the Borrower at its office referred to in Section 8.02 or as otherwise agreed with the Borrower in connection with such Issuance.  In the event and to the extent that the provisions of any Letter of Credit Agreement shall conflict with this Agreement, the provisions of this Agreement shall govern.




 


(b)           Participations.  By the Issuance of a Letter of Credit (or an amendment to a Letter of Credit increasing or decreasing the amount thereof) and without any further action on the part of the applicable Issuing Bank or the Lenders, such Issuing Bank hereby grants to each Lender, and each Lender hereby acquires from such Issuing Bank, a participation in such Letter of Credit equal to such Lender’s Ratable Share of the Available Amount of such Letter of Credit.  The Borrower hereby agrees to each such participation.  In consideration and in furtherance of the foregoing, each Lender hereby absolutely and unconditionally agrees to pay to the Agent, for the account of such Issuing Bank, such Lender’s Ratable Share of each drawing made under a Letter of Credit funded by such Issuing Bank and not reimbursed by the Borrower on the date made, or of any reimbursement payment required to be refunded to the Borrower for any reason, which amount will be advanced, and deemed to be an Advance to the Borrower hereunder, regardless of the satisfaction of the conditions set forth in Section 3.02.  Each Lender acknowledges and agrees that its obligation to acquire participations pursuant to this paragraph in respect of Letters of Credit is absolute and unconditional and shall not be affected by any circumstance whatsoever, including any amendment, renewal or extension of any Letter of Credit or the occurrence and continuance of a Default or reduction or termination of the Revolving Credit Commitments, and that each such payment shall be made without any offset, abatement, withholding or reduction whatsoever.  Each Lender further acknowledges and agrees that its participation in each Letter of Credit will be automatically adjusted to reflect such Lender’s Ratable Share of the Available Amount of such Letter of Credit at each time such Lender’s Revolving Credit Commitment is changed pursuant to an assignment in accordance with Section 8.07 or otherwise pursuant to this Agreement.


 


(c)           Drawing and Reimbursement.  The payment by an Issuing Bank of a draft drawn under any Letter of Credit which is not reimbursed by the Borrower or reimbursed by the application of funds on deposit in the L/C Cash Collateral Account (in the case of a Letter of Credit that is drawn after the latest stated Termination Date) on the date made shall constitute for all purposes of this Agreement the making by any such Issuing Bank of an Advance, which shall be a Base Rate Advance, in the amount of such draft, without regard to whether the making of such an Advance would exceed such Issuing Bank’s Unused Commitment and whether or not the Revolving Credit Commitments have terminated.  Each Issuing Bank shall give prompt notice of each drawing under any Letter of Credit issued by it to the Borrower and the Agent.  Upon written demand by such Issuing Bank, with a copy of such demand to the Agent and the Borrower, each Lender shall pay to the Agent such Lender’s Ratable Share of such outstanding Advance pursuant to Section 2.03(b).  Each Lender acknowledges and agrees that its obligation to make Advances pursuant to this paragraph in respect of Letters of Credit is absolute and unconditional and shall not be affected by any circumstance whatsoever, including any amendment, renewal or extension of any Letter of Credit or the occurrence and continuance of a Default or reduction or termination of the Revolving Credit Commitments, and that each such payment shall be made without any offset, abatement, withholding or reduction whatsoever.  Promptly after receipt thereof, the Agent shall transfer such funds to such Issuing Bank.  Each Lender agrees to fund its Ratable Share of an outstanding Advance on (i) the Business Day on which demand therefor is made by such Issuing Bank, 




  





18











  




 


provided that notice of such demand is given not later than 11:00 A.M. (New York City time) on such Business Day, or (ii) the first Business Day next succeeding such demand if notice of such demand is given after such time.  If and to the extent that any Lender shall not have so made the amount of such Advance available to the Agent, such Lender agrees to pay to the Agent forthwith on demand such amount together with interest thereon, for each day from the date of demand by any such Issuing Bank until the date such amount is paid to the Agent, at the Federal Funds Rate for its account or the account of such Issuing Bank, as applicable.  If such Lender shall pay to the Agent such amount for the account of any such Issuing Bank on any Business Day, such amount so paid in respect of principal shall constitute an Advance made by such Lender on such Business Day for purposes of this Agreement, and the outstanding principal amount of the Advance made by such Issuing Bank shall be reduced by such amount on such Business Day.




 


(d)           Letter of Credit Reports.  Each Issuing Bank shall furnish (A) to the Agent and each Lender (with a copy to the Borrower) on the first Business Day of each month a written report summarizing Issuance and expiration dates of Letters of Credit issued by such Issuing Bank during the preceding month and drawings during such month under all Letters of Credit and (B) to the Agent and each Lender (with a copy to the Borrower) on the first Business Day of each calendar quarter a written report setting forth the average daily aggregate Available Amount during the preceding calendar quarter of all Letters of Credit issued by such Issuing Bank.


 


(e)           Failure to Make Advances.  The failure of any Lender to make the Advance to be made by it on the date specified in Section 2.03(c) shall not relieve any other Lender of its obligation hereunder to make its Advance on such date, but no Lender shall be responsible for the failure of any other Lender to make the Advance to be made by such other Lender on such date.


 


(f)           Failure of Issuing Bank to be a Qualifying Issuing Bank.  If at any time any Issuing Bank ceases to be a Qualifying Issuing Bank, then (a) at the request of the Borrower, such Issuing Bank shall cause one of its Affiliates if any such Affiliate is then a Qualifying Issuing Bank, to be substituted as the Issuing Bank as promptly as practicable thereafter with respect to all subsequent Letters of Credit issued pursuant to this Agreement and (b) if none of such Issuing Bank’s Affiliates is a Qualifying Issuing Bank, such Issuing Bank shall cooperate with the Borrower’s efforts to find a substitute Qualifying Issuing Bank to assume such Issuing Bank’s Letter of Credit Commitment.  With respect to any Letter of Credit outstanding at the time a substitute Qualifying Issuing Bank becomes an Issuing Bank hereunder, the applicable Issuing Bank shall use reasonable commercial efforts to assist the Borrower in replacing such existing Letter of Credit with a letter of credit issued by the new Issuing Bank.


 


SECTION 2.04.  Fees.  (a)  Commitment Fee.  The Borrower agrees to pay to the Agent for the account of each Lender a commitment fee on the aggregate amount of such Lender’s Unused Commitment from the date hereof in the case of each Initial Lender and from the effective date specified in the Assumption Agreement or the Assignment and Assumption pursuant to which it became a Lender in the case of each other Lender until the Termination Date applicable to such Lender at a rate per annum equal to the Applicable Percentage in effect from time to time, payable in arrears quarterly on the last day of each March, June, September and December, commencing September 30, 2011, and on the Termination Date applicable to such Lender, provided that no Defaulting Lender shall be entitled to receive any commitment fee for any period during which that Lender is a Defaulting Lender (and the Borrower shall not be required to pay such fee that otherwise would have been required to have been paid to that Defaulting Lender).


 


(b)           Letter of Credit Fees.  (i)  The Borrower shall pay to the Agent for the account of each Lender a commission on such Lender’s Ratable Share of the average daily aggregate Available 



 



  





19











  




 


Amount of all Letters of Credit issued for the account of the Borrower and outstanding from time to time at a rate per annum equal to the Applicable Margin for Eurodollar Rate Advances in effect from time to time during such calendar quarter, payable in arrears quarterly on the last day of each March, June, September and December, commencing with the quarter ended September 30, 2011, and on the later of the Termination Date applicable to such Lender and the date on which all Letters of Credit have expired or have been terminated; provided that the Applicable Margin shall be 2% above the Applicable Margin in effect upon the occurrence and during the continuation of an Event of Default if the Borrower is required to pay default interest pursuant to Section 2.07(b); provided, further, that (i) to the extent that all or a portion of the Fronting Exposure in respect of any Defaulting Lender is reallocated to the Non-Defaulting Lenders pursuant to Section 2.19(a), such fees that would have accrued for the benefit of such Defaulting Lender will instead accrue for the benefit of and be payable to such Non-Defaulting Lenders, pro rata in accordance with their respective Revolving Credit Commitments, and (ii) to the extent that all or any portion of such Fronting Exposure cannot be so reallocated, such fees will instead accrue for the benefit of and be payable to the respective Issuing Banks ratably according to the outstanding Letters of Credit issued by each Issuing Bank.




 


(ii)           The Borrower shall pay to each Issuing Bank, for its own account, a fronting fee equal to a rate per annum agreed in writing between the Borrower and the applicable Issuing Bank on the Available Amount of each Letter of Credit issued by such Issuing Bank, payable in arrears quarterly on the last day of each March, June, September and December, commencing September 30, 2011, and on the later of the Termination Date applicable to such Issuing Bank and the date on which all Letters of Credit have expired or have been terminated, and such other commissions, issuance fees, transfer fees and other fees and charges in connection with the Issuance or administration of each Letter of Credit as the Borrower and such Issuing Bank shall agree.


 


(c)           Agent’s Fees.  The Borrower shall pay to the Agent for its own account such fees as may from time to time be agreed between the Borrower and the Agent.


 


SECTION 2.05.  Termination or Reduction of the Commitments.  The Borrower shall have the right, upon at least three Business Days’ notice to the Agent, to terminate in whole or permanently reduce ratably in part the Unused Commitments or the Unissued Letter of Credit Commitments of the Lenders, provided that each partial reduction shall be in the aggregate amount of $5,000,000 or an integral multiple of $1,000,000 in excess thereof.


 


SECTION 2.06.  Repayment of Advances and Letter of Credit Drawings.  (a)  Advances.  The Borrower shall repay to the Agent for the ratable account of each Lender on the Termination Date applicable to such Lender the aggregate principal amount of the Advances made by such Lender and then outstanding.  The Borrower shall repay to the Agent for the ratable account of each Lender on demand the aggregate principal amount of the Advances made pursuant to Section 2.03(c) after the Termination Date applicable to such Lender.


 


(b)           Letter of Credit Drawings.  The obligations of the Borrower under any Letter of Credit Agreement and any other agreement or instrument relating to any Letter of Credit issued for the account of the Borrower shall be unconditional and irrevocable, and shall be paid strictly in accordance with the terms of this Agreement, such Letter of Credit Agreement and such other agreement or instrument under all circumstances, including, without limitation, the following circumstances (it being understood that any such payment by the Borrower is without prejudice to, and does not constitute a waiver of, any rights the Borrower might have or might acquire as a result of the payment by any Lender of any draft or the reimbursement by the Borrower thereof):


 


 




  





20











  






 



(i)           any lack of validity or enforceability of this Agreement, any Note, any Letter of Credit Agreement, any Letter of Credit or any other agreement or instrument relating thereto (all of the foregoing being, collectively, the “L/C Related Documents”);


 




(ii)           any change in the time, manner or place of payment of, or in any other term of, all or any of the obligations of the Borrower in respect of any L/C Related Document or any other amendment or waiver of or any consent to departure from all or any of the L/C Related Documents;


 


(iii)           the existence of any claim, set-off, defense or other right that the Borrower may have at any time against any beneficiary or any transferee of a Letter of Credit (or any Persons for which any such beneficiary or any such transferee may be acting), any Issuing Bank, the Agent, any Lender or any other Person, whether in connection with the transactions contemplated by the L/C Related Documents or any unrelated transaction, other than defense of payment;


 


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


 


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


 


(vi)           any exchange, release or non-perfection of any collateral, or any release or amendment or waiver of or consent to departure from any guarantee, for all or any of the obligations of the Borrower in respect of the L/C Related Documents; or


 


(vii)           any other circumstance or happening whatsoever, whether or not similar to any of the foregoing, including, without limitation, any other circumstance that might otherwise constitute a defense available to, or a discharge of, the Borrower or a guarantor.


 


SECTION 2.07.  Interest on Advances.  (a)  Scheduled Interest.  The Borrower shall pay interest on the unpaid principal amount of each Advance made to it and owing to each Lender from the date of such Advance until such principal amount shall be paid in full, at the following rates per annum:


 


(i)           Base Rate Advances.  During such periods as such Advance is a Base Rate Advance, a rate per annum equal at all times to the sum of (x) the Base Rate in effect from time to time plus (y) the Applicable Margin in effect from time to time, payable in arrears quarterly on the last day of each March, June, September and December during such periods and on the date such Base Rate Advance shall be Converted or paid in full.


 


(ii)           Eurodollar Rate Advances.  During such periods as such Advance is a Eurodollar Rate Advance, a rate per annum equal at all times during each Interest Period for such Advance to the sum of (x) the Eurodollar Rate for such Interest Period for such Advance plus (y) the Applicable Margin in effect from time to time, payable in arrears on the last day of such Interest Period and, if such Interest Period has a duration of more than three months, on each day that occurs during such Interest Period every three months from the first day of such Interest Period and on the date such Eurodollar Rate Advance shall be Converted or paid in full.


 


(b)           Default Interest.  Upon the occurrence and during the continuance of an Event of Default, the Agent shall at the request, or may with the consent, of the Required Lenders, require the Borrower to pay interest (“Default Interest”) on (i) the unpaid principal amount of each Advance owing to 



 



  





21











  




 


each Lender, payable in arrears on the dates referred to in clause (a)(i) or (a)(ii) above, at a rate per annum equal at all times to 2% per annum above the rate per annum required to be paid on such Advance pursuant to clause (a)(i) or (a)(ii) above and (ii) to the fullest extent permitted by law, the amount of any interest, fee or other amount (to the extent that such other amount is not being contested in good faith) payable hereunder that is not paid when due, from the date such amount shall be due until such amount shall be paid in full, payable in arrears on the date such amount shall be paid in full and on demand, at a rate per annum equal at all times to 2% per annum above the rate per annum required to be paid on Base Rate Advances pursuant to clause (a)(i) above; provided, however, that following acceleration of the Advances pursuant to Section 6.01, Default Interest shall accrue and be payable hereunder whether or not previously required by the Agent.




 


SECTION 2.08.  Interest Rate Determination.  (a)  Each Reference Bank agrees, if requested by the Agent, to furnish to the Agent timely information for the purpose of determining each Eurodollar Rate.  If any one or more of the Reference Banks shall not furnish such timely information to the Agent for the purpose of determining any such interest rate, the Agent shall determine such interest rate on the basis of timely information furnished by the remaining Reference Banks.  The Agent shall give prompt notice to the Borrower and the Lenders of the applicable interest rate determined by the Agent for purposes of Section 2.07(a)(i) or (ii), and the rate, if any, furnished by each Reference Bank for the purpose of determining the interest rate under Section 2.07(a)(ii).


 


(b)           If, with respect to any Eurodollar Rate Advances, the Required Lenders notify the Agent that (i) they are unable to obtain matching deposits in the London inter-bank market at or about 11:00 A.M. (London time) on the second Business Day before the making of a Borrowing in sufficient amounts to fund their respective Advances as a part of such Borrowing during its Interest Period or (ii) the Eurodollar Rate for any Interest Period for such Advances will not adequately reflect the cost to such Required Lenders of making, funding or maintaining their respective Eurodollar Rate Advances for such Interest Period, the Agent shall forthwith so notify the Borrower and the Lenders, whereupon (A) the Borrower will, on the last day of the then existing Interest Period therefor, either (x) prepay such Advances or (y) Convert such Advances into Base Rate Advances and (B) the obligation of the Lenders to make, or to Convert Advances into, Eurodollar Rate Advances shall be suspended until the Agent shall notify the Borrower and the Lenders that the circumstances causing such suspension no longer exist.


 


(c)           If the Borrower shall fail to select the duration of any Interest Period for any Eurodollar Rate Advances in accordance with the provisions contained in the definition of “Interest Period” in Section 1.01, the Agent will forthwith so notify the Borrower and the Lenders and such Advances will automatically, on the last day of the then existing Interest Period therefor, continue as Eurodollar Rate Advances having an Interest Period of one month.


 


(d)           On the date on which the aggregate unpaid principal amount of Eurodollar Rate Advances comprising any Borrowing shall be reduced, by payment or prepayment or otherwise, to less than $3,000,000, such Advances shall automatically Convert into Base Rate Advances.


 


(e)           Upon the occurrence and during the continuance of any Event of Default, (i) each Eurodollar Rate Advance will automatically, on the last day of the then existing Interest Period therefor, be Converted into Base Rate Advances and (ii) the obligation of the Lenders to make, or to Convert Advances into, Eurodollar Rate Advances shall be suspended.


 


(f)           If Reuters LIBOR01 Page is unavailable and fewer than two Reference Banks furnish timely information to the Agent for determining the Eurodollar Rate for any Eurodollar Rate Advances after the Agent has requested such information,


 


 




  





22











  






 



(i)           the Agent shall forthwith notify the Borrower and the Lenders that the interest rate cannot be determined for such Eurodollar Rate Advances,




 


(ii)           each such Advance will automatically, on the last day of the then existing Interest Period therefor, Convert into a Base Rate Advance (or if such Advance is then a Base Rate Advance, will continue as a Base Rate Advance), and


 


(iii)           the obligation of the Lenders to make Eurodollar Rate Advances or to Convert Advances into Eurodollar Rate Advances shall be suspended until the Agent shall notify the Borrower and the Lenders that the circumstances causing such suspension no longer exist.


 


SECTION 2.09.  Optional Conversion of Advances.  The Borrower may on any Business Day, upon notice given to the Agent not later than 11:00 A.M. (New York City time) on the third Business Day prior to the date of the proposed Conversion and subject to the provisions of Sections 2.08 and 2.12, Convert all or a portion of the Advances of one Type comprising the same Borrowing into Advances of the other Type; provided, however, that any Conversion of Eurodollar Rate Advances into Base Rate Advances shall be made only on the last day of an Interest Period for such Eurodollar Rate Advances (unless the Borrower shall pay any compensation owing with respect thereto under Section 8.04(c)), any Conversion of Base Rate Advances into Eurodollar Rate Advances shall be in an amount not less than the minimum amount specified in Section 2.02(b) and no Conversion of any Advances shall result in more separate Borrowings than permitted under Section 2.02(b).  Each such notice of a Conversion shall, within the restrictions specified above, specify (i) the date of such Conversion, (ii) the Advances to be Converted, and (iii) if such Conversion is into Eurodollar Rate Advances, the duration of the initial Interest Period for each such Advance.  Each notice of Conversion shall be irrevocable and binding on the Borrower.


 


SECTION 2.10.  Optional Prepayments of Advances.  The Borrower may, upon notice at least two Business Days’ prior to the date of such prepayment, in the case of Eurodollar Rate Advances, and not later than 11:00 A.M. (New York City time) on the date of such prepayment, in the case of Base Rate Advances, to the Agent stating the proposed date and aggregate principal amount of the prepayment, and if such notice is given the Borrower shall, prepay the outstanding principal amount of the Advances comprising part of the same Borrowing in whole or ratably in part, together with accrued interest to the date of such prepayment on the principal amount prepaid; provided, however, that (x) each partial prepayment of Advances shall be in an aggregate principal amount of not less than $3,000,000 or an integral multiple of $1,000,000 in excess thereof and (y) in the event of any such prepayment of a Eurodollar Rate Advance, the Borrower shall be obligated to reimburse the Lenders in respect thereof pursuant to Section 8.04(c).


 


SECTION 2.11.  Increased Costs.  (a)  If, due to either (i) the introduction of or any change in or in the interpretation of any law or regulation or (ii) the compliance with any guideline or request from any central bank or other Governmental Authority including, without limitation, any agency of the European Union or similar monetary or multinational authority (whether or not having the force of law), in either case enacted or adopted after the date hereof, there shall be any increase in the cost to any Lender of agreeing to make or making, funding or maintaining Eurodollar Rate Advances or of agreeing to issue or of issuing or maintaining or participating in Letters of Credit (excluding for purposes of this Section 2.11(a) any such increased costs resulting from (i) Taxes and Other Taxes which are covered by Section 2.14, (ii) changes in the basis of taxation of overall net income or overall gross income by the United States or by the foreign jurisdiction or state under the laws of which such Lender is organized or has its Applicable Lending Office or any political subdivision thereof and (iii) FATCA), then the Borrower shall from time to time, upon demand by such Lender by delivery of a certificate as described below (with a copy of such demand and certificate to the Agent), pay to the Agent for the account of such 



 



  





23











  




 


Lender additional amounts sufficient to compensate such Lender for such increased cost; provided, however, that before making any such demand, each Lender agrees to use reasonable efforts (consistent with its internal policy and legal and regulatory restrictions) to designate a different Applicable Lending Office if the making of such designation would avoid the need for, or reduce the amount of, such increased cost and would not, in the reasonable judgment of such Lender, be otherwise disadvantageous to such Lender.  A certificate (x) stating that such increased cost has been allocated to such Lender’s obligations under this Agreement on a reasonable basis and (y) as to the amount of such increased cost, submitted to the Borrower and the Agent by such Lender, shall be conclusive and binding for all purposes, absent manifest error.




 


(b)           If any Lender determines that compliance with any law or regulation or any guideline or request from any central bank or other Governmental Authority (whether or not having the force of law), in either case enacted or adopted after the date hereof, affects or would affect the amount of capital required or expected to be maintained by such Lender or any corporation controlling such Lender and that the amount of such capital is increased by or based upon the existence of such Lender’s commitment to lend or to issue or participate in Letters of Credit hereunder and other commitments of such type or the Issuance or maintenance of or participation in the Letters of Credit (or similar contingent obligations), then, upon demand by such Lender by delivery of a certificate as described below (with a copy of such demand and certificate to the Agent), the Borrower shall pay to the Agent for the account of such Lender, from time to time as specified by such Lender, additional amounts sufficient to compensate such Lender or such corporation in the light of such circumstances, to the extent that such Lender reasonably determines such increase in capital to be allocable to the existence of such Lender’s commitment to lend or to issue or participate in Letters of Credit hereunder or to the Issuance or maintenance of or participation in any Letters of Credit; provided, however, that before making any such demand, each Lender agrees to use reasonable efforts (consistent with its internal policy and legal and regulatory restrictions) to designate a different Applicable Lending Office if the making of such designation would avoid the need for, or reduce the amount of, such increased capital and would not, in the reasonable judgment of such Lender, be otherwise disadvantageous to such Lender.  A certificate (x) stating that such increased capital has been allocated to such Lender’s obligations under this Agreement on a reasonable basis and (y) as to such amounts submitted to the Borrower and the Agent by such Lender shall be conclusive and binding for all purposes, absent manifest error.


 


(c)           For the avoidance of doubt, for the purposes of this Section 2.11, the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, guidelines or directives thereunder or issued in connection therewith shall be deemed to be a change in law regardless of the date enacted, adopted, issued, promulgated or implemented.


 


(d)           Failure or delay on the part of any Lender or Issuing Bank to demand compensation pursuant to clause (a) or (b) this Section shall not constitute a waiver of such Lender’s or Issuing Bank’s right to demand such compensation, provided that the Borrower shall not be required to compensate a Lender or Issuing Bank pursuant to this Section for any increased costs incurred or reductions suffered more than six months prior to the date that such Lender or Issuing Bank, as the case may be, notifies the Borrower of the change in law giving rise to such increased costs or reductions and of such Lender’s or Issuing Bank’s intention to claim compensation therefor (except that, if the change in law giving rise to such increased costs or reductions is retroactive, then the six-month period referred to above shall be extended to include the period of retroactive effect thereof).


 


(e)           Each Lender that is subject to reserve requirements of the Board of Governors of the Federal Reserve System (or any successor) may require the Borrower to pay, contemporaneously with each payment of interest on the Eurodollar Rate Advances additional interest on the related Eurodollar Rate Advances of such Lender at the rate per annum equal to the excess of (i) (A) the applicable 



 



  





24











  




 


Eurodollar Rate divided by (B) one minus the Eurodollar Rate Reserve Percentage over (ii) the rate specified in clause (i)(A).  Any Lender wishing to require payment of such additional interest (x) shall so notify the Agent and the Borrower, in which case such additional interest on the Eurodollar Rate Advances of such Lender shall be payable to such Lender at the place indicated in such notice with respect to each Interest Period commencing at least five Business Days after the giving of such notice and (y) shall notify the Agent and the Borrower at least five Business Days prior to each date on which interest is payable on the amount then due it under this Section 2.11(e). If a Lender fails to give notice five Business Days prior to the relevant interest payment date, such additional interest shall be due and payable five Business Days from receipt of such notice.




 


SECTION 2.12.  Illegality.  Notwithstanding any other provision of this Agreement, if any Lender shall notify the Agent that the introduction of or any change in or in the interpretation of any law or regulation, in each case after the date hereof, makes it unlawful, or any central bank or other governmental authority asserts that it is unlawful, for any Lender or its Eurodollar Lending Office to perform its obligations hereunder to make Eurodollar Rate Advances or to fund or maintain Eurodollar Rate Advances hereunder, (a) each Eurodollar Rate Advance will automatically, upon such demand be Converted into a Base Rate Advance and (b) the obligation of the Lenders to make Eurodollar Rate Advances or to Convert Advances into Eurodollar Rate Advances shall be suspended until the Agent shall notify the Borrower and the Lenders that the circumstances causing such suspension no longer exist.


 


SECTION 2.13.  Payments and Computations.  (a)  The Borrower shall make each payment hereunder, irrespective of any right of counterclaim or set-off, not later than 11:00 A.M. (New York City time) on the day when due in U.S. Dollars to the Agent at the Agent’s Account in same day funds.  The Agent will promptly thereafter cause to be distributed like funds relating to the payment of principal or interest, fees or commissions ratably (other than amounts payable pursuant to Section 2.04(b)(ii), 2.04(c), 2.11, 2.14 or 8.04(c)) to the Lenders for the account of their respective Applicable Lending Offices, and like funds relating to the payment of any other amount payable to any Lender to such Lender for the account of its Applicable Lending Office, in each case to be applied in accordance with the terms of this Agreement.  Upon any Assuming Lender becoming a Lender hereunder as a result of an extension of the Termination Date pursuant to Section 2.20, and upon the Agent’s receipt of such Lender’s Assumption Agreement and recording of the information contained therein in the Register, from and after the applicable Extension Date the Agent shall make all payments hereunder and under any Notes issued in connection therewith in respect of the interest assumed thereby to the Assuming Lender.  Upon its acceptance of an Assignment and Assumption and recording of the information contained therein in the Register pursuant to Section 8.07(c), from and after the effective date specified in such Assignment and Assumption, the Agent shall make all payments hereunder and under the Notes in respect of the interest assigned thereby to the Lender assignee thereunder, and the parties to such Assignment and Assumption shall make all appropriate adjustments in such payments for periods prior to such effective date directly between themselves.


 


(b)           The Borrower hereby authorizes each Lender, if and to the extent payment owed to such Lender is not made when due hereunder or under the Note held by such Lender, to charge from time to time against any or all of the Borrower’s accounts with such Lender any amount so due.


 


(c)           All computations of interest based on the Base Rate shall be made by the Agent on the basis of a year of 365 or 366 days, as the case may be, and all computations of interest based on the Eurodollar Rate or the Federal Funds Rate and of fees and Letter of Credit commissions shall be made by the Agent on the basis of a year of 360 days, in each case for the actual number of days (including the first day but excluding the last day) occurring in the period for which such interest, fees or commissions are payable.  Each determination by the Agent of an interest rate hereunder shall be conclusive and binding for all purposes, absent manifest error.


 


 




  





25











  




 



(d)           Whenever any payment hereunder or under the Notes shall be stated to be due on a day other than a Business Day, such payment shall be made on the next succeeding Business Day, and such extension of time shall in such case be included in the computation of payment of interest, fee or commission, as the case may be; provided, however, that, if such extension would cause payment of interest on or principal of Eurodollar Rate Advances to be made in the next following calendar month, such payment shall be made on the next preceding Business Day.






 


(e)           Unless the Agent shall have received notice from the Borrower prior to the date on which any payment is due to the Lenders hereunder that the Borrower will not make such payment in full, the Agent may assume that the Borrower has made such payment in full to the Agent on such date and the Agent may, in reliance upon such assumption, cause to be distributed to each Lender on such due date an amount equal to the amount then due such Lender.  If and to the extent the Borrower shall not have so made such payment in full to the Agent, each Lender shall repay to the Agent forthwith on demand such amount distributed to such Lender together with interest thereon, for each day from the date such amount is distributed to such Lender until the date such Lender repays such amount to the Agent, at the Federal Funds Rate.


 


SECTION 2.14.  Taxes.  (a)  Any and all payments by the Borrower to or for the account of any Lender or the Agent hereunder or under the Notes or any other documents to be delivered hereunder shall be made, in accordance with Section 2.13 or the applicable provisions of such other documents, free and clear of and without deduction for any and all Indemnified Taxes.  If the Borrower shall be required by law to deduct any Indemnified Taxes from or in respect of any sum payable hereunder or under any Note or any other documents to be delivered hereunder to any Lender or the Agent, (i) the sum payable shall be increased as may be necessary so that after making all required deductions (including deductions applicable to additional sums payable under this Section 2.14) such Lender or the Agent (as the case may be) receives an amount equal to the sum it would have received had no such deductions been made, (ii) the Borrower shall make such deductions and (iii) the Borrower shall pay the full amount deducted to the relevant Governmental Authority in accordance with applicable law.


 


(b)           In addition, the Borrower shall pay any Other Taxes to the relevant Governmental Authority in accordance with applicable law.


 


(c)           The Borrower shall indemnify each Lender and the Agent for and hold it harmless against the full amount of Indemnified Taxes or Other Taxes (including, without limitation, Indemnified Taxes or Other Taxes of any kind imposed or asserted by any jurisdiction on amounts payable under this Section 2.14) imposed on or paid by such Lender or the Agent (as the case may be) and any liability (including penalties, interest and expenses) arising therefrom or with respect thereto.  This indemnification shall be made within 30 days from the date such Lender or the Agent (as the case may be) makes written demand therefor.


 


(d)           As soon as practicable after the date of any payment of Indemnified Taxes or Other Taxes, the Borrower shall furnish to the Agent, at its address referred to in Section 8.02, the original or a certified copy of a receipt evidencing such payment to the extent such a receipt is issued therefor, or other written proof of payment thereof that is reasonably satisfactory to the Agent.  For purposes of this subsection (d) and subsection (e), the terms “United States” and “United States person” shall have the meanings specified in section 7701 of the Code.


 


(e)           (i)           Each Foreign Lender, on or prior to the date of its execution and delivery of this Agreement in the case of each Initial Lender and on the date of the Assignment and Assumption pursuant to which it becomes a Lender in the case of each other Lender, and from time to time thereafter as reasonably requested in writing by the Borrower (but only so long as such Lender remains lawfully 



 



  





26











  




 


able to do so), shall provide each of the Agent and the Borrower with the number of original copies requested by the recipient of any required forms, certifying that such Lender is exempt from or entitled to a reduced rate of United States withholding Tax on payments pursuant to this Agreement or the Notes (including Internal Revenue Service Forms W-8BEN or W-8ECI, as appropriate, or any successor or other form prescribed by the Internal Revenue Service, or, in the case of a Foreign Lender claiming exemption from U.S. federal withholding Tax under section 871(h) or 881(c) of the Code with respect to payments of “portfolio interest,” both a Form W-8BEN and a certificate to the effect that such Foreign Lender is not (1) a “bank” within the meaning of section 881(c)(3)(A) of the Code, (2) a “10 percent shareholder” of the Borrower within the meaning of section 881(c)(3)(B) of the Code, or (3) a “controlled foreign corporation” described in section 881(c)(3)(C) of the Code).




 


(ii)           If a payment made to a Lender would be subject to United States federal withholding tax imposed by FATCA if such Lender were to fail to comply with the applicable reporting requirements of FATCA (including those contained in Section 1471(b) or 1472(b) of the Code, as applicable), such Lender shall deliver to the Borrower, at the time or times prescribed by law and at such time or times reasonably requested in writing by the Borrower, such documentation prescribed by applicable law (including as prescribed by Section 1471(b)(3)(C)(i) of the Code) and such additional documentation reasonably requested in writing by the Borrower as may be necessary for the Borrower to comply with its obligations under FATCA, to determine that such Lender has complied with such Lender’s obligations under FATCA or to determine the amount to deduct and withhold from such payment.  For purposes of this Section 2.14(e)(ii) FATCA shall include any Treasury regulations or interpretations thereof.


 


(f)           Any Lender claiming any additional amounts payable pursuant to this Section 2.14 agrees to use reasonable efforts (consistent with its internal policy and legal and regulatory restrictions) to change the jurisdiction of its Eurodollar Lending Office if the making of such a change would avoid the need for, or reduce the amount of, any such additional amounts that may thereafter accrue and would not, in the reasonable judgment of such Lender, be otherwise disadvantageous to such Lender.


 


(g)           If the Agent, a Lender or any Issuing Bank determines, in its sole discretion, that it has received a refund of any Taxes or Other Taxes as to which it has been indemnified by the Borrower or with respect to which the Borrower has paid additional amounts pursuant to this Section, it shall pay to the Borrower an amount equal to such refund (but only to the extent of indemnity payments made, or additional amounts paid, by the Borrower under this Section with respect to the Taxes or Other Taxes giving rise to such refund), net of all out-of-pocket expenses of the Agent, such Lender or Issuing Bank, as the case may be, and without interest (other than any interest paid by the relevant Governmental Authority with respect to such refund), provided that the Borrower, upon the request of the Agent, such Lender or Issuing Bank, agrees to repay the amount paid over to the Borrower (plus any penalties, interest or other charges imposed by the relevant Governmental Authority) to the Agent, such Lender or Issuing Bank in the event the Agent, such Lender or Issuing Bank is required to repay such refund to such Governmental Authority.  This paragraph shall not be construed to require the Agent, any Lender or Issuing Bank to make available its tax returns (or any other information relating to its taxes that it deems confidential) to the Borrower or any other Person.


 


SECTION 2.15.  Sharing of Payments, Etc.  If any Lender shall obtain any payment (whether voluntary, involuntary, through the exercise of any right of set-off, or otherwise) on account of the Advances owing to it (other than (x) as payment of an Advance made by an Issuing Bank pursuant to the first sentence of Section 2.03(c) or (y) pursuant to Section 2.11, 2.14 or 8.04(c)) in excess of its Ratable Share of payments on account of the Advances obtained by all the Lenders, such Lender shall forthwith purchase from the other Lenders such participations in the Advances owing to them as shall be 



 



  





27











  




 


necessary to cause such purchasing Lender to share the excess payment ratably with each of them; provided, however, that if all or any portion of such excess payment is thereafter recovered from such purchasing Lender, such purchase from each Lender shall be rescinded and such Lender shall repay to the purchasing Lender the purchase price to the extent of such recovery together with an amount equal to such Lender’s ratable share (according to the proportion of (i) the amount of such Lender’s required repayment to (ii) the total amount so recovered from the purchasing Lender) of any interest or other amount paid or payable by the purchasing Lender in respect of the total amount so recovered.  The Borrower agrees that any Lender so purchasing a participation from another Lender pursuant to this Section 2.15 may, to the fullest extent permitted by law, exercise all its rights of payment (including the right of set-off) with respect to such participation as fully as if such Lender were the direct creditor of the Borrower in the amount of such participation.




 


SECTION 2.16.  Evidence of Debt.  (a)  Each Lender shall maintain in accordance with its usual practice an account or accounts evidencing the indebtedness of the Borrower to such Lender resulting from each Advance owing to such Lender from time to time, including the amounts of principal and interest payable and paid to such Lender from time to time hereunder in respect of Advances.  The Borrower agrees that upon notice by any Lender to the Borrower (with a copy of such notice to the Agent) to the effect that a Note is required or appropriate in order for such Lender to evidence (whether for purposes of pledge, enforcement or otherwise) the Advances owing to, or to be made by, such Lender, the Borrower shall promptly execute and deliver to such Lender a Note payable to the order of such Lender in a principal amount up to the Revolving Credit Commitment of such Lender.


 


(b)           The Register maintained by the Agent pursuant to Section 8.07(c) shall include a control account, and a subsidiary account for each Lender, in which accounts (taken together) shall be recorded (i) the date and amount of each Borrowing made hereunder, the Type of Advances comprising such Borrowing and, if appropriate, the Interest Period applicable thereto, (ii) the terms of each Assumption Agreement and each Assignment and Assumption delivered to and accepted by it, (iii) the amount of any principal or interest due and payable or to become due and payable from the Borrower to each Lender hereunder and (iv) the amount of any sum received by the Agent from the Borrower hereunder and each Lender’s share thereof.


 


(c)           Entries made in good faith by the Agent in the Register pursuant to subsection (b) above, and by each Lender in its account or accounts pursuant to subsection (a) above, shall be prima facie evidence of the amount of principal and interest due and payable or to become due and payable from the Borrower to, in the case of the Register, each Lender and, in the case of such account or accounts, such Lender, under this Agreement, absent manifest error; provided, however, that the failure of the Agent or such Lender to make an entry, or any finding that an entry is incorrect, in the Register or such account or accounts shall not limit or otherwise affect the obligations of the Borrower under this Agreement.


 


SECTION 2.17.  Use of Proceeds.  The proceeds of the Advances shall be available (and the Borrower agrees that it shall use such proceeds) solely for general corporate purposes of the Borrower and its Subsidiaries.


 


SECTION 2.18.  Replacement of Lenders.  If any Lender requests compensation under Section 2.11(a) or (b), or if the Borrower is required to pay any additional amount to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 2.14, or if any Lender is a Defaulting Lender or a Non-Consenting Lender, then the Borrower may, at its sole expense and effort, upon notice to such Lender and the Agent, require such Lender to assign, without recourse (in accordance with and subject to the restrictions contained in, and consents required by, Section 8.07), all of its interests, rights and obligations under this Agreement and any Notes held by such Lender to an Eligible 



 



  





28











  




 


Assignee that shall assume such obligations, provided that (i) in the case of any such assignment resulting from a claim for compensation under Section 2.11(a) or (b) or payments required to be made pursuant to Section 2.14, such assignment will result in a reduction in such compensation or payments thereafter; and (ii) such assignment does not conflict with applicable law.




 


A Lender shall not be required to make any such assignment if, prior thereto, as a result of a waiver by such Lender or otherwise, the circumstances entitling the Borrower to require such assignment cease to apply.


 


SECTION 2.19.  Defaulting Lenders.  (a)  If a Lender becomes, and during the period it remains, a Defaulting Lender, the following provisions shall apply:


 


(i)           so long as no Default has occurred and is continuing, such Defaulting Lender’s Ratable Share of the L/C Obligations will, subject to the limitation in the proviso below, automatically be reallocated (effective on the day such Lender becomes a Defaulting Lender) among the Non-Defaulting Lenders pro rata in accordance with their respective Revolving Credit Commitments, so that the L/C Obligations are 100% risk participated among the Non-Defaulting Lenders; provided that (A) the sum of each Non-Defaulting Lender’s aggregate principal amount of Advances and allocated share of the L/C Obligations may not in any event exceed the Revolving Credit Commitment of such Non-Defaulting Lender as in effect at the time of such reallocation and (B) neither such reallocation nor any payment by a Non-Defaulting Lender pursuant thereto will constitute a waiver or release of any claim the Borrower, the Agent, any Issuing Bank or any other Lender may have against such Defaulting Lender or cause such Defaulting Lender to be a Non-Defaulting Lender;


 


(ii)           to the extent that any portion (the “unreallocated portion”) of the Defaulting Lender’s share of the L/C Obligations cannot be so reallocated, whether by reason of the proviso in clause (i) above or otherwise, the Borrower will, not later than five Business Days after demand by the Agent (at the direction of an Issuing Bank), (A) Cash Collateralize the obligations of the Borrower in respect of such L/C Obligations in an amount at least equal to the aggregate amount of the unreallocated portion of such L/C Obligations or (B) make other arrangements satisfactory to the Agent and each Issuing Bank, as the case may be, in their sole discretion to protect them against the risk of non-payment by such Defaulting Lender;


 


(iii)           in addition to the Borrower’s rights under Section 2.05, the Borrower may terminate the unused amount of the Commitment of any Lender that is a Defaulting Lender upon not less than three Business Days’ prior notice to the Agent (which shall promptly notify the Lenders thereof), and in such event the provisions of Section 2.19(a)(iv) will apply to all amounts thereafter paid by the Borrower for the account of such Defaulting Lender under this Agreement (whether on account of principal, interest, fees, indemnity or other amounts); provided that (x) no Event of Default shall have occurred and be continuing, and (y) such termination shall not be deemed to be a waiver or release of any claim the Borrower, the Agent, any Issuing Bank or any Lender may have against such Defaulting Lender; and


 


(iv)           any amount paid by the Borrower or otherwise received by the Agent for the account of a Defaulting Lender under this Agreement (whether on account of principal, interest, fees, indemnity payments or other amounts) will not be paid or distributed to such Defaulting Lender, but will instead be retained by the Agent in a segregated non-interest bearing account until (subject to Section 2.19(c)) the termination of the Revolving Credit Commitments and payment in full of all obligations of the Borrower hereunder and will be applied by the Agent, to the fullest extent permitted by law, to the making of payments from time to time in the following 



 



  





29










 


order of priority:  first to the payment of any amounts owing by such Defaulting Lender to the Agent under this Agreement, second to the payment of any amounts owing by such Defaulting Lender to an Issuing Bank (pro rata as to the respective amounts owing to each of them) under this Agreement, third, as the Borrower may request (so long as no Default exists), to the funding of any Loan in respect of which such Defaulting Lender has failed to fund its portion thereof as required by this Agreement, as determined by the Agent, fourth, if so determined by the Agent and the Borrower, to be held in a deposit account and released pro rata in order to (x) satisfy such Defaulting Lender’s potential future funding obligations with respect to Loans under this Agreement and (y) Cash Collateralize the Issuing Banks’ future Fronting Exposure with respect to such Defaulting Lender with respect to future Letters of Credit issued under this Agreement, in accordance with Section 2.19(a)(ii), fifth, to the payment of post-default interest and then current interest due and payable to the Lenders hereunder other than Defaulting Lenders, ratably among them in accordance with the amounts of such interest then due and payable to them, sixth to the payment of fees then due and payable to the Non-Defaulting Lenders hereunder, ratably among them in accordance with the amounts of such fees then due and payable to them, seventh to pay principal then due and payable to the Non-Defaulting Lenders hereunder ratably in accordance with the amounts thereof then due and payable to them, eighth to the ratable payment of other amounts then due and payable to the Non-Defaulting Lenders, and ninth after the termination of the Revolving Credit Commitments and payment in full of all obligations of the Borrower hereunder, to pay amounts owing under this Agreement to such Defaulting Lender or as a court of competent jurisdiction may otherwise direct.  Any payments, prepayments or other amounts paid or payable to a Defaulting Lender that are applied (or held) to pay amounts owed by a Defaulting Lender or to post cash collateral pursuant to this Section 2.19 shall be deemed paid to and redirected by such Defaulting Lender, and each Lender irrevocably consents hereto.




 


(b)           No Revolving Credit Commitment of any Lender shall be increased or otherwise affected, and, except as otherwise expressly provided in this Section 2.19, performance by the Borrower of its obligations shall not be excused or otherwise modified as a result of the operation of this Section 2.19.  The rights and remedies against a Defaulting Lender under this Section 2.19 are in addition to any other rights and remedies which the Borrower, the Agent, any Issuing Bank or any Lender may have against such Defaulting Lender.


 


(c)           If the Borrower and the Agent agree in writing in their reasonable determination that a Defaulting Lender should no longer be deemed to be a Defaulting Lender, the Agent will so notify the parties hereto, whereupon as of the effective date specified in such notice and subject to any conditions set forth therein (which may include arrangements with respect to any cash collateral), that Lender will, to the extent applicable, purchase at par that portion of outstanding Advances of the other Lenders or take such other actions as the Agent may determine to be necessary to cause the Advances to be funded and held on a pro rata basis by the Lenders in accordance with their Ratable Shares, whereupon such Lender will cease to be a Defaulting Lender; provided that no adjustments will be made retroactively with respect to fees accrued or payments made by or on behalf of the Borrower while that Lender was a Defaulting Lender; and provided, further, that except to the extent otherwise expressly agreed by the affected parties, no change hereunder from Defaulting Lender to Lender will constitute a waiver or release of any claim of any party hereunder arising from such Lender having been a Defaulting Lender.


 


(d)           In the event the Borrower terminates the unused Commitment of any Defaulting Lender pursuant to Section 2.19(a)(iii), the Borrower may thereafter increase the aggregate Commitments by an amount equal to the amount of such terminated unused Commitment, provided there exists no Default at the time of such increase.  To achieve the full amount of a requested increase, the Borrower may invite to participate therein any or all existing Lenders and, subject to the approval of the Agent and each Issuing Bank (which approvals shall not be unreasonably withheld), one or more additional Eligible 



 



  





30











  




 


Assignees to become Lenders pursuant to a joinder agreement in form and substance satisfactory to the Agent.  On the effective date of any such increase, the Borrower acknowledges that, in order to reallocate any Loans outstanding on such date, it may be necessary to pay any additional amounts required pursuant to Section 8.04(c) to the extent necessary to keep the outstanding Loans ratable with any revised Ratable Shares arising from any nonratable increase in the Commitments under this Section.




 


SECTION 2.20.  Extension of Termination Date.  (a)        Requests for Extension.  The Borrower may, by notice to the Agent (who shall promptly notify the Lenders) not earlier than 45 days and not later than 35 days prior to any single anniversary of the Effective Date (the “Anniversary Date”), request that each Lender extend such Lender’s Termination Date for an additional one year from the Termination Date then in effect.


 


(b)           Lender Elections to Extend.  Each Lender, acting in its sole and individual discretion, shall, by notice to the Agent given not earlier than 30 days prior to the Anniversary Date and not later than the date (the “Notice Date”) that is 20 days prior to the Anniversary Date, advise the Agent whether or not such Lender agrees to such extension (and each Lender that determines not to so extend its Termination Date (a “Non-Extending Lender”) shall notify the Agent of such fact promptly after such determination (but in any event no later than the Notice Date) and any Lender that does not so advise the Agent on or before the Notice Date shall be deemed to be a Non-Extending Lender).  The election of any Lender to agree to such extension shall not obligate any other Lender to so agree.


 


(c)           Notification by Agent.  The Agent shall notify the Borrower of each Lender’s determination under this Section no later than the date 15 days prior to the Anniversary Date (or, if such date is not a Business Day, on the next preceding Business Day).


 


(d)           Additional Commitment Lenders.  The Borrower shall have the right on or before the Anniversary Date to replace each Non-Extending Lender with, and add as “Lenders” under this Agreement in place thereof, one or more Eligible Assignees (each, an “Assuming Lender”) with the approval of the Agent (which approval shall not be unreasonably withheld), each of which Assuming Lenders shall have entered into an agreement in form and substance satisfactory to the Borrower and the Agent (an “Assumption Agreement”) pursuant to which such Assuming Lender shall, effective as of the Anniversary Date, undertake a Commitment (and, if any such Assuming Lender is already a Lender, its Commitment shall be in addition to such Lender’s Commitment hereunder on such date).


 


(e)           Minimum Extension Requirement.  If (and only if) the total of the Commitments of the Lenders that have agreed so to extend their Termination Date and the additional Commitments of the Assuming Lenders shall be more than 50% of the aggregate amount of the Commitments in effect immediately prior to the Anniversary Date, then, effective as of the Anniversary Date, the Termination Date of each Extending Lender and of each Assuming Lender shall be extended to the date falling one year after the Termination Date then in effect (except that, if such date is not a Business Day, such Termination Date as so extended shall be the next preceding Business Day) and each Assuming Lender shall thereupon become a “Lender” for all purposes of this Agreement.


 


(f)           Conditions to Effectiveness of Extensions.  Notwithstanding the foregoing, the extension of the Termination Date pursuant to this Section shall not be effective with respect to any Lender unless, on the Notice Date and on the Anniversary Date:


 


(x)  no Default shall have occurred and be continuing on such date and after giving effect to such extension; and


 




  





31











  






 



(y)  the representations and warranties contained in Section 4.01 are correct on and as of such date, before and after giving effect to such extension, as though made on and as of such date (except to the extent any such representation or warranty is expressly made as of a specific date, in which case such representation or warranty shall be correct in all material respects as of such date).


 


ARTICLE III




 


 


CONDITIONS TO EFFECTIVENESS AND LENDING


 


SECTION 3.01.  Conditions Precedent to Effectiveness of Section 2.01.  Section 2.01 of this Agreement shall become effective on and as of the first date (the “Effective Date”) on which the following conditions precedent have been satisfied:


 


(a)           There shall have occurred no Material Adverse Change since December 31, 2010.


 


(b)           There shall exist no action, suit, investigation, litigation or proceeding affecting the Borrower or any of its Subsidiaries pending or, to the Borrower’s knowledge, threatened before any court, governmental agency or arbitrator that (i) would be reasonably likely to have a Material Adverse Effect other than the matters described on Schedule 3.01(b) hereto (the “Disclosed Litigation”) or (ii) purports to affect the legality, validity or enforceability of this Agreement or any Note or the consummation of the transactions contemplated hereby, and there shall have been no adverse change in the status, or financial effect on the Borrower or any of its Subsidiaries, of the Disclosed Litigation from that described on Schedule 3.01(b) hereto.


 


(c)           All governmental and third party consents and approvals necessary in connection with the transactions contemplated hereby shall have been obtained (without the imposition of any conditions that are not acceptable to the Lenders) and shall remain in effect, and no law or regulation shall be applicable in the reasonable judgment of the Lenders that restrains, prevents or imposes materially adverse conditions upon the transactions contemplated hereby.


 


(d)           The Borrower shall have paid all accrued fees and expenses of the Agent and the Lenders (including the accrued fees and expenses of counsel to the Agent).


 


(e)           On the Effective Date, the following statements shall be true and the Agent shall have received for the account of each Lender a certificate signed by a duly authorized officer of the Borrower, dated the Effective Date, stating that:


 


(i)           The representations and warranties contained in Section 4.01 are correct on and as of the Effective Date (except to the extent any such representation or warranty is expressly made as of a specific date, in which case such representation or warranty shall be correct in all material respects as of such date), and


 


(ii)           No event has occurred and is continuing that constitutes a Default.


 


(f)           The Agent shall have received on or before the Effective Date the following, each dated such day, in form and substance satisfactory to the Agent and (except for the Notes) in sufficient copies for each Lender:


 




  





32











  






 


(i)           The Notes to the order of the Lenders to the extent requested by any Lender pursuant to Section 2.16.



 


(ii)           Certified copies of the resolutions of the Board of Directors of the Borrower approving this Agreement and the Notes, and of all documents evidencing other necessary corporate action and governmental approvals, if any, with respect to this Agreement and the Notes.




 


(iii)           A certificate of the Secretary or an Assistant Secretary of the Borrower certifying the names and true signatures of the officers of the Borrower authorized to sign this Agreement and the Notes and the other documents to be delivered hereunder.


 


(iv)           A favorable opinion of Mayer Brown LLP, special New York counsel for the Borrower, substantially in the form of Exhibit D-1 hereto, a favorable opinion of in-house counsel for the Borrower, substantially in the form of Exhibit D-2 hereto and as to such other matters as any Lender through the Agent may reasonably request.


 


(v)           A favorable opinion of Shearman & Sterling LLP, counsel for the Agent, in form and substance satisfactory to the Agent.


 


(g)           The Borrower shall have terminated the commitments of the lenders and repaid or prepaid all of the obligations under, the Credit Agreement dated as of August 23, 2006 among the Borrower, the lenders parties thereto and Citibank, N.A., as administrative agent, and each of the Lenders that is a party to such credit facility hereby waives, upon execution of this Agreement, any notice required by said Credit Agreement relating to the termination of commitments thereunder.


 


SECTION 3.02.  Conditions Precedent to Each Borrowing and Issuance.  The obligation of each Lender to make an Advance (other than an Advance made by any Issuing Bank or any Lender pursuant to Section 2.03(c)) on the occasion of each Borrowing and the obligation of each Issuing Bank to issue a Letter of Credit shall be subject to the conditions precedent that the Effective Date shall have occurred and on the date of such Borrowing or such Issuance (as the case may be) the following statements shall be true (and each of the giving of the applicable Notice of Borrowing or Notice of Issuance and the acceptance by the Borrower of the proceeds of such Borrowing or such Issuance shall constitute a representation and warranty by the Borrower that on the date of such Borrowing or such Issuance such statements are true):


 


(a)           the representations and warranties contained in Section 4.01 (other than the representations and warranties contained in Section 4.01(e)(ii) and Section 4.01(f)(i)) are correct in all material respects on and as of such date, before and after giving effect to such Borrowing or such Issuance and to the application of the proceeds therefrom, as though made on and as of such date (except to the extent any such representation or warranty is expressly made as of a specific date, in which case such representation or warranty shall be correct in all material respects as of such date), and


 


(b)           no event has occurred and is continuing, or would result from such Borrowing or such Issuance or from the application of the proceeds therefrom, that constitutes a Default.


 


In addition to the other conditions precedent herein set forth, if any Lender becomes, and during the period it remains, a Defaulting Lender, no Issuing Bank will be required to issue any Letter of Credit or to amend any outstanding Letter of Credit to increase the face amount thereof, alter the drawing 



 



  





33











  




 


 


terms thereunder or extend the expiry date thereof, unless such Issuing Bank is satisfied that any exposure that would result therefrom is eliminated or fully covered by the Revolving Credit Commitments of the Non-Defaulting Lenders or by Cash Collateralization or a combination thereof satisfactory to such Issuing Bank. 

 


SECTION 3.03.  Determinations Under Section 3.01.  For purposes of determining compliance with the conditions specified in Section 3.01, each Lender shall be deemed to have consented to, approved or accepted or to be satisfied with each document or other matter required thereunder to be consented to or approved by or acceptable or satisfactory to the Lenders unless an officer of the Agent responsible for the transactions contemplated by this Agreement shall have received notice from such Lender prior to the date that the Borrower, by notice to the Lenders, designates as the proposed Effective Date, specifying its objection thereto.  The Agent shall promptly notify the Lenders of the occurrence of the Effective Date.






 


ARTICLE IV


 


REPRESENTATIONS AND WARRANTIES


 


SECTION 4.01.  Representations and Warranties of the Borrower.  The Borrower represents and warrants as follows:


 


(a)           The Borrower is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware.


 


(b)           The execution, delivery and performance by the Borrower of this Agreement and the Notes to be delivered by it, and the consummation of the transactions contemplated hereby, are within the Borrower’s corporate powers, have been duly authorized by all necessary corporate action, and do not contravene (i) the Borrower’s charter or by-laws or (ii) law or any contractual restriction binding on or affecting the Borrower.


 


(c)           No authorization or approval or other action by, and no notice to or filing with, any governmental authority or regulatory body or any other third party is required for the due execution, delivery and performance by the Borrower of this Agreement or the Notes to be delivered by it.


 


(d)           This Agreement has been, and each of the Notes to be delivered by it when delivered hereunder will have been, duly executed and delivered by the Borrower.  This Agreement is, and each of the Notes when delivered hereunder will be, the legal, valid and binding obligation of the Borrower enforceable against the Borrower in accordance with their respective terms, except as enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting creditors’ rights generally or by general equitable principles.


 


(e)           (i) The Consolidated balance sheet of the Borrower and its Subsidiaries as at December 31, 2010, and the related Consolidated statements of income and cash flows of the Borrower and its Subsidiaries for the fiscal year then ended, accompanied by an opinion of PricewaterhouseCoopers LLP, independent public accountants, and the Consolidated balance sheet of the Borrower and its Subsidiaries as at June 30, 2011, and the related Consolidated statements of income and cash flows of the Borrower and its Subsidiaries for the six months then ended, duly certified by the chief financial officer of the Borrower, copies of which have been furnished to each Lender, fairly present in all material respects, subject, in the case of said 



 



  





34











  






 


balance sheet as at June 30, 2011, and said statements of income and cash flows for the six months then ended, to year-end audit adjustments, the Consolidated financial condition of the Borrower and its Subsidiaries as at such dates and the Consolidated results of the operations of the Borrower and its Subsidiaries for the periods ended on such dates, all in accordance with  generally accepted accounting principles consistently applied.



 


(ii)  Since December 31, 2010, there has been no Material Adverse Change.




 


(iii)  The annual financial statements of each Insurance Subsidiary as at December 31, 2010, and the quarterly financial statements of each Insurance Subsidiary as at June 30, 2011, in each case as required to be flied with the Insurance Regulatory Authority of the jurisdiction of domicile of such Insurance Subsidiary, copies of which have been furnished to each Lender, fairly present in all material respects, subject, in the case of said quarterly financial statements as at June 30, 2011, to year-end audit adjustments, the financial condition of such Insurance Subsidiary as at such dates and the results of operations, changes in capital and surplus and cash flow of such Insurance Subsidiary for the respective periods then ended.


 


(f)           There is no pending or, to the Borrower’s knowledge, threatened action, suit, investigation, litigation or proceeding, including, without limitation, any Environmental Action, affecting the Borrower or any of its Subsidiaries before any court, governmental agency, Insurance Regulatory Authority or arbitrator that (i) would be reasonably likely to have a Material Adverse Effect (other than the Disclosed Litigation), and there has been no adverse change in the status, or financial effect on the Borrower or any of its Subsidiaries, of the Disclosed Litigation from that described on Schedule 3.01(b) hereto or (ii) purports to affect the legality, validity or enforceability of this Agreement or any Note or the consummation of the transactions contemplated hereby.


 


(g)           The Borrower is not engaged in the business of extending credit for the purpose of purchasing or carrying margin stock (within the meaning of Regulation U issued by the Board of Governors of the Federal Reserve System), and no proceeds of any Advance will be used to purchase or carry any margin stock or to extend credit to others for the purpose of purchasing or carrying any margin stock.


 


(h)           The Borrower is not an “investment company”, or a company “controlled” by an “investment company”, within the meaning of the Investment Company Act of 1940, as amended.


 


(i)           The Information Memorandum and the other information, exhibits and reports furnished by or on behalf of the Borrower to the Agent or any Lender in connection with the negotiation and syndication of this Agreement or pursuant to the terms of this Agreement, taken as a whole, did not contain any untrue statement of a material fact or omitted to state a material fact necessary to make the statements made therein, in light of the circumstances in which made, not misleading.


 


(j)           Schedule 4.01(j) lists with respect to each Insurance Subsidiary, as of the Effective Date, all of the jurisdictions in which such Insurance Subsidiary holds licenses (including, without limitation, licenses or certificates of authority from relevant Insurance Regulatory Authorities), permits or authorizations to transact insurance and reinsurance business (collectively, the “Licenses”), and indicates the type or types of insurance in which each such Insurance Subsidiary is permitted to be engaged with respect to each License therein listed.  (i) No such License is the subject of a proceeding for suspension, revocation or limitation or any 



 



  





35











  




 


similar proceedings, (ii) there is no sustainable basis for such a suspension, revocation or limitation, and (iii) no such suspension, revocation or limitation is, to the Borrower’s knowledge, threatened by any relevant Insurance Regulatory Authority, that, in each instance under (i), (ii) and (iii) above, would individually or in the aggregate, have a Material Adverse Effect.  No Insurance Subsidiary transacts any insurance business, directly or indirectly, in any jurisdiction other than those listed on Schedule 4.01(j), where such business requires any license, permit or other authorization of an Insurance Regulatory Authority of such jurisdiction.




 


(k)           As of the Effective Date, except as set forth on Schedule F to the financial statements  for the Insurance Subsidiaries for the fiscal year ending December 31, 2010 or as provided for or disclosed on the interim GAAP financial statements dated as of June 30, 2011, there are no material liabilities outstanding as of the Effective Date under any Reinsurance Agreement to which any Insurance Subsidiary is the ceding party.  Each Reinsurance Agreement to which an Insurance Subsidiary is the ceding party and which is in effect on the Effective Date is in full force and effect on the Effective Date.  Each Reinsurance Agreement to which an Insurance Subsidiary is the ceding party and which is in effect on the Effective Date is qualified as of the Effective Date under all applicable law to receive the statutory credit assigned to such Reinsurance Agreement in the relevant financial statements at the time prepared.


 


ARTICLE V


 


COVENANTS OF THE BORROWER


 


SECTION 5.01.  Affirmative Covenants.  So long as any Advance shall remain unpaid, any Letter of Credit is outstanding or any Lender shall have any Commitment hereunder, the Borrower will:


 


(a)           Compliance with Laws, Etc.  Comply, and cause each of its Subsidiaries to comply, in all material respects, with all applicable laws, rules, regulations and orders, such compliance to include, without limitation, compliance with ERISA, Environmental Laws and the Patriot Act.


 


(b)           Payment of Taxes, Etc.  Pay and discharge, and cause each of its Subsidiaries to pay and discharge, before the same shall become delinquent, (i) all Taxes, assessments and governmental charges or levies imposed upon it or upon its property and (ii) all lawful claims that, if unpaid, might by law become a Lien upon its property; provided, however, that neither the Borrower nor any of its Subsidiaries shall be required to pay or discharge any such Tax, assessment, charge or claim that is being contested in good faith and by proper proceedings and as to which appropriate reserves are being maintained, unless and until any Lien resulting therefrom attaches to its property and becomes enforceable against its other creditors.


 


(c)           Maintenance of Insurance.  Maintain, and cause each of its Subsidiaries to maintain, insurance with responsible and reputable insurance companies or associations in such amounts and covering such risks as is usually carried by companies engaged in similar businesses and owning similar properties in the same general areas in which the Borrower or such Subsidiary operates; provided, however, that the Borrower and its Subsidiaries may self-insure to the same extent as other companies engaged in similar businesses and owning similar properties in the same general areas in which the Borrower or such Subsidiary operates and to the extent consistent with prudent business practice.


 




  





36











  






 


(d)           Preservation of Corporate Existence, Etc.  Preserve and maintain, and cause each of its Subsidiaries to preserve and maintain, its corporate existence, rights (charter and statutory) and franchises; provided, however, that the Borrower and its Subsidiaries may consummate any merger or consolidation permitted under Section 5.02(b) and provided further that neither the Borrower nor any of its Subsidiaries shall be required to preserve any right or franchise if the Board of Directors of the Borrower or such Subsidiary shall determine that the preservation thereof is no longer desirable in the conduct of the business of the Borrower or such Subsidiary, as the case may be, and that the loss thereof is not disadvantageous in any material respect to the Borrower, such Subsidiary or the Lenders.


 


(e)           Visitation Rights.  At any reasonable time and from time to time, permit the Agent or any of the Lenders or any agents or representatives thereof, to examine and make copies of and abstracts from the records and books of account of, and visit the properties of, the Borrower and any of its Subsidiaries, and to discuss the affairs, finances and accounts of the Borrower and any of its Subsidiaries with any of their officers or directors and with their independent certified public accountants.


 


(f)           Keeping of Books.  Keep, and cause each of its Subsidiaries to keep, proper books of record and account, in which full and correct entries shall be made of all financial transactions and the assets and business of the Borrower and each such Subsidiary in accordance with generally accepted accounting principles in effect from time to time.


 


(g)           Maintenance of Properties, Etc.  Maintain and preserve, and cause each of its Subsidiaries to maintain and preserve, all of its properties that are used or useful in the conduct of its business in good working order and condition, ordinary wear and tear excepted.


 


(h)           Dividends.  Take all action necessary to cause its Subsidiaries to make such dividends, distributions or other payments to the Borrower as shall be necessary for the Borrower to make payments of the principal of and interest on the Advances in accordance with the terms of this Agreement.  In the event the approval of any governmental authority or other Person is required in order for any such Subsidiary to make any such dividends, distributions or other payments to the Borrower, or for the Borrower to make any such principal or interest payments, the Borrower will forthwith exercise its best efforts and take all actions permitted by law and necessary to obtain such approval.


 


(i)           Reporting Requirements.  Furnish to the Lenders:


 


(i)           GAAP Financial Statements.  (A) as soon as available and in any event within 55 days after the end of each of the first three quarters of each fiscal year of the Borrower, the Consolidated balance sheet of the Borrower and its Subsidiaries as of the end of such quarter and Consolidated statements of income, stockholders’ equity and cash flows of the Borrower and its Subsidiaries for the period commencing at the end of the previous fiscal year and ending with the end of such quarter, duly certified (subject to year-end audit adjustments) by the chief financial officer of the Borrower as having been prepared in accordance with generally accepted accounting principles and certificates of the chief financial officer of the Borrower as to compliance with the terms of this Agreement and setting forth in reasonable detail the calculations necessary to demonstrate compliance with Section 5.03, provided that in the event of any change in  generally accepted accounting principles used in the preparation of such financial statements, the Borrower shall also provide, if necessary for the determination of 



 



  





37











  




 


compliance with Section 5.03, a statement of reconciliation conforming such financial statements to GAAP; and



 


(B)           as soon as available and in any event within 105 days after the end of each fiscal year of the Borrower, a copy of the annual audit report for such year for the Borrower and its Subsidiaries, containing the Consolidated balance sheet of the Borrower and its Subsidiaries as of the end of such fiscal year and Consolidated statements of statements of income, stockholders’ equity and cash flows of the Borrower and its Subsidiaries for such fiscal year, in each case accompanied by an opinion, without qualification as to going concern or scope of audit, by PricewaterhouseCoopers LLP or other nationally recognized independent public accountants and certificates of the chief financial officer of the Borrower as to compliance with the terms of this Agreement and setting forth in reasonable detail the calculations necessary to demonstrate compliance with Section 5.03, provided that in the event of any change in generally accepted accounting principles used in the preparation of such financial statements, the Borrower shall also provide, if necessary for the determination of compliance with Section 5.03, a statement of reconciliation conforming such financial statements to GAAP;






 


(ii)           Statutory Financial Statements.  (A) as soon as available and in any event within 55 days after the end of each of the first three quarters of each fiscal year of each Insurance Subsidiary (or, in the case of Everest Insurance Company of Canada, within 15 days after the required filing date), the quarterly financial statements of each of its Insurance Subsidiaries as of the end of such fiscal quarter and for that portion of the fiscal year then ended, in the form filed with the relevant Insurance Regulatory Authority, prepared in accordance with SAP;


 


(B)           as soon as available and in any event within 90 days after the end of each fiscal year of each Insurance Subsidiary (or, in the case of Everest Insurance Company of Canada, within 15 days after the required filing date), the annual financial statements of each of its Insurance Subsidiaries as of the end of such fiscal year and for the fiscal year then ended, in the form filed with the relevant Insurance Regulatory Authority, prepared in accordance with SAP;


 


(C)           as soon as available and in any event within 135 days after the end of each fiscal year, an unaudited consolidated balance sheet of the Borrower and its Insurance Subsidiaries (other than Everest Insurance Company of Canada) as of the end of such fiscal year and unaudited consolidated statements of income, stockholders’ equity and cash flows for the Borrower and its Insurance Subsidiaries (other than Everest Reinsurance Company of Canada) for the fiscal year then ended, in each case setting forth comparative consolidated figures as of the end of and for the preceding fiscal year, all prepared in accordance with SAP applied on a basis consistent with that of the preceding year or containing disclosure of the effect on the financial condition or results of operations of any change in the application of accounting principles and practices during such year; and


 


(D)           as soon as available and in any event within 165 days after the end of each fiscal year (but only if and to the extent required by the applicable Insurance Regulatory Authority with regard to any Insurance Subsidiary), a certification by PricewaterhouseCoopers LLP or other nationally recognized independent public accountants as to the annual financial statements of each such Insurance Subsidiary as of the end of such fiscal year and for the fiscal year then ended, together with a report 



 



  





38











  




 


thereon by such accountants that is not qualified as to going concern or scope of audit and to the effect that such financial statements present fairly the consolidated financial condition and results of operations of such Insurance Subsidiary as of the date and for the period indicated in accordance with SAP applied on a basis consistent with that of the preceding year or containing disclosure of the effect on the financial condition or results of operations of any change in the application of accounting principles and practices during such year;



 


(iii)           as soon as possible and in any event within five days after the occurrence of each Default continuing on the date of such statement, a statement of a Responsible Officer of the Borrower setting forth details of such Default and the action that the Borrower has taken and proposes to take with respect thereto;






 


(iv)           promptly upon the sending, filing or receipt thereof, copies of (A) all financial statements, reports, notices and proxy statements that the Borrower or any of the Borrower’s Subsidiaries shall send or make available generally to its shareholders, (B) all reports (other than earnings press releases) on Form 10-Q, Form 10-K or Form 8-K (or their successor forms) or registration statements and prospectuses (other than on Form S-8 or its successor form) that the Borrower or any of the Borrower’s Subsidiaries shall render to or file with the Securities and Exchange Commission, the National Association of Securities Dealers, Inc. or any national securities exchange, (C) all reports on Form A (or any successor form) that any Insurance Subsidiary shall file with any Insurance Regulatory Authority, (D) all material reports on examination or similar material reports, financial examination reports or market conduct examination reports by the National Association of Insurance Commissioners or any Insurance Regulatory Authority or other governmental authority with respect to any Insurance Subsidiary’s insurance business, and (E) all material filings made under applicable state insurance holding company acts by the Borrower or any of its Subsidiaries, including, without limitation, filings seeking approval of transactions with Affiliates;


 


(v)           promptly upon filing with the relevant Insurance Regulatory Authority and in any event within 105 days after the end of each fiscal year (or, in the case of Everest Insurance Company of Canada, within fifteen (15) days of the required filing date), a copy of each Insurance Subsidiary’s “Statement of Actuarial Opinion” (or equivalent information should the relevant Insurance Regulatory Authority not require such a statement) as to the adequacy of such Insurance Subsidiary’s loss reserves for such fiscal year, together with a copy of its management discussion and analysis in connection therewith (but only if and to the extent required by the applicable Insurance Regulatory Authority with regard to such Insurance Subsidiary), each in the format prescribed by the applicable insurance laws of such Insurance Subsidiary’s jurisdiction of domicile;


 


(vi)           promptly after the commencement thereof, notice of all actions and proceedings before any court, governmental agency or arbitrator affecting the Borrower or any of its Subsidiaries of the type described in Section 4.01(f); and


 


(vii)           as soon as possible and in any event within five days after the receipt by the Borrower or any of its Subsidiaries from any Insurance Regulatory Authority or other governmental authority of (A) any notice asserting any failure by the Borrower or any of its Subsidiaries to be in compliance with applicable law or that threatens the taking of any action against the Borrower or such Subsidiary or sets forth circumstances that, if taken or adversely determined, would have, or be reasonably likely to have, a Material Adverse 



 



  





39











  




 


Effect, or (B) any notice of any actual or threatened suspension, limitation or revocation of, failure to renew, or imposition of any restraining order, escrow or impoundment of funds in connection with, any license, permit, accreditation or authorization of the Borrower or any of its Subsidiaries, where such action would have, or be reasonably likely to have, a Material Adverse Effect;





 


(viii)           as soon as practicable after the occurrence of any decrease in (A) the rating given by either S&P or Moody’s with respect to any Insurance Subsidiary’s claims paying ability or financial strength rating or (B) the rating given to any Insurance Subsidiary by A.M. Best Company;




 


(ix)           as soon as practicable after the occurrence of any actual changes in any insurance statute or regulation governing the investment or dividend practices of any Insurance Subsidiary that would be reasonably likely to have a Material Adverse Effect;


 


(x)           as soon as practicable after the occurrence of any other matter or event that has, or would be reasonably likely to have, a Material Adverse Effect, together with a written statement of a Responsible Officer of the Borrower setting forth the nature and period of existence thereof and the action that the Borrower has taken and proposes to take with respect thereof;


 


(xi)           promptly, notice of (A) the occurrence of any material amendment or modification (other than expiration) to any Reinsurance Agreement (whether entered into before or after the Effective Date), including any such agreements that are in a runoff mode on the date hereof, which amendment or modification would be reasonably likely to have a Material Adverse Effect, or (B) the receipt by the Borrower or any of its Subsidiaries of any written notice of any denial of coverage or claim, litigation or arbitration with respect to any Reinsurance Agreement to which it is a ceding party which would be reasonably likely to have a Material Adverse Effect;


 


(xii)           promptly following the request from the Agent or the Required Lenders (which request may only be made when an Event of Default has occurred and is continuing), a report prepared by an independent actuarial consulting firm of recognized professional standing reasonably satisfactory to the Agent or the Required Lenders, as the case may be, reviewing the adequacy of reserves of each Insurance Subsidiary determined in accordance with SAP, which firm shall be provided access to or copies of all reserve analyses and valuations relating to the insurance business of each Insurance Subsidiary in the possession of or available to the Borrower or any of its Subsidiaries;


 


(xiii)           promptly, notice of any material change to the investment policy for the Insurance Subsidiaries or the Borrower, including copies of such changes; and


 


(xiv)           such other information respecting the Borrower or any of its Subsidiaries as any Lender through the Agent may from time to time reasonably request.


 


SECTION 5.02.  Negative Covenants.  So long as any Advance shall remain unpaid, any Letter of Credit is outstanding or any Lender shall have any Commitment hereunder, the Borrower will not:


 


(a)           Liens, Etc.  Create or suffer to exist, or permit any of its Subsidiaries to create or suffer to exist, any Lien on or with respect to any of its properties, whether now owned or


 




  





40











  




 


hereafter acquired, or assign, or permit any of its Subsidiaries to assign, any right to receive income, other than:



 


(i)           Permitted Liens;


 


(ii)           purchase money Liens upon or in any real property or personal property acquired or held by the Borrower or any Subsidiary in the ordinary course of business to secure the purchase price of such property or to secure Debt incurred solely for the purpose of financing the acquisition of such property (including any Liens placed on such assets within 90 days after such acquisition), or Liens existing on such property at the time of its acquisition (other than any such Liens created in contemplation of such acquisition that were not incurred to finance the acquisition of such property) or extensions, renewals or replacements of any of the foregoing for the same or a lesser amount, provided, however, that no such Lien shall extend to or cover any properties of any character other than the property being acquired, and no such extension, renewal or replacement shall extend to or cover any properties not theretofore subject to the Lien being extended, renewed or replaced, provided further that the aggregate principal amount of the indebtedness secured by the Liens referred to in this clause (ii) shall not exceed 5% of the value of the total assets of the Borrower and its Subsidiaries at such time, determined on a Consolidated basis as of the date of the financial statements most recently delivered pursuant to Section 5.01(i) prior to such time;






 


(iii)           the Liens existing on the Effective Date and described on Schedule 5.02(a) hereto;


 


(iv)           Liens on 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 Subsidiary of the Borrower; 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 of the Person so merged into or consolidated with the Borrower or such Subsidiary or acquired by the Borrower or such Subsidiary;


 


(v)           Liens in connection with pledges and deposits made pursuant to statutory and regulatory requirements of Insurance Regulatory Authorities by an Insurance Subsidiary in the ordinary course of its business, for the purpose of securing regulatory capital or satisfying other financial responsibility requirements;


 


(vi)           Liens upon cash and United States government and agency securities and other investment assets of the Borrower and its Subsidiaries securing (A) obligations incurred in connection with reverse repurchase transactions and other similar investment management transactions, (B) reinsurance transactions of such types and in such amounts as are customary for companies similar to the Borrower in size and lines of business and that are entered into by the Borrower and its Subsidiaries in the ordinary course of business and (C) Hedge Agreements in an aggregate amount not to exceed $350,000,000 at any time of such types and in such amounts as are customary for companies similar to the Borrower in size and lines of business and that are entered into by the Borrower and its Subsidiaries in the ordinary course of business;


 



(vii)           any attachment or judgment Lien not constituting an Event of Default under Section 6.01 that is being contested in good faith by appropriate proceedings and for which adequate reserves have been established in accordance with GAAP;




 




  





41











  






 



 


(viii)           Liens arising from the filing, for notice purposes only, of financing statements in respect of true leases;


 


(ix)           Liens on marketable securities and cash or cash equivalents securing letter of credit facilities in an aggregate amount not to exceed $750,000,000 at any time;


 


(x)           Liens of financial institutions as collecting banks or with respect to deposit or securities accounts held at such financial institutions, in each case in the ordinary course of business;




 


(xi)           Liens on Cash Collateral provided under the terms of this Agreement; and


 


(xii)           the replacement, extension or renewal of any Lien permitted by clause (iii) or (iv) above upon or in the same property theretofore subject thereto or the replacement, extension or renewal (without increase in the amount) of the Debt secured thereby.


 


(b)           Mergers, Etc.  Merge or consolidate with or into any Person, except that any Subsidiary of the Borrower may merge into the Borrower and the Borrower may merge with any other Person so long as the Borrower is the surviving corporation, provided, in each case, that no Default shall have occurred and be continuing at the time of such proposed transaction or would result therefrom.


 


(c)           Accounting Changes.  Make or permit, or permit any of its Subsidiaries to make or permit, any change in accounting policies or reporting practices, except as required or permitted by generally accepted accounting principles or SAP, as applicable.


 


(d)           Change in Nature of Business.  Engage, or permit any of its Subsidiaries to engage, to any material extent in any business other than the insurance and reinsurance business (including the life reinsurance business) and other businesses engaged in by the Borrower and its Subsidiaries on the date hereof or a business reasonably related thereto.


 


(e)           Sales, Etc. of Assets.  Sell, lease, transfer or otherwise dispose of, or permit any of its Subsidiaries to sell, lease, transfer or otherwise dispose of, any assets consisting of equity interests in Everest Re or any other Material Insurance Subsidiary, or grant any option or other right to purchase, lease or otherwise acquire any such assets.


 


(f)           Transactions with Affiliates.  Enter into, or permit or cause any of its Subsidiaries to enter into, any transaction (including, without limitation, any purchase, sale, lease or exchange of property or the rendering of any service) with any officer, director, stockholder or other Affiliate of the Borrower or any Subsidiary, except in the ordinary course of its business and upon fair and reasonable terms that are no less favorable to it than it would obtain in a comparable arm’s length transaction with a Person other than an Affiliate of the Borrower or such Subsidiary, other than:


 


(i)           transactions between and among the Borrower and its Subsidiaries or between and among Subsidiaries of the Borrower, provided, however, that such transactions are made in the ordinary course of its business and upon fair and reasonable terms or as otherwise required by law;


 


 




  





42











  






(ii)           transactions under incentive compensation plans, stock option plans and other employee benefit plans, and loans and advances from the Borrower or any of its Subsidiaries to its officers, in each case that have been approved by the board of directors, or a committee thereof, of the Borrower or any of its Subsidiaries; and



 


(iii)           the payment by the Borrower of reasonable and customary fees to members of its board of directors.


 


(g)           Ratings.  Permit or cause Everest Re to fail to maintain a financial strength rating by either A.M. Best Company or S&P.




 


(h)           Limitation on Certain Restrictions.  Create or otherwise cause or suffer to exist or become effective permit or permit any of its Subsidiaries to create or otherwise cause or suffer to exist or become effective, directly or indirectly, any restriction or encumbrance on (i) the ability of the Borrower to perform and comply with its obligations hereunder or under any Notes or (ii) the ability of any Subsidiary of the Borrower to make any dividend payments or other distributions in respect of its equity interests, to repay Debt owed to the Borrower or any other Subsidiary, to make loans or advances to the Borrower or any other Subsidiary, or to transfer any of its assets or properties to the Borrower or any other Subsidiary, in each case other than such restrictions or encumbrances existing under or by reason of (1) this Agreement, (2) applicable law, (3) customary provisions restricting subletting or assignment of any lease governing any leasehold interest of the Borrower or any of its Subsidiaries, (4) customary provisions restricting assignment of any licensing agreement (in which the Borrower or any of its Subsidiaries is the licensee) or other contract (including leases) entered into by the Borrower or any of its Subsidiaries in the ordinary course of business, (5) restrictions on the transfer of any asset pending the close of the sale of such asset, (6) restrictions on the transfer of any asset subject to a Lien, (7) agreements entered into by an Insurance Subsidiary with an Insurance Regulatory Authority, (8) customary provisions in partnership agreements, limited liability company organizational governance documents, joint venture agreements and other similar agreements entered into in the ordinary course of business that restrict the transfer of ownership interests in such partnership, limited liability company, joint venture or similar Person, (9) restrictions on cash or other deposits or net worth imposed by customers under contracts entered into in the ordinary course of business and not otherwise prohibited by this Agreement and (10) pursuant to any agreement or instrument relating to any Debt of a Subsidiary (A) if the encumbrances and restrictions contained in any such agreement or instrument taken as a whole are not materially less favorable to the Lenders than the encumbrances and restrictions contained in this Agreement as of the date hereof or (B) if such encumbrance or restriction is not materially more disadvantageous to the Lenders than is customary in comparable financings and such encumbrance or restriction will not have a material adverse effect on the ability of the Borrower to make payments of the Advances as and when due.


 


SECTION 5.03.  Financial Covenants.  So long as any Advance shall remain unpaid, any Letter of Credit is outstanding or any Lender shall have any Commitment hereunder, the Borrower will:


 


(a)           Maximum Consolidated Indebtedness to Total Capitalization.  Maintain a ratio of Consolidated Indebtedness to Total Capitalization as of the last day of any fiscal quarter beginning with the fiscal quarter ending September 30, 2011 of not greater than 0.35 to 1.0.


 


(b)           Minimum Statutory Surplus.  Cause the statutory surplus of Everest Re, at any time beginning with the fiscal quarter ending September 30, 2011, to not be less than $1,875,000,000 plus 25% of the aggregate Net Income of Everest Re for the period beginning 


 




  





43











  






 


after December 31, 2010 and ending on the date of calculation, as determined in each case in accordance with SAP (provided that Net Income for any period shall be taken into account for purposes of this calculation only if positive), plus 25% of the aggregate capital contributions made to Everest Re after December 31, 2010.



 


ARTICLE VI


 


EVENTS OF DEFAULT


 


SECTION 6.01.  Events of Default.  If any of the following events (“Events of Default”) shall occur and be continuing:




 


 


(a)           The Borrower shall fail to pay any principal of any Advance when the same becomes due and payable; or the Borrower shall fail to pay any interest on any Advance or make any other payment of fees or other amounts payable under this Agreement or any Note within three Business Days after the same becomes due and payable; or


 


(b)           Any representation or warranty made by the Borrower herein or by the Borrower (or any of its officers) in connection with this Agreement shall prove to have been incorrect in any material respect when made; or


 


(c)           (i) The Borrower shall fail to perform or observe any term, covenant or agreement contained in Section 5.01(d) (with respect to the Borrower only) or (i)(iii), 5.02 or 5.03, or (ii) the Borrower shall fail to perform or observe any term, covenant or agreement contained in Section 5.01(d) (with respect to any Material Insurance Subsidiary), (e) or (i) (other than clause (iii) thereof) if such failure shall remain unremedied for 5 days after the earlier of (x) a Responsible Officer of the Borrower acquires knowledge thereof and (y) written notice thereof shall have been given to the Borrower by the Agent or any Lender; or (iii) the Borrower shall fail to perform or observe any other term, covenant or agreement contained in this Agreement on its part to be performed or observed if such failure shall remain unremedied for 30 days after the earlier of (x) a Responsible Officer of the Borrower acquires knowledge thereof and (y) written notice thereof shall have been given to the Borrower by the Agent or any Lender; or


 


(d)           The Borrower or any of its Subsidiaries shall fail to pay any principal of or premium or interest on any Debt that is outstanding in a principal amount of at least $50,000,000 in the aggregate (but excluding Debt outstanding hereunder) of the Borrower or such Subsidiary (as the case may be), when the same becomes due and payable (whether by scheduled maturity, required prepayment, acceleration, demand or otherwise), and such failure shall continue after the applicable grace period, if any, specified in the agreement or instrument relating to such Debt; or any other event shall occur or condition shall exist under any agreement or instrument relating to any such Debt and shall continue after the applicable grace period, if any, specified in such agreement or instrument, if the effect of such event or condition is to accelerate, or to permit the acceleration of, the maturity of such Debt; or any such Debt shall be declared to be due and payable, or required to be prepaid or redeemed (other than by a regularly scheduled required prepayment or redemption), purchased or defeased, or an offer to prepay, redeem, purchase or defease such Debt shall be required to be made, in each case prior to the stated maturity thereof; or


 


(e)           The Borrower or any of its Subsidiaries shall generally not pay its debts as such debts become due, or shall admit in writing its inability to pay its debts generally, or shall make a general assignment for the benefit of creditors; or any proceeding shall be instituted by or against 


 




  





44











  




 


the Borrower or any of its Subsidiaries seeking to adjudicate it a bankrupt or insolvent, or seeking liquidation, winding up, reorganization, arrangement, adjustment, protection, relief, or composition of it or its debts under any law relating to bankruptcy, insolvency or reorganization or relief of debtors, or seeking the entry of an order for relief or the appointment of a receiver, trustee, custodian or other similar official for it or for any substantial part of its property and, in the case of any such proceeding instituted against it (but not instituted by it), either such proceeding shall remain undismissed or unstayed for a period of 60 days, or any of the actions sought in such proceeding (including, without limitation, the entry of an order for relief against, or the appointment of a receiver, trustee, custodian or other similar official for, it or for any substantial part of its property) shall occur; or the Borrower or any of its Subsidiaries shall take any corporate action to authorize any of the actions set forth above in this subsection (e); or




 


(f)           Judgments or orders for the payment of money in excess of $50,000,000 in the aggregate shall be rendered against the Borrower or any of its Subsidiaries and either (i) enforcement proceedings shall have been commenced by any creditor upon such judgment or order or (ii) there shall be any period of 60 consecutive days during which a stay of enforcement of such judgment or order, by reason of a pending appeal or otherwise, shall not be in effect; provided, however, that any such judgment or order shall not be an Event of Default under this Section 6.01(f) if and for so long as (i) the amount of such judgment or order is covered by a valid and binding policy of insurance between the defendant and the insurer covering payment thereof and (ii) such insurer, which shall be rated at least “A” by A.M. Best Company, has been notified of, and has not disputed the claim made for payment of, the amount of such judgment or order; or


 


(g)           (i) Any Person or two or more Persons acting in concert shall have acquired beneficial ownership (within the meaning of Rule 13d-3 of the Securities and Exchange Commission under the Securities Exchange Act of 1934), directly or indirectly, of Voting Stock of Group (or other securities convertible into such Voting Stock) representing 30% or more of the combined voting power of all Voting Stock of Group; or (ii) during any period of up to 24 consecutive months, commencing after the date of this Agreement, individuals who at the beginning of such 24-month period were directors of Group shall cease for any reason (other than due to death or disability) to constitute a majority of the board of directors of Group (except to the extent that individuals who at the beginning of such 24-month period were replaced by individuals (x) elected by a majority of the remaining members of the board of directors of Group or (y) nominated for election by a majority of the remaining members of the board of directors of Group and thereafter elected as directors by the shareholders of Group); or (iii) the Borrower shall cease for any reason to be directly or indirectly wholly-owned by Group; or


 


(i)           The Borrower or any of its ERISA Affiliates shall incur liability in excess of $50,000,000 in the aggregate as a result of one or more of the following:  (i) the occurrence of any ERISA Event; (ii) the partial or complete withdrawal of the Borrower or any of its ERISA Affiliates from a Multiemployer Plan; or (iii) the reorganization or termination of a Multiemployer Plan; or


 


(j)           Any Insurance Regulatory Authority or other governmental authority having jurisdiction shall issue any order of conservation, supervision, rehabilitation or liquidation or any other order of similar effect in respect of any Material Insurance Subsidiary;


 


then, and in any such event, the Agent (i) shall at the request, or may with the consent, of the Required Lenders, by notice to the Borrower, declare the obligation of each Lender to make Advances (other than Advances to be made by a Lender pursuant to Section 2.03(b) or by an Issuing Bank or a Lender pursuant 


 




  





45











  






 


to Section 2.03(c)) and of the Issuing Banks to issue Letters of Credit to be terminated, whereupon the same shall forthwith terminate, and (ii) shall at the request, or may with the consent, of the Required Lenders, by notice to the Borrower, declare the Advances, all interest thereon and all other amounts payable under this Agreement to be forthwith due and payable, whereupon the Advances, all such interest and all such amounts shall become and be forthwith due and payable, without presentment, demand, protest or further notice of any kind, all of which are hereby expressly waived by the Borrower; provided, however, that in the event of an actual or deemed entry of an order for relief with respect to the Borrower under the Federal Bankruptcy Code, (A) the obligation of each Lender to make Advances (other than Advances to be made by a Lender pursuant to Section 2.03(b) or by an Issuing Bank or a Lender pursuant to Section 2.03(c)) and of the Issuing Banks to issue Letters of Credit shall automatically be terminated and (B) the Advances, all such interest and all such amounts shall automatically become and be due and payable, without presentment, demand, protest or any notice of any kind, all of which are hereby expressly waived by the Borrower.


 


SECTION 6.02.  Actions in Respect of the Letters of Credit upon Default or Termination.  If (a) the latest Termination Date shall have occurred, the Borrower shall or (b) any Event of Default shall have occurred and be continuing, the Agent may with the consent, or shall at the request, of the Required Lenders, irrespective of whether it is taking any of the actions described in Section 6.01 or otherwise, make demand upon the Borrower to, and forthwith upon such demand the Borrower will,


 


(i) pay to the Agent on behalf of the Lenders in same day funds at the Agent’s office designated in such demand, for deposit in the L/C Cash Collateral Account, an amount equal to the aggregate Available Amount of all Letters of Credit then outstanding (but only to the extent such Available Amount has not already been Cash Collateralized) or


 


(ii) make such other arrangements in respect of the outstanding Letters of Credit as shall be acceptable to the Required Lenders and the applicable Issuing Banks;


 


provided, however, that in the event of an actual or deemed entry of an order for relief with respect to the Borrower under the Federal Bankruptcy Code, an amount equal to the aggregate Available Amount of all outstanding Letters of Credit shall be immediately due and payable to the Agent for the account of the Lenders without notice to or demand upon the Borrower, which are expressly waived by the Borrower, to be held in the L/C Cash Collateral Account.  If at any time after the Termination  Date or an Event of Default is continuing the Agent reasonably determines that any funds held in the L/C Cash Collateral Account are subject to any right or claim of any Person other than the Agent and the Lenders or that the total amount of such funds is less than the aggregate Available Amount of all Letters of Credit, the Borrower will, forthwith upon demand by the Agent, pay to the Agent, as additional funds to be deposited and held in the L/C Cash Collateral Account, an amount equal to the excess of (a) such aggregate Available Amount over (b) the total amount of funds, if any, then held in the L/C Cash Collateral Account that the Agent reasonably determines to be free and clear of any such right and claim.  Upon the drawing of any Letter of Credit, to the extent funds are on deposit in the L/C Cash Collateral Account, such funds shall be applied to reimburse the Issuing Banks to the extent permitted by applicable law.  After all such Letters of Credit shall have expired or been fully drawn upon and all other obligations of the Borrower hereunder and under the Notes shall have been paid in full, the balance, if any, in such L/C Cash Collateral Account shall be returned to the Borrower.


 


ARTICLE VII


 


THE AGENT


 


 




  





46











  




 



SECTION 7.01.  Appointment and Authority.  Each of the Lenders hereby irrevocably appoints Citibank to act on its behalf as the Agent hereunder and authorizes the Agent to take such actions on its behalf and to exercise such powers as are delegated to the Agent by the terms hereof, together with such actions and powers as are reasonably incidental thereto.  The provisions of this Article are solely for the benefit of the Agent and the Lenders, and the Borrower shall not have rights as a third-party beneficiary of any of such provisions.  It is understood and agreed that the use of the term “agent” herein (or any other similar term) with reference to the Agent is not intended to connote any fiduciary or other implied (or express) obligations arising under agency doctrine of any applicable law.  Instead such term is used as a matter of market custom, and is intended to create or reflect only an administrative relationship between contracting parties.


 


SECTION 7.02.  Rights as a Lender  The Person serving as the Agent hereunder shall have the same rights and powers and duties hereunder in its capacity as a Lender as any other Lender and may exercise the same as though it were not the Agent, and the term “Lender” or “Lenders” shall, unless otherwise expressly indicated or unless the context otherwise requires, include the Person serving as the Agent hereunder in its individual capacity.  Such Person and its Affiliates may accept deposits from, lend money to, own securities of, act as the financial advisor or in any other advisory capacity for, and generally engage in any kind of business with, the Borrower or any Subsidiary or other Affiliate thereof as if such Person were not the Agent hereunder and without any duty to account therefor to the Lenders.






 


SECTION 7.03.  Exculpatory Provisions.  (a) The Agent shall not have any duties or obligations except those expressly set forth herein, and its duties hereunder shall be administrative in nature.  Without limiting the generality of the foregoing, the Agent:


 


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


 


(ii)           shall not have any duty to take any discretionary action or exercise any discretionary powers, except discretionary rights and powers expressly contemplated hereby that the Agent is required to exercise as directed in writing by the Required Lenders (or such other number or percentage of the Lenders as shall be expressly provided for herein); provided that the Agent shall not be required to take any action that, in its opinion or the opinion of its counsel, may expose the Agent to liability or that is contrary to this Agreement or applicable law, including for the avoidance of doubt any action that may be in violation of the automatic stay under any debtor relief law or that may effect a forfeiture, modification or termination of property of a Defaulting Lender in violation of any debtor relief law; and


 


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


 


(b)           The Agent shall not be liable for any action taken or not taken by it (i) with the consent or at the request of the Required Lenders (or such other number or percentage of the Lenders as shall be necessary, or as the Agent shall believe in good faith shall be necessary, under the circumstances as provided in Section 8.01 and Article VI), or (ii) in the absence of its own gross negligence or willful misconduct as determined by a court of competent jurisdiction by final and nonappealable judgment.  The Agent shall be deemed not to have knowledge of any Default unless and until notice describing such Default is given to the Agent in writing by the Borrower or a Lender.


 




  





47











  




 



 


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


 


SECTION 7.04.  Reliance by Agent.  The Agent shall be entitled to rely upon, and shall not incur any liability for relying upon, any notice, request, certificate, consent, statement, instrument, document or other writing (including any electronic message, Internet or intranet website posting or other distribution) believed by it to be genuine and to have been signed, sent or otherwise authenticated by the proper Person.  The Agent also may rely upon any statement made to it orally or by telephone and believed by it to have been made by the proper Person, and shall not incur any liability for relying thereon.  In determining compliance with any condition hereunder to the making of an Advance, or the issuance, extension, renewal or increase of a Letter of Credit, that by its terms must be fulfilled to the satisfaction of a Lender or an Issuing Bank, the Agent may presume that such condition is satisfactory to such Lender or Issuing Bank unless the Agent shall have received notice to the contrary from such Lender or Issuing Bank prior to the making of such Advance or the issuance of such Letter of Credit.  The Agent may consult with legal counsel (who may be counsel for the Borrower), independent accountants and other experts selected by it, and shall not be liable for any action taken or not taken by it in accordance with the advice of any such counsel, accountants or experts.






 


SECTION 7.05.  Indemnification.  (a)  Each Lender severally agrees to indemnify the Agent (to the extent not reimbursed by the Borrower) from and against such Lender’s Ratable Share of any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever that may be imposed on, incurred by, or asserted against the Agent in any way relating to or arising out of this Agreement or any action taken or omitted by the Agent under this Agreement (collectively, the “Indemnified Costs”), provided that no Lender shall be liable for any portion of the Indemnified Costs resulting from the Agent’s gross negligence or willful misconduct.  Without limitation of the foregoing, each Lender agrees to reimburse the Agent promptly upon demand for its ratable share of any out-of-pocket expenses (including counsel fees) incurred by the Agent in connection with the preparation, execution, delivery, administration, modification, amendment or enforcement (whether through negotiations, legal proceedings or otherwise) of, or legal advice in respect of rights or responsibilities under, this Agreement, to the extent that the Agent is not reimbursed for such expenses by the Borrower.  In the case of any investigation, litigation or proceeding giving rise to any Indemnified Costs, this Section 7.05 applies whether any such investigation, litigation or proceeding is brought by the Agent, any Lender or a third party.


 


(b)           Each Lender severally agrees to indemnify the Issuing Banks (to the extent not promptly reimbursed by the Borrower) from and against such Lender’s Ratable Share of any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever that may be imposed on, incurred by, or asserted against any such Issuing Bank in any way relating to or arising out of this Agreement or any action taken or omitted by such Issuing Bank hereunder or in connection herewith; provided, however, that no Lender shall be liable for any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements resulting from such Issuing Bank’s gross negligence or willful misconduct.  Without limitation of the foregoing, each Lender agrees to reimburse any such Issuing Bank promptly upon demand for its Ratable Share of any costs and expenses (including, without 


 




  





48











  




 


limitation, fees and expenses of counsel) payable by the Borrower under Section 8.04, to the extent that such Issuing Bank is not promptly reimbursed for such costs and expenses by the Borrower.

 


(c)           The failure of any Lender to reimburse the Agent or any Issuing Bank promptly upon demand for its Ratable Share of any amount required to be paid by the Lenders to the Agent as provided herein shall not relieve any other Lender of its obligation hereunder to reimburse the Agent or any Issuing Bank for its Ratable Share of such amount, but no Lender shall be responsible for the failure of any other Lender to reimburse the Agent or any Issuing Bank for such other Lender’s Ratable Share of such amount.  Without prejudice to the survival of any other agreement of any Lender hereunder, the agreement and obligations of each Lender contained in this Section 7.05 shall survive the payment in full of principal, interest and all other amounts payable hereunder and under the Notes.  Each of the Agent and each Issuing Bank agrees to return to the Lenders their respective Ratable Shares of any amounts paid under this Section 7.05 that are subsequently reimbursed by the Borrower.


 


SECTION 7.06.  Delegation of Duties.  The Agent may perform any and all of its duties and exercise its rights and powers hereunder by or through any one or more sub-agents appointed by the Agent.  The Agent and any such sub-agent may perform any and all of its duties and exercise its rights and powers by or through their respective Related Parties.  The exculpatory provisions of this Article shall apply to any such sub-agent and to the Related Parties of the Agent and any such sub-agent, and shall apply to their respective activities in connection with the syndication of the Commitments as well as activities as Agent.  The Agent shall not be responsible for the negligence or misconduct of any sub-agents except to the extent that a court of competent jurisdiction determines in a final and nonappealable judgment that the Agent acted with gross negligence or willful misconduct in the selection of such sub-agents.






 


SECTION 7.07.  Resignation of Agent.  (a) The Agent may at any time give notice of its resignation to the Lenders and the Borrower.  Upon receipt of any such notice of resignation, the Required Lenders shall have the right, in consultation with the Borrower, to appoint a successor, which shall be a bank with an office in the United States, or an Affiliate of any such bank with an office in the United States.  If no such successor shall have been so appointed by the Required Lenders and shall have accepted such appointment within 30 days after the retiring Agent gives notice of its resignation (or such earlier day as shall be agreed by the Required Lenders) (the “Resignation Effective Date”), then the retiring Agent may (but shall not be obligated to), on behalf of the Lenders, appoint a successor Agent meeting the qualifications set forth above.  Whether or not a successor has been appointed, such resignation shall become effective in accordance with such notice on the Resignation Effective Date.


 


(b)           If the Person serving as Agent is a Defaulting Lender pursuant to clause (v) of the definition thereof, the Required Lenders may, to the extent permitted by applicable law, by notice in writing to the Borrower and such Person remove such Person as Agent and, in consultation with the Borrower, appoint a successor.  If no such successor shall have been so appointed by the Required Lenders and shall have accepted such appointment within 30 days (or such earlier day as shall be agreed by the Required Lenders) (the “Removal Effective Date”), then such removal shall nonetheless become effective in accordance with such notice on the Removal Effective Date.


 


(c)  With effect from the Resignation Effective Date or the Removal Effective Date (as applicable) (1) the retiring or removed Agent shall be discharged from its duties and obligations hereunder (except that in the case of any collateral security held by the Agent on behalf of the Lenders or the Issuing Banks hereunder, the retiring or removed Agent shall continue to hold such collateral security until such time as a successor Agent is appointed) and (2) all payments, communications and determinations provided to be made by, to or through the Agent shall instead be made by or to each Lender directly, until such time, if any, as the Required Lenders appoint a successor Agent as provided 




  





49











  




 


for above.  Upon the acceptance of a successor’s appointment as Agent hereunder, such successor shall succeed to and become vested with all of the rights, powers, privileges and duties of the retiring or removed Agent, and the retiring or removed Agent shall be discharged from all of its duties and obligations hereunder.  The fees payable by the Borrower to a successor Agent shall be the same as those payable to its predecessor unless otherwise agreed between the Borrower and such successor.  After the retiring or removed Agent’s resignation or removal hereunder, the provisions of this Article and Section 8.04 shall continue in effect for the benefit of such retiring or removed Agent, its sub-agents and their respective Related Parties in respect of any actions taken or omitted to be taken by any of them while the retiring or removed Agent was acting as Agent.

 


(d)           Any resignation pursuant to this Section by a Person acting as Agent shall, unless such Person shall notify the Borrower and the Lenders otherwise, also act to relieve such Person and its Affiliates of any obligation to advance or issue new, or extend existing, Letters of Credit where such advance, issuance or extension is to occur on or after the effective date of such resignation.  Upon the acceptance of a successor’s appointment as Agent hereunder, (i) such successor shall succeed to and become vested with all of the rights, powers, privileges and duties of the retiring Issuing Bank, (ii) the retiring Issuing Bank shall be discharged from all of its duties and obligations hereunder and (iii) successor Issuing Bank shall issue letters of credit in substitution for the Letters of Credit, if any, outstanding at the time of such succession or make other arrangement satisfactory to the retiring Issuing Bank to effectively assume the obligations of the retiring Issuing Bank with respect to such Letters of Credit.






 


SECTION 7.08.  Non-Reliance on Agent and Other Lenders.  Each Lender acknowledges that it has, independently and without reliance upon the Agent or any other Lender or any of their Related Parties and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement.  Each Lender also acknowledges that it will, independently and without reliance upon the Agent or any other Lender or any of their Related Parties and based on such documents and information as it shall from time to time deem appropriate, continue to make its own decisions in taking or not taking action under or based upon this Agreement or any related agreement or any document furnished hereunder.


 


SECTION 7.09.  Other Agents.  Each Lender hereby acknowledges that no syndication agent and no documentation agent nor any other Lender designated as any “Agent” (other than the Agent) on the signature pages or the cover hereof has any liability or obligations hereunder other than in its capacity as a Lender.


 


ARTICLE VIII


 


MISCELLANEOUS


 


SECTION 8.01.  Amendments, Etc.  No amendment or waiver of any provision of this Agreement or the Notes, nor consent to any departure by the Borrower therefrom, shall in any event be effective unless the same shall be in writing and signed by the Required Lenders, and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given; provided, however, that no amendment, waiver or consent shall, unless in writing and signed by (a) all the Lenders, do any of the following:  (1) waive any of the conditions specified in Section 3.01, (2) change the percentage of the Commitments or of the aggregate unpaid principal amount of the Advances, or the number of Lenders, that shall be required for the Lenders or any of them to take any action hereunder or (3) amend this Section 8.01 or (b) each Lender directly affected thereby, (1) increase the Commitment of such Lender, (2) reduce the principal of, or interest on, the Advances or any fees or other amounts payable hereunder to such Lender or (3) postpone any date fixed for any payment of principal of, or 


 




  





50











  






 


interest on, the Advances or any fees or other amounts payable hereunder to such Lender; and provided further that (x) no amendment, waiver or consent shall, unless in writing and signed by the Agent in addition to the Lenders required above to take such action, affect the rights or duties of the Agent under this Agreement or any Note and (y) no amendment, waiver or consent shall, unless in writing and signed by each Issuing Bank affected thereby, in addition to the Lenders required above to take such action, adversely affect the rights or obligations of such Issuing Bank in its capacity as such under this Agreement.

 


SECTION 8.02.  Notices, Etc.  (a)  Notices Generally.  Except in the case of notices and other communications expressly permitted to be given by telephone (and except as provided in paragraph (b) below), all notices and other communications provided for herein shall be in writing and shall be delivered by hand or overnight courier service, mailed by certified or registered mail or sent by facsimile as follows:


 


(i)           if to the Borrower, to it at 477 Martinsville Road, Liberty Corner, NJ 04938, Attention:  Frank N. Lopapa (Facsimile No. 908-604-3412; Telephone No. 908-604-3160), (with a copy to Sanjoy Mukherjee at the same address);




 


(ii)           if to the Agent, to Citibank, N.A. at 1615 Brett Road, Building #3, New Castle, Delaware 19720, Attention of Bank Loan Syndications; (Facsimile No. (212) 994-0961; Telephone No. (302) 894-6160);


 


(iii)           if to Citibank, N.A. in its capacity as an Issuing Bank, to it at 1615 Brett Road, Building #3, New Castle, Delaware 19720, Attention of Bank Loan Syndications; (Facsimile No. (212) 994-0961; Telephone No. (302) 894-6160); and if to any other Issuing Bank, to it at the address provided in writing to the Agent and the Borrower at the time of its appointment as an Issuing Bank hereunder; and


 


(iv)           if to a Lender, to it at its address (or facsimile number) set forth in its Administrative Questionnaire.


 


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


 


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


 


Unless the Agent otherwise prescribes, (i) notices and other communications sent to an e-mail address shall be deemed received upon the sender’s receipt of an acknowledgement from the intended recipient (such as by the “return receipt requested” function, as available, return e-mail or other written acknowledgement), and (ii) notices or communications posted to an Internet or intranet website 


 




  





51











  




 


shall be deemed received upon the deemed receipt by the intended recipient, at its e-mail address as described in the foregoing clause (i), of notification that such notice or communication is available and identifying the website address therefor; provided that, for both clauses (i) and (ii) above, if such notice, email or other communication is not sent during the normal business hours of the recipient, such notice or communication shall be deemed to have been sent at the opening of business on the next business day for the recipient.


 


(c)           Change of Address, etc.  Any party hereto may change its address or facsimile number for notices and other communications hereunder by notice to the other parties hereto.





 


(d)           Platform.


 


(i)           The Borrower agrees that the Agent may, but shall not be obligated to, make the Communications (as defined below) available to the Lenders by posting the Communications on Debt Domain, Intralinks, Syndtrak or a substantially similar electronic transmission system (the “Platform”).




 


(ii)           The Platform is provided “as is” and “as available.”  The Agent Parties (as defined below) do not warrant the adequacy of the Platform and expressly disclaim liability for errors or omissions in the Communications.  No warranty of any kind, express, implied or statutory, including, without limitation, any warranty of merchantability, fitness for a particular purpose, non-infringement of third-party rights or freedom from viruses or other code defects, is made by any Agent Party in connection with the Communications or the Platform.  In no event shall the Agent or any of its Related Parties (collectively, the “Agent Parties”) have any liability to the Borrower, any Lender or any other Person or entity for damages of any kind, including, without limitation, direct or indirect, special, incidental or consequential damages, losses or expenses (whether in tort, contract or otherwise) arising out of the Borrower’s or the Agent’s transmission of communications through the Platform, except to the extent resulting from the gross negligence or willful misconduct of an Agent Party.  “Communications” means, collectively, any notice, demand, communication, information, document or other material that the Borrower provides to the Agent pursuant to any Loan Document or the transactions contemplated therein which is distributed to the Agent any Lender by means of electronic communications pursuant to this Section, including through the Platform.


 


SECTION 8.03.  No Waiver; Remedies.  No failure on the part of any Lender or the Agent to exercise, and no delay in exercising, any right hereunder or under any Note shall operate as a waiver thereof; nor shall any single or partial exercise of any such right preclude any other or further exercise thereof or the exercise of any other right.  The remedies herein provided are cumulative and not exclusive of any remedies provided by law.


 


SECTION 8.04.  Costs and Expenses.  (a)  The Borrower agrees to pay on demand all reasonable and documented out-of-pocket costs and expenses of the Agent in connection with the preparation, execution, delivery, administration, modification and amendment of this Agreement, the Notes and the other documents to be delivered hereunder, including, without limitation, (A) all due diligence, syndication (including printing, distribution and bank meetings), transportation, computer, duplication, appraisal, consultant, and audit expenses and (B) the reasonable and documented fees and expenses of counsel for the Agent with respect thereto and with respect to advising the Agent as to its rights and responsibilities under this Agreement.  The Borrower further agrees to pay on demand all costs and expenses of the Agent and the Lenders, if any (including, without limitation, reasonable and documented counsel fees and expenses), in connection with the enforcement (whether through negotiations, legal proceedings or otherwise) of this Agreement, the Notes and the other documents to be 


 




  





52











  




 


delivered hereunder, including, without limitation, reasonable and documented fees and expenses of counsel for the Agent and each Lender in connection with the enforcement of rights under this Section 8.04(a).  For the avoidance of doubt, any costs or expenses constituting Other Taxes shall be governed exclusively by the provisions of Section 2.14 and not by the provisions of this Section 8.04(a).

 


(b)           The Borrower agrees to indemnify and hold harmless the Agent and each Lender and each of their Affiliates and their officers, directors, employees, agents and advisors (each, an “Indemnified Party”) from and against any and all claims, damages, losses, liabilities and expenses (including, without limitation, reasonable and documented fees and expenses of counsel) incurred by or asserted or awarded against any Indemnified Party, in each case arising out of or in connection with or by reason of (including, without limitation, in connection with any investigation, litigation or proceeding or preparation of a defense in connection therewith) (i) the Notes, this Agreement, any of the transactions contemplated herein or the actual or proposed use of the proceeds of the Advances or Letters of Credit or (ii) the actual or alleged presence of Hazardous Materials on any property of the Borrower or any of its Subsidiaries or any Environmental Action relating in any way to the Borrower or any of its Subsidiaries, except to the extent such claim, damage, loss, liability or expense results from such Indemnified Party’s gross negligence or willful misconduct.  In the case of an investigation, litigation or other proceeding to which the indemnity in this Section 8.04(b) applies, such indemnity shall be effective whether or not such investigation, litigation or proceeding is brought by the Borrower, its directors, equityholders or creditors or an Indemnified Party or any other Person, whether or not any Indemnified Party is otherwise a party thereto and whether or not the transactions contemplated hereby are consummated.  The Borrower also agrees not to assert any claim for special, indirect, consequential or punitive damages against the Agent, any Lender, any of their Affiliates, or any of their respective directors, officers, employees, attorneys and agents, on any theory of liability, arising out of or otherwise relating to the Notes, this Agreement, any of the transactions contemplated herein or the actual or proposed use of the proceeds of the Advances.  For the avoidance of doubt, any claims, damages, losses, liabilities and expenses relating to Taxes shall be governed exclusively by the provisions of Section 2.14 and not by the provisions of this Section 8.04(b).






 


(c)           If any payment of principal of, or Conversion of, any Eurodollar Rate Advance is made by the Borrower to or for the account of a Lender (i) other than on the last day of the Interest Period for such Advance, as a result of a payment or Conversion pursuant to Section 2.09, 2.10 or 2.12, acceleration of the maturity of the Notes pursuant to Section 6.01 or for any other reason, or by an Eligible Assignee to a Lender other than on the last day of the Interest Period for such Advance upon an assignment of rights and obligations under this Agreement pursuant to Section 8.07 as a result of a demand by the Borrower pursuant to Section 2.18 or (ii) as a result of a payment or Conversion pursuant to Section 2.09, 2.10 or 2.12, the Borrower shall, upon demand by such Lender (with a copy of such demand to the Agent), pay to the Agent for the account of such Lender any amounts required to compensate such Lender for any additional losses, costs or expenses that it may reasonably incur as a result of such payment or Conversion, including, without limitation, any loss (excluding loss of anticipated profits), cost or expense incurred by reason of the liquidation or reemployment of deposits or other funds acquired by any Lender to fund or maintain such Advance.


 


(d)           Without prejudice to the survival of any other agreement of the Borrower hereunder, the agreements and obligations of the Borrower contained in Sections 2.11, 2.14 and 8.04 shall survive the payment in full of principal, interest and all other amounts payable hereunder and under the Notes.


 


SECTION 8.05.  Right of Set-off.  Upon either (a) the occurrence and during the continuance of any Event of Default under Section 6.01(a) or 6.01(e) or (b) (i) the occurrence and during the continuance of any other Event of Default and (ii) the making of the request or the granting of the consent specified by Section 6.01 to authorize the Agent to declare the Advances due and payable 


 




  





53











  




 


pursuant to the provisions of Section 6.01, each Lender and each of its Affiliates is hereby authorized at any time and from time to time, to the fullest extent permitted by law, to set off and apply any and all deposits (general or special, time or demand, provisional or final) at any time held and other indebtedness at any time owing by such Lender or such Affiliate to or for the credit or the account of the Borrower against any and all of the obligations of the Borrower now or hereafter existing under this Agreement and the Note held by such Lender, whether or not such Lender shall have made any demand under this Agreement or such Note and although such obligations may be unmatured.  Each Lender agrees promptly to notify the Borrower after any such set-off and application, provided that the failure to give such notice shall not affect the validity of such set-off and application.  The rights of each Lender and its Affiliates under this Section are in addition to other rights and remedies (including, without limitation, other rights of set-off) that such Lender and its Affiliates may have.

 


SECTION 8.06.  Binding Effect.  This Agreement shall become effective (other than Section 2.01, which shall only become effective upon satisfaction of the conditions precedent set forth in Section 3.01) when it shall have been executed by the Borrower and the Agent and when the Agent shall have been notified by each Initial Lender that such Initial Lender has executed it and thereafter shall be binding upon and inure to the benefit of the Borrower, the Agent and each Lender and their respective successors and assigns, except that the Borrower shall not have the right to assign its rights hereunder or any interest herein without the prior written consent of all of the Lenders (and any other attempted assignment or transfer by the Borrower shall be null and void).






 


SECTION 8.07.  Assignments and Participations.  (a)  Successors and Assigns Generally.  No Lender may assign or otherwise transfer any of its rights or obligations hereunder except (i) to an assignee in accordance with the provisions of paragraph (b) of this Section, (ii) by way of participation in accordance with the provisions of paragraph (d) of this Section, or (iii) by way of pledge or assignment of a security interest subject to the restrictions of paragraph (f) of this Section (and any other attempted assignment or transfer by any Lender shall be null and void).  Nothing in this Agreement, expressed or implied, shall be construed to confer upon any Person (other than the parties hereto, their respective successors and assigns permitted hereby, Participants to the extent provided in paragraph (d) of this Section and, to the extent expressly contemplated hereby, the Related Parties of each of the Agent and the Lenders) any legal or equitable right, remedy or claim under or by reason of this Agreement.


 


(b)           Assignments by Lenders.  Any Lender may at any time assign to one or more assignees all or a portion of its rights and obligations under this Agreement (including all or a portion of its Commitment and the Advances at the time owing to it); provided that any such assignment shall be subject to the following conditions:


 


(i)           Minimum Amounts.


 


(A)           in the case of an assignment of the entire remaining amount of the assigning Lender’s Commitment and/or the Advances at the time owing to it or in the case of an assignment to a Lender, an Affiliate of a Lender or an Approved Fund, no minimum amount need be assigned; and


 


(B)           in any case not described in paragraph (b)(i)(A) of this Section, the aggregate amount of the Commitment (which for this purpose includes Advances outstanding thereunder) or, if the applicable Commitment is not then in effect, the principal outstanding balance of the Advances of the assigning Lender subject to each such assignment (determined as of the date the Assignment and Assumption with respect to such assignment is delivered to the Agent or, if “Trade Date” is specified in the Assignment and Assumption, as of the Trade Date) shall not be less than $10,000,000 (or 


 




  





54











  






 


in increments of $1,000,000 in excess thereof) unless each of the Agent and, so long as no Event of Default has occurred and is continuing, the Borrower otherwise consents (each such consent not to be unreasonably withheld or delayed).

 


(ii)           Proportionate Amounts.  Each partial assignment shall be made as an assignment of a proportionate part of all the assigning Lender’s rights and obligations under this Agreement with respect to the Advances or the Commitment assigned.


 


(iii)           Required Consents.  No consent shall be required for any assignment except to the extent required by paragraph (b)(i)(B) of this Section and, in addition:


 


(A) the consent of the Borrower (such consent not to be unreasonably withheld or delayed) shall be required unless (x) an Event of Default has occurred and is continuing at the time of such assignment, or (y) such assignment is to a Lender, an Affiliate of a Lender or an Approved Fund; provided that the Borrower shall be deemed to have consented to any such assignment unless it shall object thereto by written notice to the Agent within ten Business Days after having received notice thereof;




 


(B) the consent of the Agent (such consent not to be unreasonably withheld or delayed) shall be required for assignments if such assignment is to a Person that is not a Lender, an Affiliate of a Lender or an Approved Fund with respect to such Lender; and


 


(C) the consent of each Issuing Bank (such consent not to be unreasonably withheld or delayed) shall be required for any assignment of the Revolving Credit Commitments.


 


(iv)           Assignment and Assumption.  The parties to each assignment shall execute and deliver to the Agent (with a copy to the Borrower) an Assignment and Assumption, together with a processing and recordation fee of $3,500; provided that the Agent may, in its sole discretion, elect to waive such processing and recordation fee in the case of any assignment.  The assignee, if it is not a Lender, shall deliver to the Agent an Administrative Questionnaire.


 


(v)           No Assignment to Certain Persons.  No such assignment shall be made to (A) the Borrower or any of the Borrower’s Affiliates or Subsidiaries or (B) any Defaulting Lender or any of its Subsidiaries, or any Person who, upon becoming a Lender hereunder, would constitute any of the foregoing Persons described in this clause (B).


 


(vi)           No Assignment to Natural Persons.  No such assignment shall be made to a natural Person.


 


(vii)           Certain Additional Payments.  In connection with any assignment of rights and obligations of any Defaulting Lender hereunder, no such assignment shall be effective unless and until, in addition to the other conditions thereto set forth herein, the parties to the assignment shall make such additional payments to the Agent in an aggregate amount sufficient, upon distribution thereof as appropriate (which may be outright payment, purchases by the assignee of participations or subparticipations, or other compensating actions, including funding, with the consent of the Borrower and the Agent, the applicable Ratable Share of Advances previously requested but not funded by the Defaulting Lender, to each of which the applicable assignee and assignor hereby irrevocably consent), to (x) pay and satisfy in full all payment liabilities then owed by such Defaulting Lender to the Agent, each Issuing Bank and each other Lender hereunder (and interest accrued thereon), and (y) acquire (and fund as appropriate) its full Ratable 


 




  





55











  






 


Share of all Advances and participations in Letters of Credit in accordance with its Ratable Share.  Notwithstanding the foregoing, in the event that any assignment of rights and obligations of any Defaulting Lender hereunder shall become effective under applicable law without compliance with the provisions of this paragraph, then the assignee of such interest shall be deemed to be a Defaulting Lender for all purposes of this Agreement until such compliance occurs.



 


Subject to acceptance and recording thereof by the Agent pursuant to paragraph (c) of this Section, from and after the effective date specified in each Assignment and Assumption, the assignee thereunder shall be a party to this Agreement and, to the extent of the interest assigned by such Assignment and Assumption, have the rights and obligations of a Lender under this Agreement, and the assigning Lender thereunder shall, to the extent of the interest assigned by such Assignment and Assumption, be released from its obligations under this Agreement (and, in the case of an Assignment and Assumption covering all of the assigning Lender’s rights and obligations under this Agreement, such Lender shall cease to be a party hereto) but shall continue to be entitled to the benefits of Sections 2.11 and 8.04 with respect to facts and circumstances occurring prior to the effective date of such assignment; provided, that except to the extent otherwise expressly agreed by the affected parties, no assignment by a Defaulting Lender will constitute a waiver or release of any claim of any party hereunder arising from that Lender’s having been a Defaulting Lender.  Any assignment or transfer by a Lender of rights or obligations under this Agreement that does not comply with this paragraph shall be treated for purposes of this Agreement as a sale by such Lender of a participation in such rights and obligations in accordance with paragraph (d) of this Section.




 


(c)           Register.  The Agent, acting solely for this purpose as an agent of the Borrower, shall maintain at one of its offices in the United States a copy of each Assignment and Assumption delivered to it and a register for the recordation of the names and addresses of the Lenders, and the Commitments of, and principal amounts of the Advances owing to, each Lender pursuant to the terms hereof from time to time (the “Register”).  The entries in the Register shall be conclusive absent manifest error, and the Borrower, the Agent and the Lenders shall treat each Person whose name is recorded in the Register pursuant to the terms hereof as a Lender hereunder for all purposes of this Agreement.  The Register shall be available for inspection by the Borrower or any Lender, at any reasonable time and from time to time upon reasonable prior notice.


 


(d)           Participations.  Any Lender may at any time, without the consent of, or notice to, the Borrower or the Agent, sell participations to any Person (other than a natural Person or the Borrower or any of the Borrower’s Affiliates) (each, a “Participant”) in all or a portion of such Lender’s rights and/or obligations under this Agreement (including all or a portion of its Commitment and/or the Advances owing to it); provided that (i) such Lender’s obligations under this Agreement shall remain unchanged, (ii) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations, and (iii) the Borrower, the Agent and Lenders shall continue to deal solely and directly with such Lender in connection with such Lender’s rights and obligations under this Agreement.  For the avoidance of doubt, each Lender shall be responsible for the indemnity under Section 7.05 with respect to any payments made by such Lender to its Participant(s).


 


Any agreement or instrument pursuant to which a Lender sells such a participation shall provide that such Lender shall retain the sole right to enforce this Agreement and to approve any amendment, modification or waiver of any provision of this Agreement; provided that such agreement or instrument may provide that such Lender will not, without the consent of the Participant, agree to any amendment, modification or waiver described in the first proviso of Section 8.01 that affects such Participant.  Without the consent of the Borrower, a Participant shall not be entitled to the benefits of Section 2.11.  To the extent permitted by law, each Participant also shall be entitled to the benefits of 




  





56











  




 


Section 8.05 as though it were a Lender; provided that such Participant agrees to be subject to Section 2.15 as though it were a Lender.

 


(e)          Limitations upon Participant Rights.  A Participant shall not be entitled to receive any greater payment under Sections 2.11 or 2.14 than the applicable Lender would have been entitled to receive with respect to the participation sold to such Participant, unless the sale of the participation to such Participant is made with the Borrower’s prior written consent.  A Participant that would be a Foreign Lender if it were a Lender shall not be entitled to the benefits of Section 2.14 unless the Borrower consents to the participation and such Participant agrees, for the benefit of the Borrower, to comply with Section 2.14(e) as though it were a Lender.


 


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


 


(g)           Letter of Credit Commitments.  Each Issuing Bank may assign to a Qualifying Issuing Bank that is an Eligible Assignee acceptable to the Borrower its rights and obligations or any portion of the undrawn Letter of Credit Commitment at any time; provided, however, that  (i) the amount of the Letter of Credit Commitment of the assigning Issuing Bank being assigned pursuant to each such assignment (determined as of the date of the Assignment and Assumption with respect to such assignment) shall in no event be less than $1,000,000 or an integral multiple of $1,000,000 in excess thereof, and (ii) the parties to each such assignment shall execute and deliver to the Agent, for its acceptance and recording in the Register, an Assignment and Assumption, together with a processing and recordation fee of $3,500.






 


SECTION 8.08.  Confidentiality.  Each of the Agent and the Lenders agree to maintain the confidentiality of the Information (as defined below), except that Information may be disclosed (a) to its Affiliates and to its Related Parties (it being understood that the Persons to whom such disclosure is made will be informed of the confidential nature of such Information and instructed to keep such Information confidential on substantially the same terms as provided herein); (b) to the extent required or requested by any regulatory authority purporting to have jurisdiction over such Person or its Related Parties (including any self-regulatory authority, such as the National Association of Insurance Commissioners); (c) to the extent required by applicable laws or regulations or by any subpoena or similar legal process; (d) to any other party to this Agreement; (e) in connection with the exercise of any remedies hereunder or under any action or proceeding relating to this Agreement or the enforcement of rights hereunder; (f) subject to an agreement containing provisions substantially the same as, or more restrictive than, those of this Section, to (i) any assignee of or Participant in, or any prospective assignee of or Participant in, any of its rights and obligations under this Agreement, or (ii) any actual or prospective party (or its Related Parties) to any swap, derivative or other transaction under which payments are to be made by reference to the Borrower and its obligations, this Agreement or payments hereunder; (g) on a confidential basis to (i)  any rating agency in connection with rating the Borrower or its Subsidiaries or (ii) the CUSIP Service Bureau or any similar agency in connection with the issuance and monitoring of CUSIP numbers with respect to the this Agreement; (h) with the consent of the Borrower; or (i) to the extent such Information (x) becomes publicly available other than as a result of a breach of this Section, or (y) becomes available to the Agent, any Lender or any of their respective Affiliates on a nonconfidential basis from a source other than the Borrower.


 


For purposes of this Section, “Information” means all information received from the Borrower or any of its Subsidiaries relating to the Borrower or any of its Subsidiaries or any of their 


 




  





57











  




 


respective businesses, other than any such information that is available to the Agent or any Lender on a nonconfidential basis prior to disclosure by the Borrower or any of its Subsidiaries.  Any Person required to maintain the confidentiality of Information as provided in this Section shall be considered to have complied with its obligation to do so if such Person has exercised the same degree of care to maintain the confidentiality of such Information as such Person would accord to its own confidential information.

 


SECTION 8.09.  Governing Law.  This Agreement and the Notes shall be governed by, and construed in accordance with, the laws of the State of New York.


 


SECTION 8.10.  Execution in Counterparts.  This Agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement.  Delivery of an executed counterpart of a signature page to this Agreement by telecopier shall be effective as delivery of a manually executed counterpart of this Agreement.


 


SECTION 8.11.  Jurisdiction, Etc.  (a)  Each of the parties hereto irrevocably and unconditionally agrees that it will not commence any action, litigation or proceeding of any kind or description, whether in law or equity, whether in contract or in tort or otherwise, against the Agent, any Lender or any Related Party of the foregoing in any way relating to this Agreement or any Note or the transactions relating hereto or thereto, in any forum other than the courts of the State of New York sitting in New York County, and of the United States District Court of the Southern District of New York, and any appellate court from any thereof, and each of the parties hereto irrevocably and unconditionally submits to the jurisdiction of such courts and agrees that all claims in respect of any such action, litigation or proceeding may be heard and determined in such New York State court or, to the fullest extent permitted by applicable law, in such federal court.  Each of the parties hereto agrees that a final non-appealable judgment in any such action, litigation or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law.  The parties hereto hereby further irrevocably consent to the service of process in any action or proceeding in such courts by the mailing thereof by any parties hereto by registered or certified mail, postage prepaid, to the Borrower at its address specified pursuant to Section 8.02.






 


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


 


SECTION 8.12.  No Liability of the Issuing Banks.  The Borrower assumes all risks of the acts or omissions of any beneficiary or transferee of any Letter of Credit with respect to its use of such Letter of Credit.  Neither an Issuing Bank nor any of its officers or directors shall be liable or responsible for:  (a) the use that may be made of any Letter of Credit or any acts or omissions of any beneficiary or transferee in connection therewith; (b) the validity, sufficiency or genuineness of documents, or of any endorsement thereon, even if such documents should prove to be in any or all respects invalid, insufficient, fraudulent or forged; (c) payment by such Issuing Bank against presentation of documents that do not comply with the terms of a Letter of Credit, including failure of any documents to bear any reference or adequate reference to the Letter of Credit; or (d) any other circumstances whatsoever in making or failing to make payment under any Letter of Credit, except that the Borrower shall have a claim against such Issuing Bank, and such Issuing Bank shall be liable to the Borrower, to the extent of any direct, but not consequential, damages suffered by the Borrower that the Borrower proves were caused by such Issuing Bank’s willful misconduct or gross negligence when determining  whether drafts 




 





  





58











  








 


and other documents presented under a Letter of Credit comply with the terms thereof.  In furtherance and not in limitation of the foregoing, such Issuing Bank may accept documents that appear on their face to be in order, without responsibility for further investigation, regardless of any notice or information to the contrary; provided that nothing herein shall be deemed to excuse such Issuing Bank if it acts with gross negligence or willful misconduct in accepting such documents.

 


SECTION 8.13.  Patriot Act Notice.  Each Lender and the Agent (for itself and not on behalf of any Lender) hereby notifies the Borrower that pursuant to the requirements of the Patriot Act, it is required to obtain, verify and record information that identifies the Borrower, which information includes the name and address of the Borrower and other information that will allow such Lender or the Agent, as applicable, to identify the Borrower in accordance with the Patriot Act.  The Borrower shall provide such information and take such actions as are reasonably requested by the Agent or any Lenders in order to assist the Agent and the Lenders in maintaining compliance with the Patriot Act.


 


SECTION 8.14.  No Fiduciary Duties.  The Borrower agrees that in connection with all aspects of the transactions contemplated hereby and any communications in connection therewith, the Borrower and its Affiliates, on the one hand, and the Agent, the Lenders and their respective Affiliates, on the other hand, will have a business relationship that does not create, by implication or otherwise, any fiduciary duty on the part of the Agent, the Lenders and or their respective Affiliates and no such duty will be deemed to have arisen in connection with any such transactions or communications.




 


 




  





59











  






 







SECTION 8.15.  Waiver of Jury Trial.  Each of the Borrower, the Agent and the Lenders hereby irrevocably waives all right to trial by jury in any action, proceeding or counterclaim (whether based on contract, tort or otherwise) arising out of or relating to this Agreement or the Notes or the actions of the Agent or any Lender in the negotiation, administration, performance or enforcement thereof.


 


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


 


 




	 	EVEREST REINSURANCE HOLDINGS, INC.	 
	 	 	 	 
	 	 	 	 
	
 

	
By: 

	/S/ FRANK N. LOPAPA	 
	 	Name: Frank N. Lopapa	 
	 	Title: Treasurer	 
	 	 	 	 







 





	 	CITIBANK, N.A.,	 
	 	as Agent	 
	 	 	 	 
	
 

	
By: 

	/S/ MAUREEN MARONEY	 
	 	Name: Maureen Maroney	 
	 	Title: Vice President	 
	 	 	 	 









 


 




	 Initial Lenders	 	 	 
	 	 	 	 
	 	 	CITIBANK, N.A.,	 
	 	 	 	 	 
	
 

	 	
By: 

	/S/ MAUREEN MARONEY	 
	 	 	Name: Maureen Maroney	 
	 	 	Title: Vice President	 
	 	 	 	 	 







 



	 	
DEUTSCHE BANK AG NEW YORK BRANCH

	 
	 	 	 	 
	
 

	
By: 

	 /S/ JOHN MCGILL	 
	 	Name: John McGill	 
	 	Title: Director	 
	 	 	 	 






	 	

HSBC BANK USA, NATIONAL ASSOCIATION



	 
	 	 	 	 
	
 

	
By: 

	/S/ JODY T. FELDMAN	 
	 	Name: Jody T. Feldman	 
	 	Title: Vice President	 





 




  





60











  






 



	 	

WELLS FARGO BANK, NATIONAL ASSOCIATION



	 
	 	 	 	 
	
 

	
By: 

	/S/ WILLIAM R. GALEY	 
	 	Name: William R. Galey	 
	 	Title: Director	 





 



	 	

JPMORGAN CHASE BANK, N.A.



	 
	 	 	 	 
	
 

	
By: 

	/S/ KIMBERLY S. DAUBER	 
	 	Name: Kimberly S. Dauber	 
	 	Title: Vice President	 





 



	 	

THE BANK OF NEW YORK



	 
	 	 	 	 
	
 

	
By: 

	/S/ PAULETTE TRUMAN	 
	 	Name: Paulette Truman	 
	 	Title: Vice President	 









  





61











  











SCHEDULE I


EVEREST REINSURANCE HOLDINGS, INC.


FIVE YEAR CREDIT AGREEMENT


COMMITMENTS


 







 



	
Name of Initial Lender


 


 

	 	
Revolving 


Credit 


Commitment

	 	 	
Letter of 


Credit 


Commitment

	 
	  	 	 	 	 	 	 
	
Citibank, N.A.

	 	$	32,500,000	 	 	$	150,000,000	 
	
Deutsche Bank AG New York Branch

	 	$	25,000,000	 	 	 	 	 
	
HSBC Bank USA, Inc., National Association

	 	$	25,000,000	 	 	 	 	 
	
Wells Fargo Bank, National Association

	 	$	25,000,000	 	 	 	 	 
	
JPMorgan Chase Bank, N.A.

	 	$	21,250,000	 	 	 	 	 
	
The Bank of New York Mellon

	 	$	21,250,000	 	 	 	 	 
	  	 	 	 	 	 	 	 	 
	
Total:

	 	$	150,000,000	 	 	$	150,000,000	 














  





  











  








SCHEDULE 3.01(b)


DISCLOSED LITIGATION







NONE











  





  











  








SCHEDULE 4.01(j)


LICENSES








	
 

	
Everest Re

	
Everest Nat'l

	
Everest Indemnity

	
Everest Security

	
Mt. McKinley Ins.


	
Jurisdiction

	  	  	  	  	  
	
Alabama

	
Licensed

	
Licensed

	
Broker Burden

	
Licensed

	
Broker Burden


	
Alaska

	
Licensed

	
Licensed

	
Approved

	  	
Not Approved


	
Arizona

	
Licensed

	
Licensed

	
Approved

	  	
Not Approved


	
Arkansas

	
Licensed

	
Licensed

	
Approved

	  	
Approved


	
California

	
Licensed

	
Licensed

	
Approved

	  	
Licensed


	
Colorado

	
Licensed

	
Licensed

	
Approved

	  	
Not Approved


	
Connecticut

	
Licensed

	
Licensed

	
Approved

	  	
Approved


	
Delaware

	
Domiciled

	
Domiciled

	
Domiciled

	
Approved

	
Domiciled


	
D.C.

	
Licensed

	
Licensed

	
Broker Burden

	  	
Broker Burden


	
Florida

	
Licensed

	
Licensed

	
Approved

	  	
Not Approved


	
Georgia

	
Licensed

	
Licensed

	
Broker Burden

	
Domiciled

	
Broker Burden


	
Hawaii

	
Licensed

	
 


Licensed

	
Broker Burden

	  	
Broker Burden


	
Idaho

	
Licensed

	
Licensed

	
Approved

	  	
Approved


	
Illinois

	
Licensed

	
Licensed

	
Broker Burden

	  	
Broker Burden


	
Indiana

	
Licensed

	
Licensed

	
Broker Burden

	  	
 Not Approved


	
Iowa

	
Licensed

	
Licensed

	
Approved

	  	
Approved


	
Kansas

	
Licensed

	
Licensed

	
Approved

	  	
Approved


	
Kentucky

	
Licensed

	
Licensed

	
Approved

	  	
Approved


	
Louisiana

	
Licensed

	
Licensed

	
Approved

	  	
Not Approved


	
Maine

	
Licensed

	
Licensed

	
Approved

	  	
Not Approved


	
Maryland

	
Licensed

	
Licensed

	
Approved

	  	
Approved


	
Massachusetts

	
Licensed

	
Licensed

	
Approved

	  	
 Not Approved


	
Michigan

	
Licensed

	
Licensed

	
Approved

	  	
Not Approved


	
Minnesota

	
Licensed

	
Licensed

	
Approved

	  	
Approved


	
Mississippi

	
Licensed

	
Licensed

	
Approved

	  	
Not Approved







 




  





  











  









 



	
Missouri

	
Licensed

	
Licensed

	
Approved

	  	
Approved


	
Montana

	
Licensed

	
Licensed

	
Approved

	  	
Approved


	
Nebraska

	
Licensed

	
Licensed

	
Broker Burden

	  	
Broker Burden


	
Nevada

	
 


Licensed

	
Licensed

	
Approved

	  	
Approved


	
New Hampshire

	
 


Licensed

	
Licensed

	
Approved

	  	
Not Approved


	
New Jersey

	
Licensed

	
Licensed

	
Approved

	  	
Not Approved


	
New Mexico

	
Licensed

	
Licensed

	
Approved

	  	
Not Approved


	
New York

	
Licensed

	
Licensed

	
Approved

	  	
Not Approved


	
North Carolina

	
Licensed

	
 


Licensed

	
Approved

	  	
Not Approved


	
North Dakota

	
Licensed

	
Licensed

	
Approved

	  	
Approved


	
Ohio

	
Licensed

	
Licensed

	
Approved

	  	
Not Approved


	
Oklahoma

	
Licensed

	
Licensed

	
Approved

	  	
Not Approved


	
Oregon

	
Licensed

	
Licensed

	
Approved

	  	
Approved


	
Pennsylvania

	
Licensed

	
Licensed

	
Approved

	  	
Not Approved


	
 


Puerto Rico

	
Licensed - reins.


only

	
Not licensed

	
Approved

	  	
Not Approved


	
Rhode Island

	
Licensed

	
Licensed

	
Approved

	  	
Not Approved


	
South Carolina

	
Licensed

	
Licensed

	
Approved

	  	
Not Approved


	
South Dakota

	
Licensed

	
Licensed

	
Broker Burden

	  	
Broker Burden


	
Tennessee

	
Licensed

	
Licensed

	
Approved

	  	
Approved


	
Texas

	
Licensed

	
Licensed

	
Approved

	  	
Not Approved


	
Utah

	
Licensed

	
Licensed

	
Approved

	  	
Not Approved


	
Vermont

	
Licensed

	
 


Licensed

	
Approved

	  	
Approved


	
Virginia

	
Licensed

	
Licensed

	
Approved

	  	
Not Approved


	
Washington

	
Licensed

	
Licensed

	
Broker Burden

	  	
Broker Burden


	
West Virginia

	
Licensed

	
Licensed

	
Approved

	  	
Not Approved


	
Wisconsin

	
Licensed

	
Licensed

	
Approved

	  	
Approved


	
Wyoming

	
 


Licensed

	
Licensed

	
Broker Burden

	  	
Broker Burden







 






  





2











  






 


 


Everest Re is also licensed with the United States Department of Labor (under 4 different acts) and the U.S. Department of Treasury.







 


 


Everest Insurance Company of Canada


 


Federal license from Office of the Superintendent of Financial Institutions Canada (OSFI)


Provincial licenses as follows:


Alberta


British Columbia


Manitoba


New Brunswick


Newfoundland and Labrador


Northwest Territories


Nova Scotia


Nunavut


Ontario


Prince Edward Island


Quebec


Saskatchewan


Yukon












Everest Reinsurance Company


Registration as an Insurer/Reinsurer in Foreign (Non-U.S.) Countries


 


 



	 	England and Wales
	Argentina	Guatemala
	Bolivia	Honduras
	Canada	Mexico
	Chile	Peru
	Colombia	Philippine Islands
	Ecuador	Singapore
	El Salvador	Venezuela





 




  





3











  








SCHEDULE 5.02(a)


EXISTING LIENS







NONE






  





  











  








EXHIBIT A - FORM OF


REVOLVING CREDIT


PROMISSORY NOTE


 


U.S.$_______________                                                                                                Dated:  _______________, 20__


 


FOR VALUE RECEIVED, the undersigned, EVEREST REINSURANCE HOLDINGS, INC., a Delaware corporation (the “Borrower”), HEREBY PROMISES TO PAY to the order of _________________________ (the “Lender”) for the account of its Applicable Lending Office on the Termination Date applicable to such Lender (each as defined in the Credit Agreement referred to below) the principal sum of U.S.$[amount of the Lender’s Revolving Credit Commitment in figures] or, if less, the aggregate principal amount of the Advances made by the Lender to the Borrower pursuant to the Credit Agreement dated as of August 15, 2011 among the Borrower, the Lender and certain other lenders parties thereto, and Citibank, N.A. as Agent for the Lender and such other lenders (as amended or modified from time to time, the “Credit Agreement”; the terms defined therein being used herein as therein defined) outstanding on such Termination Date.


 


The Borrower promises to pay interest on the unpaid principal amount of each Advance from the date of such Advance until such principal amount is paid in full, at such interest rates, and payable at such times, as are specified in the Credit Agreement.


 


Both principal and interest in respect of each Advance are payable in lawful money of the United States of America to the Agent at its account maintained at 388 Greenwich Street, New York, New York 10013, in same day funds.  Each Advance owing to the Lender by the Borrower pursuant to the Credit Agreement, and all payments made on account of principal thereof, shall be recorded by the Lender and, prior to any transfer hereof, endorsed on the grid attached hereto which is part of this Promissory Note.


 


This Promissory Note is one of the Notes referred to in, and is entitled to the benefits of, the Credit Agreement.  The Credit Agreement, among other things, (i) provides for the making of Advances by the Lender to the Borrower from time to time in an aggregate amount not to exceed at any time outstanding the U.S. dollar amount first above mentioned, the indebtedness of the Borrower resulting from each such Advance being evidenced by this Promissory Note and (ii) contains provisions for acceleration of the maturity hereof upon the happening of certain stated events and also for prepayments on account of principal hereof prior to the maturity hereof upon the terms and conditions therein specified.


 




	 	EVEREST REINSURANCE HOLDINGS, INC.
	 	 	 	 
	 	 	 	 
	
 

	
By

	 	 
	 	 	Title :	 
	 	 	 	 







 




  





  











  








ADVANCES AND PAYMENTS OF PRINCIPAL















	
 


Date

	
 


Amount of


Advance

	
Amount of


Principal Paid


or Prepaid

	
 


Unpaid Principal


Balance

	
 


Notation


Made By


	  	  	  	  	  
	  	  	  	  	  
	  	  	  	  	  
	  	  	  	  	  
	  	  	  	  	  
	  	  	  	  	  
	  	  	  	  	  
	  	  	  	  	  
	  	  	  	  	  
	  	  	  	  	  
	  	  	  	  	  
	  	  	  	  	  
	  	  	  	  	  
	  	  	  	  	  
	  	  	  	  	  
	  	  	  	  	  
	  	  	  	  	  
	  	  	  	  	  
	  	  	  	  	  
	  	  	  	  	  
	  	  	  	  	  
	  	  	  	  	  
	  	  	  	  	  
	  	  	  	  	  
	  	  	  	  	  









  





2











  








EXHIBIT B - FORM OF NOTICE OF


BORROWING


Citibank, N.A., as Agent


  for the Lenders parties


  to the Credit Agreement


  referred to below


  1615 Brett Road, Building #3


  New Castle, Delaware 19720


[Date]


 


Attention: Bank Loan Syndications Department


 


Ladies and Gentlemen:


 


The undersigned, Everest Reinsurance Holdings, Inc., refers to the Credit Agreement, dated as of August 15, 2011 (as amended or modified from time to time, the “Credit Agreement”, the terms defined therein being used herein as therein defined), among the undersigned, certain Lenders parties thereto and Citibank, N.A., as Agent for said Lenders, and hereby gives you notice, irrevocably, pursuant to Section 2.02 of the Credit Agreement that the undersigned hereby requests a Borrowing under the Credit Agreement, and in that connection sets forth below the information relating to such Borrowing (the “Proposed Borrowing”) as required by Section 2.02(a) of the Credit Agreement:


 


(i)           The Business Day of the Proposed Borrowing is _______________, 20__.


 


(ii)          The Type of Advances comprising the Proposed Borrowing is [Base Rate Advances] [Eurodollar Rate Advances].


 


(iii)         The aggregate amount of the Proposed Borrowing is $_______________].


 


[(iv)        The initial Interest Period for each Eurodollar Rate Advance made as part of the Proposed Borrowing is _____ month[s].]


 


The undersigned hereby certifies that the following statements are true on the date hereof, and will be true on the date of the Proposed Borrowing:


 


(A)           the representations and warranties contained in Section 4.01 (other than the representations and warranties contained in Section 4.01(e)(ii) and Section 4.01(f)(i)) of the Credit Agreement are correct in all material respects, before and after giving effect to the Proposed Borrowing and to the application of the proceeds therefrom, as though made on and as of the date hereof (except to the extent any such representation or warranty is expressly made as of a specific date, in which case such representation or warranty shall be correct in all material respects as of such date), and


 






  





  











  








(B)           no event has occurred and is continuing, or would result from such Proposed Borrowing or from the application of the proceeds therefrom, that constitutes a Default.


 


 




	 	Very truly yours,
	 	 	 
	 	EVEREST REINSURANCE HOLDINGS, INC.
	 	 	 	 
	 	 	 	 
	
 

	
By: 

	 	 
	 	 	Title:	 
	 	 	 	 







 




  





2











  








EXHIBIT C - FORM OF


ASSIGNMENT AND ASSUMPTION


 


Assignment and Assumption







 


This Assignment and Assumption (the “Assignment and Assumption”) is dated as of the Effective Date set forth below and is entered into by and between [the][each]11 Assignor identified in item 1 below ([the][each, an] “Assignor”) and [the][each]12 Assignee identified in item 2 below ([the][each, an] “Assignee”).  [It is understood and agreed that the rights and obligations of [the Assignors][the Assignees]13 hereunder are several and not joint.]14  Capitalized terms used but not defined herein shall have the meanings given to them in the Credit Agreement identified below (as amended, the “Credit Agreement”), receipt of a copy of which is hereby acknowledged by [the][each] Assignee.  The Standard Terms and Conditions set forth in Annex 1 attached hereto are hereby agreed to and incorporated herein by reference and made a part of this Assignment and Assumption as if set forth herein in full.


 


For an agreed consideration, [the][each] Assignor hereby irrevocably sells and assigns to [the Assignee][the respective Assignees], and [the][each] Assignee hereby irrevocably purchases and assumes from [the Assignor][the respective Assignors], subject to and in accordance with the Standard Terms and Conditions and the Credit Agreement, as of the Effective Date inserted by the Agent as contemplated below (i) all of [the Assignor’s][the respective Assignors’] rights and obligations in [its capacity as a Lender][their respective capacities as Lenders] under the Credit Agreement and any other documents or instruments delivered pursuant thereto to the extent related to the amount and percentage interest identified below of all of such outstanding rights and obligations of [the Assignor][the respective Assignors] under the respective facilities identified below (including without limitation any letters of credit, guarantees, and swingline loans included in such facilities), and (ii) to the extent permitted to be assigned under applicable law, all claims, suits, causes of action and any other right of [the Assignor (in its capacity as a Lender)][the respective Assignors (in their respective capacities as Lenders)] against any Person, whether known or unknown, arising under or in connection with the Credit Agreement, any other documents or instruments delivered pursuant thereto or the loan transactions governed thereby or in any way based on or related to any of the foregoing, including, but not limited to, contract claims, tort claims, malpractice claims, statutory claims and all other claims at law or in equity related to the rights and obligations sold and assigned pursuant to clause (i) above (the rights and obligations sold and assigned by [the][any] Assignor to [the][any] Assignee pursuant to clauses (i) and (ii) above being referred to herein collectively as [the][an] “Assigned Interest”).  Each such sale and assignment is without recourse to [the][any] Assignor and, except as expressly provided in this Assignment and Assumption, without representation or warranty by [the][any] Assignor.







1.           Assignor[s]:                                           ________________________________


 


________________________________


 




	
  

	
11 For bracketed language here and elsewhere in this form relating to the Assignor(s), if the assignment is from a single Assignor, choose the first bracketed language.  If the assignment is from multiple Assignors, choose the second bracketed language.







 


  


	
  

	
12 For bracketed language here and elsewhere in this form relating to the Assignee(s), if the assignment is to a single Assignee, choose the first bracketed language.  If the assignment is to multiple Assignees, choose the second bracketed language.







 




  


	
  

	
13 Select as appropriate.







 




  


	
  

	
14 Include bracketed language if there are either multiple Assignors or multiple Assignees.







 






  





  


 





-2-








 


 



	
  

	 	
______________________________








	
 

	

[Assignor [is] [is not] a Defaulting Lender]















	
2.

	Assignees[s]:	
______________________________








	 	 	 
	 	 	
______________________________














	 	
[for each Assignee, indicate [Affiliate][Approved Fund] of [identify Lender]













	
3.

	
Borrower(s):

	
Everest Reinsurance Holdings, Inc.













	
4.

	
Administrative Agent:

	
  Citibank, N.A., as the administrative agent under the Credit Agreement













	
5.

	
Credit Agreement:

	
The $150,000,000 Credit Agreement dated as of August 15, 2011 among Everest Reinsurance Holdings, Inc., the Lenders parties thereto, Citibank, N.A., as Agent, and the other agents parties thereto













	
6.

	
Assigned Interest[s]:













	
Assignor[s]15

	
Assignee[s]16

	
Facility 


Assigned17

	 	
Aggregate Amount of 


Commitment/Advances


 for all Lenders18

	 	
Amount of Commitment/Advances Assigned8

	 	
Percentage 


Assigned of 


Commitment/


Advances19

	 	
CUSIP 


Number


	  	  	  	 	$	 	 	 	 	$	 	%	  
	  	  	  	 	$	 	 	 	 	$	 	%	  
	  	  	  	 	$	 	 	 	 	$	 	%	  










[7.          Trade Date:                                       ______________]20







[Page break]




__________________________


 




	
  

	
15 List each Assignor, as appropriate.







 




	
  

	

16 List each Assignee, as appropriate.









 




	
  

	

17 Fill in the appropriate terminology for the types of facilities under the Credit Agreement that are being assigned under this Assignment (e.g., “Revolving Credit Commitment,” “Letter of Credit Commitment,” etc.)









 




	
  

	

18 Amount to be adjusted by the counterparties to take into account any payments or prepayments made between the Trade Date and the Effective Date.









 




	
  

	

19 Set forth, to at least 9 decimals, as a percentage of the Commitment/Advances of all Lenders thereunder.



















  




	
  

	
20 To be completed if the Assignor(s) and the Assignee(s) intend that the minimum assignment amount is to be determined as of the Trade Date.







 








  





  











  



-3-


 








 


Effective Date:   _____________ ___, 20___ [TO BE INSERTED BY AGENT AND WHICH SHALL BE THE EFFECTIVE DATE OF RECORDATION OF TRANSFER IN THE REGISTER THEREFOR.]







The terms set forth in this Assignment and Assumption are hereby agreed to:


 


 




	 	

ASSIGNOR[S]21



	 
	 	[NAME OF ASSIGNOR]	 
	 	 	 	 
	 	 	 	 
	
 

	
By: 

	 	 
	 	 	Title:	 
	 	 	 	 







 



 




	 	[NAME OF ASSIGNOR]	 
	 	 	 	 
	 	 	 	 
	
 

	
By: 

	 	 
	 	 	Title:	 
	 	 	 	 







 





 




	 	


ASSIGNEE[S]22





	 
	 	[NAME OF ASSIGNEE]	 
	 	 	 	 
	 	 	 	 
	
 

	
By: 

	 	 
	 	 	Title:	 
	 	 	 	 







 






 




	 	[NAME OF ASSIGNEE]	 
	 	 	 	 
	 	 	 	 
	
 

	
By: 

	 	 
	 	 	Title:	 
	 	 	 	 







 











[Consented to and]23 Accepted:


 





	CITIBANK, N.A., as	 
	 	Administrative Agent	 
	 	 	 	 
	 	 	 	 
	
 

	
By: 

	 	 
	 	 	Title:	 
	 	 	 	 







 




[Consented to:]24


________________________




	
  

	
21 Add additional signature blocks as needed.







 






	
  

	
22 Add additional signature blocks as needed.







 






	
  

	
23 To be added only if the consent of the Agent is required by the terms of the Credit Agreement.







 






	
  

	
24 To be added only if the consent of the Borrower and/or other parties (e.g. Swing Line Bank, Issuing Bank) is required by the terms of the Credit Agreement.















  





  


 




-4-






 



 




 




	 [NAME OF RELEVANT PARTY]	 
	 	 	 	 
	 	 	 	 
	 By: 	 	 
	 	 	Title:	 
	 	 	 	 







 










  





  











  






 


 









ANNEX 1







Everest Reinssurance Holdings, Inc. Credit Agreement dated as of August 15, 2011







STANDARD TERMS AND CONDITIONS FOR


ASSIGNMENT AND ASSUMPTION


1.           Representations and Warranties.


 


1.1           Assignor[s].  [The][Each] Assignor (a) represents and warrants that (i) it is the legal and beneficial owner of [the][the relevant] Assigned Interest, (ii) [the][such] Assigned Interest is free and clear of any lien, encumbrance or other adverse claim, (iii) it has full power and authority, and has taken all action necessary, to execute and deliver this Assignment and Assumption and to consummate the transactions contemplated hereby and (iv) it is [not] a Defaulting Lender; and (b) assumes no responsibility with respect to (i) any statements, warranties or representations made in or in connection with the Credit Agreement or any other Loan Document, (ii) the execution, legality, validity, enforceability, genuineness, sufficiency or value of the Loan Documents or any collateral thereunder, (iii) the financial condition of the Borrower, any of its Subsidiaries or Affiliates or any other Person obligated in respect of any Loan Document, or (iv) the performance or observance by the Borrower, any of its Subsidiaries or Affiliates or any other Person of any of their respective obligations under any Loan Document.


 


1.2.           Assignee[s].  [The][Each] Assignee (a) represents and warrants that (i) it has full power and authority, and has taken all action necessary, to execute and deliver this Assignment and Assumption and to consummate the transactions contemplated hereby and to become a Lender under the Credit Agreement, (ii) it meets all the requirements to be an assignee under Section 8.07(b)(iii), (v) and (vi) of the Credit Agreement (subject to such consents, if any, as may be required under Section 8.07(b)(iii) of the Credit Agreement), (iii) from and after the Effective Date, it shall be bound by the provisions of the Credit Agreement as a Lender thereunder and, to the extent of [the][the relevant] Assigned Interest, shall have the obligations of a Lender thereunder, (iv) it is sophisticated with respect to decisions to acquire assets of the type represented by the Assigned Interest and either it, or the Person exercising discretion in making its decision to acquire the Assigned Interest, is experienced in acquiring assets of such type, (v) it has received a copy of the Credit Agreement, and has received or has been accorded the opportunity to receive copies of the most recent financial statements delivered pursuant to Section 5.01(i) thereof, as applicable, and such other documents and information as it deems appropriate to make its own credit analysis and decision to enter into this Assignment and Assumption and to purchase [the][such] Assigned Interest, (vi) it has, independently and without reliance upon the Agent or any other Lender and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Assignment and Assumption and to purchase [the][such] Assigned Interest, and (vii) if it is a Foreign Lender, attached to the Assignment and Assumption is any documentation required to be delivered by it pursuant to the terms of the Credit Agreement, duly completed and executed by [the][such] Assignee; and (b) agrees that (i) it will, independently and without reliance on the Agent, [the][any] Assignor or any other Lender, and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Loan Documents, and (ii) it will perform in accordance with their terms all of the obligations which by the terms of the Loan Documents are required to be performed by it as a Lender.


 




  





  


 





-6-  






 


 


2.           Payments.  From and after the Effective Date, the Agent shall make all payments in respect of [the][each] Assigned Interest (including payments of principal, interest, fees and other amounts) to [the][the relevant] Assignee whether such amounts have accrued prior to, on or after the Effective Date.  The Assignor[s] and the Assignee[s] shall make all appropriate adjustments in payments by the Agent for periods prior to the Effective Date or with respect to the making of this assignment directly between themselves.


 


3.           General Provisions.  This Assignment and Assumption shall be binding upon, and inure to the benefit of, the parties hereto and their respective successors and assigns.  This Assignment and Assumption may be executed in any number of counterparts, which together shall constitute one instrument.  Delivery of an executed counterpart of a signature page of this Assignment and Assumption by telecopy shall be effective as delivery of a manually executed counterpart of this Assignment and Assumption.  This Assignment and Assumption shall be governed by, and construed in accordance with, the law of the State of New York.


 






  





  











  








EXHIBIT D - FORM OF 


COUNSEL TO THE BORROWER


 


See Tab 5 of this closing set for the executed copy.




 




  





  











  








 



 


ASSISTANT SECRETARY’S CERTIFICATE


 


EVEREST REINSURANCE HOLDINGS, INC.


 


August 15, 2011


 


Pursuant to Section 3.01(f) of the Credit Agreement dated as of August 15, 2011 (the “Credit Agreement”; capitalized terms used herein and not otherwise defined having the meanings assigned to such terms in the Credit Agreement) among Everest Reinsurance Holdings, Inc., a Delaware corporation (the “Company”), various financial institutions as lenders and Citibank, N.A., as Agent, the undersigned certifies that he is the duly appointed and qualified Assistant Secretary of the Company and further certifies as follows:


 


1. Attached hereto as Annex 1 is a true and complete copy of the Certificate of Incorporation of the Company as in effect on the date hereof, and such certificate has not been repealed, modified or restated.


 


2. Attached hereto as Annex 2 is a true and complete copy of the Bylaws of the Company, as in effect on the date hereof, and such Bylaws have not been repealed, modified or restated since the date hereof.


 


3. Attached hereto as Annex 3 is a true and complete copy of resolutions duly adopted by the Board of Directors of the Company; such resolutions have not in any way been amended, modified, revoked or rescinded, have been in full force and effect since their adoption to and including the date hereof and are now in full force and effect.


 


4. The persons listed on Annex 4 attached hereto are now duly appointed and qualified officers of the Company holding the offices indicated next to their respective names, and the signatures appearing opposite their respective names are the true and genuine signatures of such officers, and each of such officers is duly authorized to execute and deliver on behalf of the Company the Credit Agreement and any certificate or other document to be delivered by the Company pursuant to the Credit Agreement.


 


[Signatures Follow]







  





  











  













IN WITNESS WHEREOF, I have hereunto signed this certificate as of the date first above written.


 




	 	 	 	 
	
 

	
 

	/S/ KEVIN HELEWA	 
	 	Name: 	Kevin Helewa	 
	 	Title:  	Assistant Secretary	 
	 	 	 	 







 


The undersigned, being the duly elected Treasurer of the Company, hereby certifies that Kevin Helewa is the duly appointed, qualified and acting Assistant Secretary of the Company and the signature set forth above is the true and genuine signature of such individual.


 







 


IN WITNESS WHEREOF, I have hereunto signed this certificate as of the date first above written.


 




	 	 	 	 
	
 

	
 

	/S/ FRANK N. LOPAPA	 
	 	Name: 	Frank N. Lopapa	 
	 	Title:  	Treasurer	 
	 	 	 	 














  





  











  






 



ANNEX 1


 


Certificate of Incorporation


 


 


 


 




 





 











 








 



ANNEX 2


 


Bylaws


 


 


 




 





 











 








 



ANNEX 3


 


Resolutions


 


 


 




 





 











 








 


ANNEX 4


 


Officers


 



	Name	Office	Signature
	 	 	 	 
	 	Joseph V. Taranto	 	Chairman and Chief Executive	 	
 


	 	 	 	Officer	 	
/S/ JOSEPH V. TARANTO


	 	 	 	 	 	 
	 	Dominic J. Addesso	 	President and Chief Financial	 	
 


	 	 	 	Officer	 	
/S/ DOMINIC J. ADDESSO


	 	 	 	 	 	 
	 	Frank N. Lopapa 	 	Treasurer 	 	/S/ FRANK N. LOPAPA
	 	 	 	 	 	 
	 	Keith T. Shoemaker 	 	Comptroller 	 	/S/ KEITH T. SHOEMAKER







 




  





  











  








 









 


OFFICER’S CERTIFICATE


 


EVEREST REINSURANCE HOLDINGS, INC.


 


August 15, 2011


 


Pursuant to Section 3.01(e) of the Credit Agreement dated as of August 15, 2011 (the “Credit Agreement”; capitalized terms used herein and not otherwise defined having the meanings assigned to such terms in the Credit Agreement) among Everest Reinsurance Holdings, Inc., a Delaware corporation (the “Company”), the Lenders parties thereto and Citibank, N.A., as Agent, the undersigned, Treasurer of the Company, hereby certifies as follows:


 


1. The representations and warranties contained in Section 4.01 of the Credit Agreement are correct on and as of the Effective Date (except to the extent any such representation or warranty is expressly made as of a specific date, in which case such representation or warranty was correct in all material respects as of such date), and


 


2. No event has occurred and is continuing that constitutes a Default.


 


[Signature Page Follows]


 






  





  











  








IN WITNESS WHEREOF, I have hereunto signed this Officer’s Certificate as of the date first above written.


 


 




	 	 	 	 
	
 

	
 

	/S/ FRANK N. LOPAPA	 
	 	 	Name: Frank N. Lopapa	 
	 	 	Title: Treasurer	 
	 	 	 	 









 






  





  











  








August 15, 2011


 


Citibank, N.A., as Agent


1615 Brett Road, Building #3


New Castle, Delaware 19720


Attention:  Bank Loan Syndications













	
  

	
Re:

	
Credit Agreement, dated as of August 23, 2006 (the “Credit Agreement”), among Everest Reinsurance Holdings, Inc., the lenders parties thereto and Citibank, N.A., as administrative agent (the “Agent”)







 


Ladies and Gentlemen:


 


We refer to the Credit Agreement.  Capitalized terms used but not defined herein shall have the meanings given to such terms in the Credit Agreement.


 


Pursuant to Section 2.05 of the Credit Agreement, we hereby give you notice that, effective August 15, 2011, we are terminating the Commitments.  The obligations payable by us as of such date under the Credit Agreement have been paid in full today and we agree that all obligations of the Lenders under the Credit Agreement (without any further action by any party) be terminated and released and be of no further force or effect on such date.  By countersigning this letter below, you acknowledge that receipt in payment of all amounts owing by us under the Credit Agreement as of the effective date of the termination of the Commitments.  Notwithstanding the foregoing, nothing herein shall be deemed a release or termination of any of the Borrower’s obligations under or in respect of the Credit Agreement to the extent that such obligations are expressly stated to survive termination thereof, in accordance with the terms thereof.


 


 




	 	Very truly yours,	 
	 	 	 
	 	EVEREST REINSURANCE HOLDINGS, INC.	 
	 	 	 	 
	 	 	 	 
	 	
By: 

	/S/ FRANK N. LOPAPA	 
	 	Name:	Frank N. Lopapa	 
	 	Title:	Senior Vice President and Treasurer	 
	 	 	 	 







 



 




	CITIBANK, N.A., as Agent	 
	 	 	 
	 	 	 
	By: 	 	 
	Name:	 	 
	Title:	 	 
	 	 	 	 







 


 




  





  











  










 





	Everest Reinsurance Holdings, Inc.	 
	
477 Martinsville Road


PO Box 830

	 
	Liberty Corner, NJ 07938-0830	 August 15, 2011
	Tel: 908.604.3000	 





 




Citibank, N.A., as Agent,


and the Lenders party to the Credit Agreement


referred to below


 



	
  

	
Re:

	
Everest Reinsurance Holdings, Inc.







 


Ladies and Gentlemen:


 


I am General Counsel for Everest Reinsurance Holdings, Inc., a Delaware corporation (the “Borrower”), and have represented the Borrower in connection with the Credit Agreement dated as of August 15, 2011 (the “Credit Agreement”) among the Borrower, the financial institutions party thereto (the “Lenders”) and Citibank, N.A., as administrative agent (the “Agent”).  Capitalized terms used herein and not defined have the meanings assigned in the Credit Agreement.  This opinion is furnished to you pursuant to Section 3.01(f)(iv) of the Credit Agreement.


 


In that connection I have examined the Credit Agreement and the Notes (collectively, the “Documents”).  I have also examined such other documents as I have deemed necessary for purposes of rendering the opinions herein.  In my examination of such documents, I have assumed the authenticity of all such documents submitted to me as originals, the genuineness of all signatures (other than those of the Borrower on the Documents), and the conformity to the originals of such documents submitted to me as copies.


 


Based upon the foregoing, it is my opinion that:


 


1. The Borrower is a corporation, validly existing and in good standing under the laws of the State of Delaware.


 


2. The execution and delivery by the Borrower of the Documents and compliance by it with the terms of the Documents do not violate any provision of its certificate of incorporation or by-laws.


 


3. The execution and delivery by the Borrower of the Documents and the performance by the Borrower of its obligations under the Documents do not (i) to my knowledge, result in a breach of or constitute (with notice, lapse of time or both) a default under any material indenture, agreement or other instrument to which it is a party, by which it or any of its properties is bound or to which it is subject, (ii) result in or require the creation or imposition of any Lien upon any of its properties or assets or (iii) violate any applicable law, rule or regulation of the State of New Jersey.


 


4. The Credit Agreement and the Notes have been duly executed and delivered on behalf of the Borrower.


 




  





  











  






 


 


5. No consent, approval, authorization or other action by, notice to, or registration or filing with, any Governmental Authority of the State of New Jersey or Delaware or other Person is required as a condition to or otherwise in connection with (i) the execution and delivery by the Borrower of the Documents or (ii) the performance by the Borrower of its obligations under the Documents.


 


6. There are no actions or proceedings pending or, to my knowledge, threatened before any court, other Governmental Authority or other Person, (i) against or affecting the Borrower, any of its Subsidiaries or any of their respective properties that would reasonably be expected to have a Material Adverse Effect (except as disclosed in the Borrower’s 2010 10-K), or (ii) that question the validity of the Documents.


 


The opinions set forth above are subject to the following qualifications and limitations:


 


(A)           I express no opinion as to:


 


(1)           the existence of any Person’s ownership rights in or title to any property;


 


(2)           the validity, perfection, enforceability or priority of any Lien on any property;


 


(3)           any agreement by the Borrower to submit to the jurisdiction of a particular court, waive jury trial or appoint an agent for acceptance of service of process;


 


(4)           any provision of the Documents purporting to waive any objection to the laying of venue or any claim that an action or proceeding has been brought in an inconvenient forum;


 


(5)           any provision of the Documents which authorizes or permits any purchaser of a participation interest from any party to set off or apply any deposit or property or any indebtedness with respect to any participation interest;


 


(6)           the effect of the law of any jurisdiction (other than New Jersey) wherein the Agent or any Lender may be located or wherein the enforcement of the Documents may be sought that limits the rates of interest legally chargeable or collectible; and


 


(7)           any provision of the Documents (i) restricting access to legal or equitable remedies, (ii) purporting to establish evidentiary standards, (iii) purporting to appoint any Person as the attorney-in-fact of any other Person, (iv) which provides that the Documents may only be amended, modified or waived in writing or (v) stating that all rights or remedies of any party are cumulative and may be enforced in addition to any other right or remedy and that the election of a particular remedy does not preclude recourse to one or more remedies.


 




  





2











  






 


(B)           I note that the enforceability of the Documents may be limited or rendered ineffective if the Agent or the Lenders fail to act in good faith and in a commercially reasonable manner in seeking to exercise their rights and remedies thereunder.  Without limiting the generality of the foregoing, I note that a court might hold that a technical and nonmaterial default under the Documents does not give rise to a right of the Agent or the Lenders to exercise certain remedies including, without limitation, acceleration.


 


(C)           I express no opinion as to the enforceability of the indemnification provisions of the Documents insofar as said provisions contravene public policy or might require indemnification or payments to any Person with respect to any litigation determined adversely to such Person, or any loss, cost or expense arising out of the gross negligence or willful misconduct of such Person or any violation by such Person of statutory duties, general principles of equity or public policy.


 


(D)           No opinion is rendered herein as to the effect of any law to which the Borrower may be subject as a result of the legal or regulatory status of the Agent or any Lender or the involvement by the Agent or any Lender in the transactions contemplated by the Documents.


 


This opinion is limited to the laws of the State of New Jersey, the Federal laws of the United States and the General Corporation Law and insurance laws of the State of Delaware.


 


This opinion may not be used or relied upon by or published or communicated to any Person other than the addressees hereof and permitted Eligible Assignees for any purpose whatsoever, without my prior written consent in each instance.


 




	 	Very truly yours,	 
	 	 	 	 
	
 

	/S/ SANJOY MUKHERJEE	 
	 	 	 
	 	 Sanjoy Mukherjee	 
	 	 	 	 
	 	 	 	 











  





3











  









	  	 
	
Mayer Brown LLP


71 South Wacker Drive


Chicago, Illinois 60606-4637


 


Main Tel +1 312 782 0600


Main Fax +1 312 701 7711


www.mayerbrown.com


	  
	
 


	  
	
 


	
August 15, 2011







 


 



To the Lenders that are parties to the


Credit Agreement referred to


below, and Citibank, N.A.,


as Agent




 


 



	Re:	
Everest Reinsurance Holdings, Inc.







 


Ladies and Gentlemen:


 


We have acted as counsel to Everest Reinsurance Holdings, Inc., a Delaware corporation (the “Borrower”), in connection with the preparation, execution and delivery of the Credit Agreement dated as of August 15, 2011 (the “Credit Agreement”) among (i) the Borrower, (ii) the lenders named therein (the “Lenders”) and (iii) Citibank, N.A., as administrative agent (the “Agent”).  This opinion is being delivered to you pursuant to Section 3.01(f)(iv) of the Credit Agreement.  Unless otherwise defined herein, capitalized terms used in the Credit Agreement are used herein as therein defined.







I.           Documents Reviewed







In connection with this opinion letter, we have examined copies, certified or otherwise identified to our satisfaction, of the Credit Agreement and the Notes delivered to the initial Lenders under the Credit Agreement on the date hereof (together, the “Subject Documents”).







In rendering the opinions set forth herein, we have also examined and relied on originals, or copies certified or otherwise identified to our satisfaction, of such (i) certificates of public officials, (ii) certificates and representations of officers and representatives of the Borrower and (iii) other writings and records, and we have made such inquiries of officers and representatives of the Borrower as we have deemed appropriate as the basis for the opinions hereinafter expressed.







II.           Opinions Rendered







Based upon the foregoing, and subject to the assumptions set forth in this part and in Part III below, and the limitations, qualifications and exceptions set forth in this part and in Part IV below, we are of the opinion that:








	
A.  

	
The execution and delivery by the Borrower of each Subject Document and the performance by it of its obligations thereunder have been duly authorized by all necessary corporate action of the Borrower.







 


 





Mayer Brown LLP operates in combination with our associated English limited liability partnership








and Hong Kong partnership (and its associated entities in Asia) and is associated with Tauil & Chequer Advogados, a Brazilian law partnership.












 




August 15, 2011


Page 2


 


 



	
B.  

	
The Borrower has full corporate power and authority to execute, deliver and perform all of its obligations under the Subject Documents and to consummate the transactions contemplated thereby.













	
C.  

	
Each Subject Document has been duly executed and delivered by the Borrower and constitutes the valid and binding obligation of the Borrower, enforceable against the Borrower in accordance with its terms.













	
D.  

	
The execution and delivery by the Borrower of each Subject Document, and the performance by it of its obligations under each Subject Document will not require any consent, authorization or approval of, the giving of notice to or registration with any governmental entity.













	
E.  

	
The execution and delivery by the Borrower of each Subject Document, and the performance by it of its obligations under each Subject Document will not violate any applicable law, statute or governmental rule or regulation (including Regulations T, U and X of the Board of Governors of the Federal Reserve System).












III.           Assumptions







In rendering the opinions set forth herein, we have relied upon and assumed:








	
A.  

	
the genuineness of all signatures, the authenticity of all writings submitted to us as originals, the conformity to original writings of all copies submitted to us as certified or photostatic copies and the legal competence and capacity of all natural persons;













	
B.  

	
the truth and accuracy of all certificates and representations, writings and records reviewed by us referred to in Part I of this opinion letter, including the representations and warranties made in the Subject Documents, in each case with respect to the factual matters set forth therein;













	
C.  

	
each party to the Subject Documents is validly existing, and in good standing under the laws of its respective jurisdiction of organization and has the requisite organizational power to enter into the Subject Documents to which it is a party;













	
D.  

	
except to the extent that we expressly opine as to any of the following matters with respect to a particular party in Part II above: (i) the execution and delivery of the Subject Documents, and the performance of all obligations thereunder, have been duly authorized by all necessary organizational proceedings on the part of all parties to each such document, (ii) the Subject Documents have been duly executed and delivered by such parties, (iii) the Subject Documents constitute the valid and binding obligations of all such parties, enforceable against such parties in accordance with their respective terms and (iv) the terms and provisions of each of the Subject Documents do not, and the







 




  










 





August 15, 2011


Page 3




 


 




	
 

	
execution, delivery and performance of its obligations thereunder by each such party will not (a) violate the constitutive or organizational documents of any such party or any law, order or decree of any court, administrative agency or other governmental authority binding on any such party or (b) result in a breach of or cause a default under any contract or indenture to which it is a party or by which it is bound;









 



	
E.  

	
the Borrower will comply with the covenants in the Subject Documents as to the application of proceeds; and













	
F.  

	
there are no other agreements or understandings, whether oral or written, among any or all of the parties that would alter the agreements set forth in the Subject Documents.












IV.           Limitations and Qualifications







The opinions expressed herein are subject to the following qualifications, exceptions and limitations:








	
A.  

	
Members of our firm are members of the State Bar of New York.  We express no opinion as to the laws of any jurisdiction other than the State of New York (excluding municipal laws), federal laws of the United States of America and the Delaware General Corporation Law.  In addition, our opinions in paragraphs II.D and E as to violations of law and governmental consents, filings, registrations and the like cover only laws that a New York lawyer exercising customary professional diligence would reasonably be expected to recognize as being applicable to the Borrower or the Subject Documents.













	
B.  

	
Our opinions as to the valid and binding nature and enforceability of any agreement or instrument are subject to (i) the effect of any applicable bankruptcy, insolvency, fraudulent conveyance or similar law affecting creditors’ rights generally and (ii) general principles of equity (regardless of whether considered in a proceeding in equity or at law), including concepts of commercial reasonableness, good faith and fair dealing and the possible unavailability of specific performance or injunctive relief.  Without limiting the generality of the foregoing, we note that a court might hold that a technical and nonmaterial default under the Subject Documents does not give rise to a right of the Agent and the Lenders to exercise certain remedies including, without limitation, acceleration.













	
C.  

	
We also express no opinion regarding: (i) any severability provision in the Subject Documents; or (ii) any provision of any Subject Documents that purports to (a) require a premium or make-whole payment in connection with a prepayment, (b) impose penalties or forfeitures, late payment charges or an increase in interest rate upon delinquency in payment or the occurrence of a default, (c) require payment of attorney’s fees, except to the extent a court determines such fees to be reasonable, (d) appoint any person as the attorney-in-fact of any other person, (e) provide that all rights or remedies of any party 







 



 




  










 






August 15, 2011


Page 4




 


 








	
 

	
are cumulative and may be enforced in addition to any other right or remedy and that the election of a particular remedy does not preclude recourse to one or more remedies, (f) permit set-off in the absence of mutuality between the parties, (g) confer subject matter jurisdiction on a federal court to adjudicate any controversy in any situation in which such court would not have subject matter jurisdiction or (h) waive the right to jury trial or any right to object to the laying of venue or any claim that an action or proceeding has been brought in an inconvenient forum.  Our opinions with respect to any agreement of the Borrower to indemnify any person (including by way of contribution) are subject to the qualifications that any indemnity obligation may be limited by public policy considerations and may be subject to defenses available to sureties arising from actions of the indemnified party.









 



	
D.  

	
We express no opinion as to the effect of the law of any jurisdiction (other than New York) wherein the Agent or any Lender may be located or wherein the enforcement of any Subject Document may be sought that limits the rates of interest legally chargeable or collectible.













	
E.  

	
We express no opinion as to as to the effect of any law relating to the tax, legal or regulatory status of the Agent or any Lender or the involvement by any such Person in the transactions contemplated by the Subject Documents.













	
F.  

	
Our opinion with respect to the enforceability of the choice of law and choice of forum provisions of the Subject Documents is rendered in reliance on Sections 5-1401 and 5-1402 of the New York General Obligations Law and Section 327(b) of the New York Civil Practice Law and Rules and is subject to the qualifications that such enforceability (i) may be limited by public policy considerations of any jurisdiction, other than the State of New York, in which enforcement of such provisions, or of a judgment upon an agreement containing such provisions, is sought and (ii) does not apply to the extent provided in Section 1-105(2) of the Uniform Commercial Code as in effect in New York.  Accordingly, we express no opinion as to the effect of the law of any jurisdiction (other than the State of New York) as to the choice of law in any Subject Document (including, without limitation, whether any court outside the State of New York would honor the choice of New York law as the governing law of the Subject Documents).







 






 










 







August 15, 2011


Page 5




 




  






This opinion letter is being furnished only to you, is solely for your benefit, and is not to be used, quoted, relied upon or otherwise referred to by any other person or for any other purposes without our prior written consent.  At your request, we hereby consent to reliance hereon by any future assignee of your interest in the loans under the Credit Agreement pursuant to an assignment that is made and consented to in accordance with the express provisions of Section 8.07 of the Credit Agreement, on the condition and understanding that (i) this letter speaks only as of the date hereof, (ii) we have no responsibility or obligation to update this letter to consider its applicability or correctness or to take into account changes in any law, facts or any other developments of which we may later become aware, and (iii) any such reliance by a future assignee must be actual and reasonable under the circumstances existing at the time of assignment, including any changes in law, facts or any other developments known to or reasonably knowable by the assignee at such time.  This opinion letter is based on factual matters in existence as of the date hereof and laws and regulations in effect on the date hereof, and we assume no obligation to revise or supplement this opinion letter should such factual matters change or should such laws or regulations be changed by legislative or regulatory action, judicial decision or otherwise.


 







 



	 	Very truly yours,
	 	 
	 /S/	MAYER BROWN LLP





 







JFL/JAK


 


 




  





  











  










 




 


SHEARMAN & STERLING LLP




 


 


599 LEXINGTON AVENUE  |  NEW YORK  |  NY  |  10022-6069


 


WWW.SHEARMAN.COM  |  T +1.212.848.4000  |  F +1.212.848.7179 


 







 


August 15, 2011


 


To the Initial Lenders party to the Credit


Agreement referred to below and to


Citibank, N.A., as Agent


 


Everest Reinsurance Holdings, Inc.


 


Ladies and Gentlemen:


 


We have acted as counsel to Citibank, N.A., as Administrative Agent (the “Agent”), in connection with the Credit Agreement, dated as of August 15, 2011 (the “Credit Agreement”), among Everest Reinsurance Holdings, Inc., a Delaware corporation (the “Borrower”), and each of you.  Unless otherwise defined herein, terms defined in the Credit Agreement are used herein as therein defined.


 


In that connection, we have reviewed originals or copies of the Credit Agreement.


 


We have also reviewed originals or copies of such other agreements and documents as we have deemed necessary as a basis for the opinion expressed below.


 


In our review of the Credit Agreement and other documents, we have assumed:


 


(A)           The genuineness of all signatures.


 


(B)           The authenticity of the originals of the documents submitted to us.


 



	
  

	
(C)

	
The conformity to authentic originals of any documents submitted to us as copies.







 



	
  

	
(D)

	
As to matters of fact, the truthfulness of the representations made in the Credit Agreement.







 



	
  

	
(E)

	
That the Credit Agreement is the legal, valid and binding obligation of each party thereto, other than the Borrower, enforceable against each such party in accordance with its terms.







 


 






ABU DHABI | BEIJING | BRUSSELS | DÜSSELDORF| FRANKFURT | HONG KONG | LONDON| MILAN| MUNICH| NEW YORK


PALO ALTO | PARIS | ROME | SAN FRANCISCO | SÃO PAULO | SHANGHAI | SINGAPORE | TOKYO | TORONTO | WASHINGTON, DC  








 


SHEARMAN & STERLING LLP IS A LIMITED LIABILITY PARTNERSHIP ORGANIZED IN THE UNITED STATES UNDER THE LAWS OF THE STATE OF DELAWARE. WHICH LAWS LIMIT THE PERSONAL LIABILITY OF PARTNERS.













  








 


(F)           That:


 


(1)           The Borrower is an entity duly organized and validly existing under the laws of the jurisdiction of its organization.


 


(2)           The Borrower has full power to execute, deliver and perform, and has duly executed and delivered, the Credit Agreement.


 


(3)           The execution, delivery and performance by the Borrower of the Credit Agreement have been duly authorized by all necessary action (corporate or otherwise) and do not:


 


(a)           contravene its certificate or articles of incorporation, by-laws or other organizational documents;


 


(b)           except with respect to Generally Applicable Law, violate any law, rule or regulation applicable to it; or


 


(c)           result in any conflict with or breach of any agreement or document binding on it of which any addressee hereof has knowledge, has received notice or has reason to know.


 


(4)           Except with respect to Generally Applicable Law, no authorization, approval or other action by, and no notice to or filing with, any governmental authority or regulatory body or (to the extent the same is required under any agreement or document binding on it of which an addressee hereof has knowledge, has received notice or has reason to know) any other third party is required for the due execution, delivery or performance by the Borrower of any Credit Agreement or, if any such authorization, approval, action, notice or filing is required, it has been duly obtained, taken, given or made and is in full force and effect.


 


We have not independently established the validity of the foregoing assumptions.


 


“Generally Applicable Law” means the federal law of the United States of America, and the law of the State of New York (including the rules or regulations promulgated thereunder or pursuant thereto), that a New York lawyer exercising customary professional diligence would reasonably be expected to recognize as being applicable to the Borrower, the Credit Agreement or the transactions governed by the Credit Agreement.  Without limiting the generality of the foregoing definition of Generally Applicable Law, the term “Generally Applicable Law” does not include any law, rule or regulation that is applicable to the Borrower, the Credit Agreement or such transactions solely because such law, rule or regulation is part of a regulatory regime applicable to any party to any of the Credit Agreement or any of its affiliates due to the specific assets or business of such party or such affiliate.


 


Based upon the foregoing and upon such other investigation as we have deemed necessary and subject to the qualifications set forth below, we are of the opinion that the Credit Agreement  is the legal, valid and binding obligation of the Borrower, enforceable against the Borrower in accordance with its terms.


 


Our opinion expressed above is subject to the following qualifications:


 




  





2











  






 


(a)           Our opinion is subject to the effect of any applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors’ rights generally (including without limitation all laws relating to fraudulent transfers).


 


(b)           Our opinion is subject to the effect of general principles of equity, including without limitation concepts of materiality, reasonableness, good faith and fair dealing (regardless of whether considered in a proceeding in equity or at law).


 


(c)           We express no opinion with respect to the enforceability of indemnification provisions, or of release or exculpation provisions, contained in the Credit Agreement to the extent that enforcement thereof is contrary to public policy regarding the indemnification against or release or exculpation of criminal violations, intentional harm or violations of securities laws.


 


(d)           We express no opinion with respect to Section 8.11 of the Credit Agreement to the extent that such Section (i) implies that a federal court of the United States has subject matter jurisdiction or (ii) purports to grant any court exclusive jurisdiction.


 


(e)           Our opinion is limited to Generally Applicable Law.


 


A copy of this opinion letter may be delivered by any of you to any person that becomes a Lender in accordance with the provisions of the Credit Agreement.  Any such person may rely on the opinion expressed above as if this opinion letter were addressed and delivered to such person on the date hereof.


 


This opinion letter is rendered to you in connection with the transactions contemplated by the Credit Agreement.  This opinion letter may not be relied upon by you or any person entitled to rely on this opinion pursuant to the preceding paragraph for any other purpose without our prior written consent.


 


This opinion letter speaks only as of the date hereof.  We expressly disclaim any responsibility to advise you of any development or circumstance of any kind, including any change of law or fact, that may occur after the date of this opinion letter that might affect the opinion expressed herein.


 



	
  

	
Very truly yours,








 



	
  

	
/S/ SHEARMAN & STERLING LLP









 


 


SLH


 




  





3