exv10w1






Exhibit 10.1




[Published CUSIP No.:]




 





CREDIT AGREEMENT




 





Meadowbrook Insurance Group, Inc.,

as the Borrower




Bank of America, N.A.,

as Administrative Agent and L/C Issuer




KeyBank National Association, JPMorgan Chase Bank, N.A.

and RBS Citizens, N.A.,

as Co-Syndication Agents




The other Lenders Party Hereto




Banc of America Securities LLC,

as Sole Lead Arranger and Sole Book Manager




 





Dated as of July 31, 2008




 






 









 








TABLE OF CONTENTS




	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	Page
	 
	 	 	 	 	 	 	 	 	 	 
	1.	 	DEFINITIONS AND ACCOUNTING TERMS	 	 	1	 
	 

	 	 	1.01.	 	 	Defined Terms
	 	 	1	 
	 

	 	 	1.02.	 	 	Other Interpretive Provisions
	 	 	24	 
	 

	 	 	1.03.	 	 	Accounting Terms
	 	 	25	 
	 

	 	 	1.04.	 	 	Rounding
	 	 	26	 
	 

	 	 	1.05.	 	 	Times of Day
	 	 	26	 
	 

	 	 	1.06.	 	 	Letter of Credit Amounts
	 	 	26	 
	 
	 	 	 	 	 	 	 	 	 	 
	2.	 	THE COMMITMENTS AND CREDIT EXTENSIONS	 	 	26	 
	 

	 	 	2.01.	 	 	The Loans
	 	 	26	 
	 

	 	 	2.02.	 	 	Borrowings, Conversions and Continuations of Loans
	 	 	27	 
	 

	 	 	2.03.	 	 	Letters of Credit
	 	 	28	 
	 

	 	 	2.04.	 	 	Prepayments
	 	 	37	 
	 

	 	 	2.05.	 	 	Termination or Reduction of Commitments
	 	 	39	 
	 

	 	 	2.06.	 	 	Repayment of Loans
	 	 	40	 
	 

	 	 	2.07.	 	 	Interest
	 	 	40	 
	 

	 	 	2.08.	 	 	Fees
	 	 	41	 
	 

	 	 	2.09.	 	 	Computation of Interest and Fees; Retroactive Adjustments of Applicable Rate
	 	 	42	 
	 

	 	 	2.10.	 	 	Evidence of Debt
	 	 	43	 
	 

	 	 	2.11.	 	 	Payments Generally; Administrative Agent’s Clawback
	 	 	43	 
	 

	 	 	2.12.	 	 	Sharing of Payments by Lenders
	 	 	45	 
	 

	 	 	2.13.	 	 	Increase in Revolving Credit Facility
	 	 	46	 
	 
	 	 	 	 	 	 	 	 	 	 
	3.	 	TAXES, YIELD PROTECTION AND ILLEGALITY	 	 	47	 
	 

	 	 	3.01.	 	 	Taxes
	 	 	47	 
	 

	 	 	3.02.	 	 	Illegality
	 	 	52	 
	 

	 	 	3.03.	 	 	Inability to Determine Rates
	 	 	52	 
	 

	 	 	3.04.	 	 	Increased Costs; Reserves on Eurodollar Rate Loans
	 	 	52	 
	 

	 	 	3.05.	 	 	Compensation for Losses
	 	 	54	 
	 

	 	 	3.06.	 	 	Mitigation Obligations; Replacement of Lenders
	 	 	55	 
	 

	 	 	3.07.	 	 	Survival
	 	 	55	 
	 
	 	 	 	 	 	 	 	 	 	 
	4.	 	CONDITIONS PRECEDENT TO CREDIT EXTENSIONS	 	 	55	 
	 

	 	 	4.01.	 	 	Conditions of Initial Credit Extension
	 	 	55	 
	 

	 	 	4.02.	 	 	Conditions to all Credit Extensions
	 	 	57	 
	 
	 	 	 	 	 	 	 	 	 	 
	5.	 	REPRESENTATIONS AND WARRANTIES	 	 	58	 
	 

	 	 	5.01.	 	 	Existence, Qualification and Power
	 	 	58	 
	 

	 	 	5.02.	 	 	Authorization; No Contravention
	 	 	58	 
	 

	 	 	5.03.	 	 	Governmental Authorization; Other Consents
	 	 	58	 
	 

	 	 	5.04.	 	 	Binding Effect
	 	 	59	 
	 

	 	 	5.05.	 	 	Financial Statements; No Material Adverse Effect
	 	 	59	 
	 

	 	 	5.06.	 	 	Litigation
	 	 	60	 
	 

	 	 	5.07.	 	 	No Default
	 	 	60	 
	 

	 	 	5.08.	 	 	Ownership of Property; Liens
	 	 	60	 
	 

	 	 	5.09.	 	 	Environmental Compliance
	 	 	61	 






 









 






	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	Page
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	5.10.	 	 	Insurance
	 	 	61	 
	 

	 	 	5.11.	 	 	Taxes
	 	 	61	 
	 

	 	 	5.12.	 	 	ERISA Compliance
	 	 	61	 
	 

	 	 	5.13.	 	 	Subsidiaries; Equity Interests; Loan Parties
	 	 	62	 
	 

	 	 	5.14.	 	 	Margin Regulations; Investment Company Act
	 	 	62	 
	 

	 	 	5.15.	 	 	Disclosure
	 	 	62	 
	 

	 	 	5.16.	 	 	Compliance with Laws
	 	 	63	 
	 

	 	 	5.17.	 	 	Intellectual Property; Licenses, Etc
	 	 	63	 
	 

	 	 	5.18.	 	 	Solvency
	 	 	63	 
	 

	 	 	5.19.	 	 	Merger Agreement Representations and Warranties
	 	 	63	 
	 

	 	 	5.20.	 	 	Senior Debt
	 	 	63	 
	 
	 	 	 	 	 	 	 	 	 	 
	6.	 	AFFIRMATIVE COVENANTS	 	 	63	 
	 

	 	 	6.01.	 	 	Financial Statements
	 	 	63	 
	 

	 	 	6.02.	 	 	Certificates; Other Information
	 	 	65	 
	 

	 	 	6.03.	 	 	Notices
	 	 	67	 
	 

	 	 	6.04.	 	 	Payment of Obligations
	 	 	68	 
	 

	 	 	6.05.	 	 	Preservation of Existence, Etc
	 	 	68	 
	 

	 	 	6.06.	 	 	Maintenance of Properties
	 	 	68	 
	 

	 	 	6.07.	 	 	Maintenance of Insurance
	 	 	68	 
	 

	 	 	6.08.	 	 	Compliance with Laws
	 	 	68	 
	 

	 	 	6.09.	 	 	Books and Records
	 	 	68	 
	 

	 	 	6.10.	 	 	Inspection Rights
	 	 	68	 
	 

	 	 	6.11.	 	 	Use of Proceeds
	 	 	69	 
	 

	 	 	6.12.	 	 	Compliance with Environmental Laws
	 	 	69	 
	 

	 	 	6.13.	 	 	Guarantee by Material Subsidiaries
	 	 	69	 
	 

	 	 	6.14.	 	 	Further Assurances
	 	 	69	 
	 

	 	 	6.15.	 	 	Interest Rate Hedging
	 	 	69	 
	 
	 	 	 	 	 	 	 	 	 	 
	7.	 	NEGATIVE COVENANTS	 	 	69	 
	 

	 	 	7.01.	 	 	Liens
	 	 	70	 
	 

	 	 	7.02.	 	 	Indebtedness
	 	 	71	 
	 

	 	 	7.03.	 	 	Investments
	 	 	71	 
	 

	 	 	7.04.	 	 	Fundamental Changes
	 	 	72	 
	 

	 	 	7.05.	 	 	Dispositions
	 	 	72	 
	 

	 	 	7.06.	 	 	Restricted Payments
	 	 	73	 
	 

	 	 	7.07.	 	 	Change in Nature of Business
	 	 	73	 
	 

	 	 	7.08.	 	 	Transactions with Affiliates
	 	 	73	 
	 

	 	 	7.09.	 	 	Burdensome Agreements
	 	 	73	 
	 

	 	 	7.10.	 	 	Use of Proceeds
	 	 	74	 
	 

	 	 	7.11.	 	 	Financial Covenants
	 	 	74	 
	 

	 	 	7.12.	 	 	Amendments of Organization Documents
	 	 	74	 
	 

	 	 	7.13.	 	 	Accounting Changes
	 	 	74	 
	 

	 	 	7.14.	 	 	Prepayments, Etc. of Subordinated Indebtedness
	 	 	74	 
	 

	 	 	7.15.	 	 	Amendment, Etc. of Merger Agreement and Indebtedness
	 	 	75	 
	 
	 	 	 	 	 	 	 	 	 	 
	8.	 	EVENTS OF DEFAULT AND REMEDIES	 	 	75	 
	 

	 	 	8.01.	 	 	Events of Default
	 	 	75	 
	 

	 	 	8.02.	 	 	Remedies upon Event of Default
	 	 	77	 
	 

	 	 	8.03.	 	 	Application of Funds
	 	 	78	 






ii









 






	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	Page
	 
	 	 	 	 	 	 	 	 	 	 
	9.	 	ADMINISTRATIVE AGENT	 	 	79	 
	 

	 	 	9.01.	 	 	Appointment and Authority
	 	 	79	 
	 

	 	 	9.02.	 	 	Rights as a Lender
	 	 	79	 
	 

	 	 	9.03.	 	 	Exculpatory Provisions
	 	 	79	 
	 

	 	 	9.04.	 	 	Reliance by Administrative Agent
	 	 	80	 
	 

	 	 	9.05.	 	 	Delegation of Duties
	 	 	81	 
	 

	 	 	9.06.	 	 	Resignation of Administrative Agent
	 	 	81	 
	 

	 	 	9.07.	 	 	Non-Reliance on Administrative Agent and Other Lenders
	 	 	82	 
	 

	 	 	9.08.	 	 	No Other Duties, Etc
	 	 	82	 
	 

	 	 	9.09.	 	 	Administrative Agent May File Proofs of Claim
	 	 	82	 
	 

	 	 	9.10.	 	 	Guaranty Matters
	 	 	83	 
	 

	 	 	9.11.	 	 	Guaranteed Cash Management Agreements and Guaranteed Hedge Agreements
	 	 	83	 
	 
	 	 	 	 	 	 	 	 	 	 
	10.	 	CONTINUING GUARANTY	 	 	83	 
	 

	 	 	10.01.	 	 	Guaranty
	 	 	83	 
	 

	 	 	10.02.	 	 	Rights of Lenders
	 	 	84	 
	 

	 	 	10.03.	 	 	Certain Waivers
	 	 	84	 
	 

	 	 	10.04.	 	 	Obligations Independent
	 	 	84	 
	 

	 	 	10.05.	 	 	Subrogation
	 	 	84	 
	 

	 	 	10.06.	 	 	Termination; Reinstatement
	 	 	85	 
	 

	 	 	10.07.	 	 	Subordination
	 	 	85	 
	 

	 	 	10.08.	 	 	Stay of Acceleration
	 	 	85	 
	 

	 	 	10.09.	 	 	Condition of Borrower
	 	 	85	 
	 
	 	 	 	 	 	 	 	 	 	 
	11.	 	MISCELLANEOUS	 	 	86	 
	 

	 	 	11.01.	 	 	Amendments, Etc
	 	 	86	 
	 

	 	 	11.02.	 	 	Notices; Effectiveness; Electronic Communications
	 	 	87	 
	 

	 	 	11.03.	 	 	No Waiver; Cumulative Remedies; Enforcement
	 	 	90	 
	 

	 	 	11.04.	 	 	Expenses; Indemnity; Damage Waiver
	 	 	90	 
	 

	 	 	11.05.	 	 	Payments Set Aside
	 	 	92	 
	 

	 	 	11.06.	 	 	Successors and Assigns
	 	 	93	 
	 

	 	 	11.07.	 	 	Treatment of Certain Information; Confidentiality
	 	 	97	 
	 

	 	 	11.08.	 	 	Right of Setoff
	 	 	97	 
	 

	 	 	11.09.	 	 	Interest Rate Limitation
	 	 	98	 
	 

	 	 	11.10.	 	 	Counterparts; Integration; Effectiveness
	 	 	98	 
	 

	 	 	11.11.	 	 	Survival of Representations and Warranties
	 	 	98	 
	 

	 	 	11.12.	 	 	Severability
	 	 	99	 
	 

	 	 	11.13.	 	 	Replacement of Lenders
	 	 	99	 
	 

	 	 	11.14.	 	 	Governing Law; Jurisdiction; Etc.
	 	 	100	 
	 

	 	 	11.15.	 	 	Waiver of Jury Trial
	 	 	101	 
	 

	 	 	11.16.	 	 	No Advisory or Fiduciary Responsibility
	 	 	101	 
	 

	 	 	11.17.	 	 	Electronic Execution of Assignments and Certain Other Documents
	 	 	101	 
	 

	 	 	11.18.	 	 	USA PATRIOT ACT
	 	 	102	 
	 

	 	 	11.19.	 	 	Entire Agreement
	 	 	102	 






iii









 






	 	 	 	 	 
	SCHEDULES	 	 
	 
	 	 	 	 
	 

	 	2.01
	 	Commitments and Applicable Percentages
	 

	 	5.06
	 	Litigation
	 

	 	5.08(b)
	 	Existing Liens
	 

	 	5.13
	 	Subsidiaries and Loan Parties
	 

	 	7.02
	 	Existing Indebtedness
	 

	 	7.03(f)
	 	Existing Investments
	 

	 	7.09
	 	Existing Burdensome Agreements
	 

	 	11.02
	 	Administrative Agent’s Office, Certain Addresses for Notices
	 
	 	 	 	 
	EXHIBITS	 	 
	 
	 	 	 	 
	 

	 	Form of	 	 
	 
	 	 	 	 
	 

	 	A
	 	Committed Loan Notice
	 

	 	B-1
	 	Term Note
	 

	 	B-2
	 	Revolving Credit Note
	 

	 	C
	 	Compliance Certificate
	 

	 	D-1
	 	Assignment and Assumption
	 

	 	D-2
	 	Administrative Questionnaire
	 

	 	E
	 	Opinion Matters — Counsel to Loan Parties







 











 





CREDIT AGREEMENT




     This CREDIT AGREEMENT (“Agreement”) is entered into as of July 31, 2008, among MEADOWBROOK
INSURANCE GROUP, INC., a Michigan corporation (the “Borrower”), Meadowbrook Inc., a Michigan
corporation (“Meadowbrook Inc.”), Crest Financial Corporation, a Nevada corporation (“Crest
Financial” and together with Meadowbrook Inc., collectively, the “Guarantors” and individually, a
“Guarantor”), each lender from time to time party hereto (collectively, the “Lenders” and
individually, a “Lender”), and BANK OF AMERICA, N.A., as Administrative Agent and L/C Issuer.



PRELIMINARY STATEMENTS:




     Pursuant to the Agreement and Plan of Merger dated as of February 20, 2008 (the “Merger
Agreement”) between the Borrower, ProCentury Corporation (the “Acquired Company”) and MBKPC Corp.
(“MBKPC”), the Borrower has agreed to consummate a merger (the “Merger”) of MBKPC and the Acquired
Company, pursuant to which the Acquired Company will become a wholly-owned subsidiary of the
Borrower.



     In furtherance of the foregoing, the Borrower has requested that the Lenders provide a term
loan facility and a revolving credit facility, and the Lenders have indicated their willingness to
lend and the L/C Issuer has indicated its willingness to issue letters of credit, in each case, on
the terms and subject to the conditions set forth herein.



     In consideration of the mutual covenants and agreements herein contained, the parties hereto
covenant and agree as follows:



1. DEFINITIONS AND ACCOUNTING TERMS




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



     “Acquired Company” has the meaning specified in the Preliminary Statements.



     “Adjusted EBITDA” means, for any Measurement Period, an amount equal to the sum, without
duplication, of (a) the EBITDA of the Borrower and its Non-Regulated Subsidiaries on a combined or
consolidated basis for such Measurement Period, (b) 50% of the EBITDA of America Indemnity
Insurance Company Ltd. for such Measurement Period, (c) 100% of the EBITDA of Preferred Insurance
Company Ltd. for such Measurement Period, and (d) the greater of (i) aggregate amount of dividends
that the Insurance Subsidiaries directly and wholly-owned by the Borrower could pay directly to the
Borrower on the January 1 occurring during such Measurement Period, without prior extraordinary
regulatory approval and (ii) the aggregate amount of dividends that the Insurance Subsidiaries
directly and wholly-owned by the Borrower actually paid directly to the Borrower during such
Measurement Period.



     “Administrative Agent” means Bank of America, in its capacity as administrative agent under
any of the Loan Documents, or any successor administrative agent.



 









 





     “Administrative Agent’s Office” means the Administrative Agent’s address and, as appropriate,
account as set forth on Schedule 11.02, or such other address or account as the Administrative
Agent may from time to time notify to the Borrower and the Lenders.



     “Administrative Questionnaire” means an Administrative Questionnaire in substantially the form
of Exhibit D-2 or any other form approved by the Administrative Agent.



     “Affiliate” means, with respect to any Person, another Person that directly, or indirectly
through one or more intermediaries, Controls or is Controlled by or is under common Control with
the Person specified.



     “Aggregate Commitments” means the Commitments of all the Lenders.



     “Agreement” means this Credit Agreement.



     “Annual Statement” means the annual statutory financial statement of any Insurance Subsidiary
as required to be filed with its Supervisory Authority, together with all exhibits and schedules
filed therewith, prepared in accordance with SAP.



     “Applicable Fee Rate” means, at any time, in respect of the Revolving Credit Facility, (a)
from the date of this Agreement to the first Business Day immediately after the date on which the
Administrative Agent receives a Compliance Certificate pursuant to Section 6.02(b) for the first
fiscal quarter ending after the date of this Agreement, 0.30% per annum and (b) thereafter, the
applicable percentage per annum set forth below determined by reference to the Consolidated
Leverage Ratio as set forth in the most recent Compliance Certificate received by the
Administrative Agent pursuant to Section 6.02(b):



	 	 	 	 	 
	Applicable Fee Rate
	Pricing Level	 	Consolidated Leverage Ratio	 	Commitment Fees
	1
	 	<0.15:1	 	0.20%
	2
	 	>0.15:1 but < 0.20:1	 	0.25%
	3
	 	>0.20:1 but < 0.25:1	 	0.30%
	4
	 	>0.25:1	 	0.40%






Any increase or decrease in the Applicable Fee Rate resulting from a change in the Consolidated
Leverage Ratio shall become effective as of the first Business Day immediately following the date a
Compliance Certificate is delivered pursuant to Section 6.02(b); provided, however,
that if a Compliance Certificate is not delivered when due in accordance with such Section, then,
upon the request of the Required Revolving Lenders and the Required Term Loan Lenders, Pricing
Level 4 shall apply as of the first Business Day after the date on which such Compliance
Certificate was required to have been delivered and shall remain in effect until the first Business
Day immediately following the date on which such Compliance Certificate is delivered.



     Notwithstanding anything to the contrary contained in this definition, the determination of
the Applicable Fee Rate for any period shall be subject to the provisions of Section 2.09(b).



2









 





     “Applicable Percentage” means (a) in respect of the Term Loan Facility, with respect to any
Term Loan Lender at any time, the percentage (carried out to the ninth decimal place) of the Term
Loan Facility represented by (i) on or prior to the date the Term Loans are made, such Term Loan
Lender’s Term Loan Commitment at such time and (ii) thereafter, the principal amount of such Term
Loan Lender’s Term Loans at such time, and (b) in respect of the Revolving Credit Facility, with
respect to any Revolving Credit Lender at any time, the percentage (carried out to the ninth
decimal place) of the Revolving Credit Facility represented by such Revolving Credit Lender’s
Revolving Credit Commitment at such time. If the commitment of each Revolving Credit Lender to
make Revolving Credit Loans and the obligation of the L/C Issuer to make L/C Credit Extensions have
been terminated pursuant to Section 8.02, or if the Revolving Credit Commitments have expired, then
the Applicable Percentage of each Revolving Credit Lender in respect of the Revolving Credit
Facility shall be determined based on the Applicable Percentage of such Revolving Credit Lender in
respect of the Revolving Credit Facility most recently in effect, giving effect to any subsequent
assignments. The initial Applicable Percentage of each Lender in respect of each Facility is set
forth opposite the name of such Lender on Schedule 2.01 or in the Assignment and Assumption
pursuant to which such Lender becomes a party hereto, as applicable.



     “Applicable Rate” means, in respect of the Term Loan Facility and the Revolving Credit
Facility, (a) from the date of this Agreement to the first Business Day immediately after the date
on which the Administrative Agent receives a Compliance Certificate pursuant to Section 6.02(b) for
the first fiscal quarter ending after the date of this Agreement, 2.00% per annum for Eurodollar
Rate Loans and 0.75% per annum for Base Rate Loans and (b) thereafter, the applicable percentage
per annum set forth below determined by reference to the Consolidated Leverage Ratio as set forth
in the most recent Compliance Certificate received by the Administrative Agent pursuant to Section
6.02(b):



	 	 	 	 	 	 	 
	Applicable Rate
	 	 	 	 	Eurodollar Rate	 	 
	Pricing Level	 	Consolidated Leverage Ratio	 	(Letters of Credit)	 	Base Rate
	1
	 	<0.15:1	 	1.50%	 	0.25%
	2
	 	>0.15:1 but < 0.20:1	 	1.75%	 	0.50%
	3
	 	>0.20:1 but < 0.25:1	 	2.00%	 	0.75%
	4
	 	>0.25:1	 	2.50%	 	1.25%






Any increase or decrease in the Applicable Rate resulting from a change in the Consolidated
Leverage Ratio shall become effective as of the first Business Day immediately following the date a
Compliance Certificate is delivered pursuant to Section 6.02(b); provided, however,
that if a Compliance Certificate is not delivered when due in accordance with such Section, then,
upon the request of the Required Term Loan Lenders and the Required Revolving Lenders, Pricing
Level 4 shall apply in respect of the Term Loan Facility and the Revolving Credit Facility as of
the first Business Day after the date on which such Compliance Certificate was required to have
been delivered and in each case shall remain in effect until the first Business Day immediately
following the date on which such Compliance Certificate is delivered.



     Notwithstanding anything to the contrary contained in this definition, the determination of
the Applicable Rate for any period shall be subject to the provisions of Section 2.09(b).



3









 





     “Applicable Revolving Credit Percentage” means with respect to any Revolving Credit Lender at
any time, such Revolving Credit Lender’s Applicable Percentage in respect of the Revolving Credit
Facility at such time.



     “Appropriate Lender” means, at any time, (a) with respect to the Term Loan Facility or the
Revolving Credit Facility, a Lender that has a Commitment with respect to such Facility or holds a
Term Loan or a Revolving Credit Loan, respectively, at such time, and (b) with respect to the
Letter of Credit Sublimit, (i) the L/C Issuer and (ii) if any Letters of Credit have been issued
pursuant to Section 2.03(a), the Revolving Credit Lenders.



     “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.



     “Arranger” means Banc of America Securities LLC, in its capacity as sole lead arranger and
sole book manager.



     “Assignee Group” means two or more Eligible Assignees that are Affiliates of one another or
two or more Approved Funds managed by the same investment advisor.



     “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 11.06(b)),
and accepted by the Administrative Agent, in substantially the form of Exhibit D-1 or any other
form approved by the Administrative Agent.



     “Attributable Indebtedness” means, on any date, (a) in respect of any Capitalized Lease of any
Person, the capitalized amount thereof that would appear on a balance sheet of such Person prepared
as of such date in accordance with GAAP, (b) in respect of any Synthetic Lease Obligation, the
capitalized amount of the remaining lease or similar payments under the relevant lease or other
applicable agreement or instrument that would appear on a balance sheet of such Person prepared as
of such date in accordance with GAAP if such lease or other agreement or instrument were accounted
for as a Capitalized Lease and (c) all Synthetic Debt of such Person.



     “Audited Financial Statements” means the audited consolidated balance sheets of the Borrower
and its Subsidiaries and of the Acquired Company and its Subsidiaries, in each case for the fiscal
year ended December 31, 2007, and the related consolidated statements of income or operations,
shareholders’ equity and cash flows for such fiscal year of the Borrower and its Subsidiaries and
of the Acquired Company and its Subsidiaries, as the case may be, including the notes thereto.



     “Availability Period” means, in respect of the Revolving Credit Facility, the period from and
including the date of this Agreement to the earliest of (i) the Maturity Date for the Revolving
Credit Facility, (ii) the date of termination of the Revolving Credit Commitments pursuant to
Section 2.05, and (iii) the date of termination of the commitment of each Revolving Credit Lender
to make Revolving Credit Loans and of the obligation of the L/C Issuer to make L/C Credit
Extensions pursuant to Section 8.02.



     “Bank of America” means Bank of America, N.A. and its successors.



4









 





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



     “Base Rate Loan” means a Revolving Credit Loan or a Term Loan that bears interest based on the
Base Rate.



     “Borrower” has the meaning specified in the introductory paragraph hereto.



     “Borrower Materials” has the meaning specified in Section 6.02.



     “Borrowing” means a Revolving Credit Borrowing or a Term Loan Borrowing, as the context may
require.



     “Business Day” means any day other than a Saturday, Sunday or other day on which commercial
banks are authorized to close under the Laws of, or are in fact closed in, the state where the
Administrative Agent’s Office is located and, if such day relates to any Eurodollar Rate Loan,
means any such day on which dealings in Dollar deposits are conducted by and between banks in the
London interbank eurodollar market.



     “Capitalized Leases” means all leases that have been or should be, in accordance with GAAP,
recorded as capitalized leases.



     “Cash Collateralize” has the meaning specified in Section 2.03(g).



     “Cash Equivalents” means any of the following types of Investments, to the extent owned by the
Borrower or any of its Subsidiaries free and clear of all Liens:




          (a) readily marketable obligations issued or directly and fully guaranteed or insured
by the United States of America or any agency or instrumentality thereof having maturities
of not more than 360 days from the date of acquisition thereof; provided that the
full faith and credit of the United States of America is pledged in support thereof;




          (b) time deposits with, or insured certificates of deposit or bankers’ acceptances of,
any commercial bank that (i)(A) is a Lender or (B) is organized under the laws of the United
States of America, any state thereof or the District of Columbia or is the principal banking
subsidiary of a bank holding company organized under the laws of the United States of
America, any state thereof or the District of Columbia, and is a member of the Federal
Reserve System, (ii) issues (or the parent of which issues) commercial paper rated as
described in clause (c) of this definition and (iii) has combined capital and surplus of at
least $1,000,000,000, in each case with maturities of not more than 90 days from the date of
acquisition thereof;



5









 






          (c) commercial paper issued by any Person organized under the laws of any state of the
United States of America and rated at least “Prime-1” (or the then equivalent grade) by
Moody’s or at least “A-1” (or the then equivalent grade) by S&P, in each case with
maturities of not more than 180 days from the date of acquisition thereof; and




          (d) Investments, classified in accordance with GAAP as current assets of the Borrower
or any of its Subsidiaries, in money market investment programs registered under the
Investment Company Act of 1940, which are administered by financial institutions that have
the highest rating obtainable from either Moody’s or S&P, and the portfolios of which are
limited solely to Investments of the character, quality and maturity described in clauses
(a), (b) and (c) of this definition.



     “Cash Management Agreement” means any agreement to provide cash management services, including
treasury, depository, overdraft, credit or debit card, electronic funds transfer and other cash
management arrangements.



     “Cash Management Bank” means any Person that, at the time it enters into a Cash Management
Agreement, is a Lender or an Affiliate of a Lender, in its capacity as a party to such Cash
Management Agreement.



     “Century” means Century Surety Company.



     “Change in Law” means the occurrence, after the date of this Agreement, of any of the
following: (a) the adoption or taking effect of any law, rule, regulation or treaty, (b) any change
in any law, rule, regulation or treaty or in the administration, interpretation or application
thereof by any Governmental Authority or (c) the making or issuance of any request, guideline or
directive (whether or not having the force of law) by any Governmental Authority.



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




          (a) any “person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934, but excluding any employee benefit plan of such person or
its subsidiaries, and any person or entity acting in its capacity as trustee, agent or other
fiduciary or administrator of any such plan) becomes the “beneficial owner” (as defined in
Rules 13d-3 and 13d-5 under the Securities Exchange Act of 1934, except that a person or
group shall be deemed to have “beneficial ownership” of all securities that such person or
group has the right to acquire, whether such right is exercisable immediately or only after
the passage of time (such right, an “option right”)), directly or indirectly, of 25% or more
of the equity securities of the Borrower entitled to vote for members of the board of
directors or equivalent governing body of the Borrower on a fully-diluted basis (and taking
into account all such securities that such “person” or “group” has the right to acquire
pursuant to any option right); or




          (b) during any period of 12 consecutive months, a majority of the members of the board
of directors or other equivalent governing body of the Borrower cease to be composed of
individuals (i) who were members of that board or equivalent governing body on the first day
of such period, (ii) whose election or nomination to that board or equivalent governing body
was approved by individuals referred to in clause (i) above



6









 







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




          (c) any Person or two or more Persons acting in concert shall have acquired by contract
or otherwise, or shall have entered into a contract or arrangement that, upon consummation
thereof, will result in its or their acquisition of the power to exercise, directly or
indirectly, a controlling influence over the management or policies of the Borrower, or
control over the equity securities of the Borrower entitled to vote for members of the board
of directors or equivalent governing body of the Borrower on a fully-diluted basis (and
taking into account all such securities that such Person or Persons have the right to
acquire pursuant to any option right) representing 25% or more of the combined voting power
of such securities; or




          (d) either Meadowbrook Inc. or Crest Financial shall cease to be a wholly-owned
Subsidiary of the Borrower.



     “Closing Date” means the first date all the conditions precedent in Section 4.01 are satisfied
or waived in accordance with Section 11.01.



     “Code” means the Internal Revenue Code of 1986.



     “Commitment” means a Term Loan Commitment or a Revolving Credit Commitment, as the context may
require.



     “Committed Loan Notice” means a notice of (a) the Term Loan Borrowing, (b) a Revolving Credit
Borrowing, (c) a conversion of Loans from one Type to the other, or (d) a continuation of
Eurodollar Rate Loans, pursuant to Section 2.02(a), which, if in writing, shall be substantially in
the form of Exhibit A.



     “Company Action Level” means “Company Action Level” as defined by the NAIC from time to time
and as applied in the context of the Risk Based Capital Guidelines promulgated by the NAIC (or any
term substituted therefor by the NAIC).



     “Compliance Certificate” means a certificate substantially in the form of Exhibit C.



     “Consolidated Debt Service Coverage Ratio” means, at any date of determination, the ratio of
(a) Adjusted EBITDA to (b) the sum of (i) Interest Charges of the Borrower and its Subsidiaries on
a consolidated basis and (ii) the aggregate principal amount of all regularly scheduled principal
payments or redemptions or similar acquisitions for value of outstanding Consolidated Funded
Indebtedness, but excluding any such payments to the extent refinanced



7









 







through the incurrence of additional Indebtedness otherwise expressly permitted under Section
7.02, in each case, for the most recently completed Measurement Period.



     “Consolidated Funded Indebtedness” means, as of any date of determination, for the Borrower
and its Subsidiaries on a consolidated basis, without duplication, the sum of (a) the outstanding
principal amount of all obligations, whether current or long-term, for borrowed money (including
Obligations hereunder) and all obligations evidenced by bonds, debentures, notes, loan agreements
or other similar instruments, (b) all purchase money Indebtedness, (c) all direct obligations
arising under letters of credit (including standby and commercial), bankers’ acceptances, bank
guaranties, surety bonds and similar instruments, (d) all obligations in respect of the deferred
purchase price of property or services (other than trade accounts payable in the ordinary course of
business), (e) all Attributable Indebtedness, (f) all outstanding trust preferred securities, (g)
the Swap Termination Value of Swap Contracts that have been closed out, (h) without duplication,
all Guarantees with respect to outstanding Indebtedness of the types specified in clauses (a)
through (g) above of Persons other than the Borrower or any Subsidiary, and (i) all Indebtedness of
the types referred to in clauses (a) through (h) above of any partnership or joint venture (other
than a joint venture that is itself a corporation or limited liability company) in which the
Borrower or a Subsidiary is a general partner or joint venturer, unless such Indebtedness is
expressly made non-recourse to the Borrower or such Subsidiary.



     “Consolidated Leverage Ratio” means, as of any date of determination, the ratio of (a)
Consolidated Funded Indebtedness as of such date to (b) the sum of (i) Consolidated Funded
Indebtedness plus (ii) Consolidated Net Worth, in each case as of such date.



     “Consolidated Net Worth” means, as of any date of determination, for the Borrower and its
Subsidiaries on a consolidated basis, Shareholders’ Equity of the Borrower and its Subsidiaries on
that date.



     “Contractual Obligation” means, as to any Person, any provision of any security issued by such
Person or of any agreement, instrument or other undertaking to which such Person is a party or by
which it or any of its property is bound.



     “Control” means the possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of a Person, whether through the ability to exercise voting
power, by contract or otherwise. “Controlling” and “Controlled” have meanings correlative thereto.



     “Credit Extension” means each of the following: (a) a Borrowing and (b) an L/C Credit
Extension.



     “Crest Financial” has the meaning specified in the introductory paragraph hereto.



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



8









 





     “Default” means any event or condition that constitutes an Event of Default or that, with the
giving of any notice, the passage of time, or both, would be an Event of Default.



     “Default Rate” means (a) when used with respect to Obligations other than Letter of Credit
Fees, an interest rate equal to (i) the Base Rate plus (ii) 2% per annum; provided,
however, that with respect to a Eurodollar Rate Loan, the Default Rate shall be an interest
rate equal to the interest rate (including any Applicable Rate) otherwise applicable to such Loan
plus 2% per annum and (b) when used with respect to Letter of Credit Fees, a rate equal to
the Applicable Rate plus 2% per annum.



     “Defaulting Lender” means any Lender that (a) has failed to fund any portion of the Term
Loans, Revolving Credit Loans or participations in L/C Obligations required to be funded by it
hereunder within one Business Day of the date required to be funded by it hereunder, (b) has
otherwise failed to pay over to the Administrative Agent or any other Lender any other amount
required to be paid by it hereunder within one Business Day of the date when due, unless the
subject of a good faith dispute, or (c) has been deemed insolvent or become the subject of a
bankruptcy or insolvency proceeding.



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



     “Dollar” and “$” mean lawful money of the United States.



     “Domestic Subsidiary” means any Subsidiary that is organized under the laws of any political
subdivision of the United States.



     “EBITDA” means, for any Measurement Period for any Person, an amount equal to Net Income of
such Person for such Measurement Period plus (a) the following to the extent deducted in
calculating such Net Income: (i) Interest Charges, (ii) the provision for Federal, state, local
and foreign income taxes payable (less such income taxes actually paid in cash), (iii) depreciation
and amortization expense and (iv) other expenses reducing such Net Income which do not represent a
cash item in such Measurement Period or any future Measurement Period and minus (b) the
following to the extent included in calculating such Net Income: (i) Federal, state, local and
foreign income tax credits and (ii) all non-cash items increasing Net Income in such Measurement
Period.



     “Eligible Assignee” means any Person that meets the requirements to be an assignee under
Section 11.06(b)(iii), (v) and (vi) (subject to such consents, if any, as may be required under
Section 11.06(b)(iii)).



     “Environmental Laws” means any and all Federal, state, local, and foreign statutes, laws,
regulations, ordinances, rules, judgments, orders, decrees, permits, concessions, grants,
franchises, licenses, agreements or governmental restrictions relating to pollution and the
protection of the environment or the release of any materials into the environment, including



9









 







those related to hazardous substances or wastes, air emissions and discharges to waste or
public systems.



     “Environmental Liability” means any liability, contingent or otherwise (including any
liability for damages, costs of environmental remediation, fines, penalties or indemnities), of the
Borrower, any other Loan Party or any of their respective Subsidiaries directly or indirectly
resulting from or based upon (a) violation of any Environmental Law, (b) the generation, use,
handling, transportation, storage, treatment or disposal of any Hazardous Materials, (c) exposure
to any Hazardous Materials, (d) the release or threatened release of any Hazardous Materials into
the environment or (e) any contract, agreement or other consensual arrangement pursuant to which
liability is assumed or imposed with respect to any of the foregoing.



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



     “ERISA” means the Employee Retirement Income Security Act of 1974.



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



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



     “Eurodollar Rate” means, for any Interest Period with respect to a Eurodollar Rate Loan, the
rate per annum equal to the British Bankers Association LIBOR Rate (“BBA LIBOR”), as published by
Reuters (or other commercially available source providing quotations of BBA LIBOR as designated by
the Administrative Agent from time to time) at approximately 11:00



10









 







a.m., London time, two Business Days prior to the commencement of such Interest Period, for
Dollar deposits (for delivery on the first day of such Interest Period) with a term equivalent to
such Interest Period. If such rate is not available at such time for any reason, then the
“Eurodollar Rate” for such Interest Period shall be the rate per annum determined by the
Administrative Agent to be the rate at which deposits in Dollars for delivery on the first day of
such Interest Period in same day funds in the approximate amount of the Eurodollar Rate Loan being
made, continued or converted by Bank of America and with a term equivalent to such Interest Period
would be offered by Bank of America’s London Branch to major banks in the London interbank
eurodollar market at their request at approximately 11:00 a.m. (London time) two Business Days
prior to the commencement of such Interest Period.



     “Eurodollar Rate Loan” means a Revolving Credit Loan or a Term Loan that bears interest at a
rate based on the Eurodollar Rate.



     “Event of Default” has the meaning specified in Section 8.01.



     “Excluded Taxes” means, with respect to the Administrative Agent, any Lender, the L/C Issuer
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 or any similar tax imposed by any other
jurisdiction in which the Borrower is located, (c) any backup withholding tax that is required by
the Code to be withheld from amounts payable to a Lender that has failed to comply with clause (A)
of Section 3.01(e)(ii), and (d) in the case of a Foreign Lender (other than an assignee pursuant to
a request by the Borrower under Section 11.13), any United States withholding tax that (i) is
required to be imposed on amounts payable to such Foreign Lender pursuant to the Laws in force at
the time such Foreign Lender becomes a party hereto (or designates a new Lending Office) or (ii) is
attributable to such Foreign Lender’s failure or inability (other than as a result of a Change in
Law) to comply with clause (B) of Section 3.01(e)(ii), 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 3.01(a)(ii).



     “Existing Credit Agreements” means that certain Credit Agreement dated as of November 12,
2004, as amended or modified, among the Borrower and LaSalle Bank Midwest N.A. and that certain
Credit Agreement dated as of September 8, 2004, as amended or modified, among the Acquired Company
and JPMorgan Chase Bank, N.A.



     “Extraordinary Receipt” means any cash received by or paid to or for the account of any Person
not in the ordinary course of business, including tax refunds, pension plan reversions, proceeds of
insurance (other than proceeds of business interruption insurance to the extent such proceeds
constitute compensation for lost earnings), condemnation awards (and payments in lieu thereof),
indemnity payments and any purchase price adjustments, and not reinvested in the property and
business of the Borrower and its Subsidiaries within 180 days after receipt.



11









 





     “Facility” means the Term Loan Facility or the Revolving Credit Facility, as the context may
require.



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



     “Fee Letter” means the letter agreement, dated May 28, 2008, among the Borrower, the
Administrative Agent and the Arranger.



     “Foreign Lender” means any Lender that is organized under the Laws of a jurisdiction other
than that in which the Borrower is resident for tax purposes (including such a Lender when acting
in the capacity of the L/C Issuer). For purposes of this definition, the United States, each State
thereof and the District of Columbia shall be deemed to constitute a single jurisdiction.



     “FRB” means the Board of Governors of the Federal Reserve System of the United States.



     “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” means generally accepted accounting principles in the United States set forth in the
opinions and pronouncements of the Accounting Principles Board and the American Institute of
Certified Public Accountants and statements and pronouncements of the Financial Accounting
Standards Board or such other principles as may be approved by a significant segment of the
accounting profession in the United States, that are applicable to the circumstances as of the date
of determination, consistently applied.



     “Governmental Authority” means the government of the United States 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 Supervisory Authority and any supra-national bodies such as the European
Union or the European Central Bank).



     “Guarantee” means, as to any Person, any (a) any obligation, contingent or otherwise, of such
Person guaranteeing or having the economic effect of guaranteeing any Indebtedness or other
obligation payable or performable by another Person (the “primary obligor”) in any manner, whether
directly or indirectly, and including any obligation of such Person, direct or indirect, (i) to
purchase or pay (or advance or supply funds for the purchase or payment of) such



12









 







Indebtedness or other obligation, (ii) to purchase or lease property, securities or services
for the purpose of assuring the obligee in respect of such Indebtedness or other obligation of the
payment or performance of such Indebtedness or other obligation, (iii) to maintain working capital,
equity capital or any other financial statement condition or liquidity or level of income or cash
flow of the primary obligor so as to enable the primary obligor to pay such Indebtedness or other
obligation, or (iv) entered into for the purpose of assuring in any other manner the obligee in
respect of such Indebtedness or other obligation of the payment or performance thereof or to
protect such obligee against loss in respect thereof (in whole or in part), or (b) any Lien on any
assets of such Person securing any Indebtedness or other obligation of any other Person, whether or
not such Indebtedness or other obligation is assumed by such Person (or any right, contingent or
otherwise, of any holder of such Indebtedness to obtain any such Lien). The amount of any
Guarantee shall be deemed to be an amount equal to the stated or determinable amount of the related
primary obligation, or portion thereof, in respect of which such Guarantee is made or, if not
stated or determinable, the maximum reasonably anticipated liability in respect thereof as
determined by the guaranteeing Person in good faith. The term “Guarantee” as a verb has a
corresponding meaning.



     “Guaranteed Cash Management Agreement” means any Cash Management Agreement that is entered
into by and between the Borrower and any Cash Management Bank.



     “Guaranteed Hedge Agreement” means any Swap Contract permitted under Section 7.02(a) that is
entered into by and between the Borrower and any Hedge Bank.



     “Guaranteed Parties” means, collectively, the Administrative Agent, the Lenders, the L/C
Issuer, the Hedge Banks, the Cash Management Banks, each co-agent or sub-agent appointed by the
Administrative Agent from time to time pursuant to Section 9.05, and the other Persons the
Obligations owing to which are or are purported to be secured by the Guaranty.



     “Guarantors” means, collectively, the Material Subsidiaries.



     “Guaranty” means the guaranty made by the Guarantors under Section 10.



     “Hazardous Materials” means all explosive or radioactive substances or wastes and all
hazardous or toxic substances, wastes or other pollutants, including petroleum or petroleum
distillates, asbestos or asbestos-containing materials, polychlorinated biphenyls, radon gas,
infectious or medical wastes and all other substances or wastes of any nature regulated pursuant to
any Environmental Law.



     “Hedge Bank” means any Person that, at the time it enters into a Swap Contract permitted under
Section 7.02, is a Lender or an Affiliate of a Lender, in its capacity as a party to such Swap
Contract.



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




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



13









 






          (b) the maximum amount of all direct or contingent obligations of such Person arising
under letters of credit (including standby and commercial), bankers’ acceptances, bank
guaranties, surety bonds and similar instruments;




          (c) net obligations of such Person under any Swap Contract;




          (d) all obligations of such Person to pay the deferred purchase price of property or
services (other than trade accounts payable in the ordinary course of business and not past
due for more than 60 days after the date on which such trade account was created);




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




          (f) all Attributable Indebtedness in respect of Capitalized Leases and Synthetic Lease
Obligations of such Person and all Synthetic Debt of such Person;




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




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



     For all purposes hereof, the Indebtedness of any Person shall include the Indebtedness of any
partnership or joint venture (other than a joint venture that is itself a corporation or limited
liability company) in which such Person is a general partner or a joint venturer, unless such
Indebtedness is expressly made non-recourse to such Person.



     “Indemnified Taxes” means Taxes other than Excluded Taxes.



     “Indemnitee” has the meaning specified in Section 11.04(b).



     “Information” has the meaning specified in Section 11.07.



     “Insurance Subsidiary” means any Subsidiary of the Borrower that is authorized or admitted by
a Supervisory Authority to carry on or transact one or more aspects of the business of selling,
issuing or underwriting insurance or reinsurance.



     “Interest Charges” means, for any Measurement Period for any Person, the sum of (a) all
interest, premium payments, debt discount, fees, charges and related expenses in connection with
borrowed money (including capitalized interest) or in connection with the deferred purchase price
of assets, in each case to the extent treated as interest in accordance with GAAP, (b) all interest
paid or payable with respect to discontinued operations and (c) the portion of rent



14









 







expense under Capitalized Leases that is treated as interest in accordance with GAAP, in each
case, of or by such Person for such Measurement Period.



     “Interest Payment Date” means, (a) as to any Eurodollar Rate Loan, the last day of each
Interest Period applicable to such Loan and the Maturity Date of the Facility under which such Loan
was made; provided, however, that if any Interest Period for a Eurodollar Rate Loan
exceeds three months, the respective dates that fall every three months after the beginning of such
Interest Period shall also be Interest Payment Dates; and (b) as to any Base Rate Loan, the last
Business Day of each March, June, September and December and the Maturity Date of the Facility
under which such Loan was made.



     “Interest Period” means, as to each Eurodollar Rate Loan, the period commencing on the date
such Eurodollar Rate Loan is disbursed or converted to or continued as a Eurodollar Rate Loan and
ending on the date one, two, three, six, nine or twelve months thereafter, as selected by the
Borrower in its Committed Loan Notice; provided that:




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




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




          (c) no Interest Period shall extend beyond the Maturity Date of the Facility under
which such Loan was made.



     “Investment” means, as to any Person, any direct or indirect acquisition or investment by such
Person, whether by means of (a) the purchase or other acquisition of Equity Interests of another
Person, (b) a loan, advance or capital contribution to, Guarantee or assumption of debt of, or
purchase or other acquisition of any other debt or interest in, another Person, or (c) the purchase
or other acquisition (in one transaction or a series of transactions) of assets of another Person
that constitute a business unit. For purposes of covenant compliance, the amount of any Investment
shall be the amount actually invested, without adjustment for subsequent increases or decreases in
the value of such Investment.



     “IRS” means the United States Internal Revenue Service.



     “ISP” means, with respect to any Letter of Credit, the “International Standby Practices 1998”
published by the Institute of International Banking Law & Practice, Inc. (or such later version
thereof as may be in effect at the time of issuance).



     “Issuer Documents” means with respect to any Letter of Credit, the Letter of Credit
Application, and any other document, agreement and instrument entered into by the L/C Issuer and
the Borrower (or any Subsidiary) or in favor of the L/C Issuer and relating to such Letter of
Credit.



15









 





     “Laws” means, collectively, all international, foreign, Federal, state and local statutes,
treaties, rules, guidelines, regulations, ordinances, codes and administrative or judicial
precedents or authorities, including the interpretation or administration thereof by any
Governmental Authority charged with the enforcement, interpretation or administration thereof, and
all applicable administrative orders, directed duties, requests, licenses, authorizations and
permits of, and agreements with, any Governmental Authority, in each case whether or not having the
force of law.



     “L/C Advance” means, with respect to each Revolving Credit Lender, such Lender’s funding of
its participation in any L/C Borrowing in accordance with its Applicable Revolving Credit
Percentage.



     “L/C Borrowing” means an extension of credit resulting from a drawing under any Letter of
Credit which has not been reimbursed on the date when made or refinanced as a Revolving Credit
Borrowing.



     “L/C Credit Extension” means, with respect to any Letter of Credit, the issuance thereof or
extension of the expiry date thereof, or the increase of the amount thereof.



     “L/C Issuer” means Bank of America in its capacity as issuer of Letters of Credit hereunder,
or any successor issuer of Letters of Credit hereunder.



     “L/C Obligations” means, as at any date of determination, the aggregate amount available to be
drawn under all outstanding Letters of Credit plus the aggregate of all Unreimbursed
Amounts, including all L/C Borrowings. For purposes of computing the amount available to be drawn
under any Letter of Credit, the amount of such Letter of Credit shall be determined in accordance
with Section 1.06. For all purposes of this Agreement, if on any date of determination a Letter of
Credit has expired by its terms but any amount may still be drawn thereunder by reason of the
operation of Rule 3.14 of the ISP, such Letter of Credit shall be deemed to be “outstanding” in the
amount so remaining available to be drawn.



     “Lender” has the meaning specified in the introductory paragraph hereto.



     “Lending Office” means, as to any Lender, the office or offices of such Lender described as
such in such Lender’s Administrative Questionnaire, or such other office or offices as a Lender may
from time to time notify the Borrower and the Administrative Agent.



     “Letter of Credit” means any standby letter of credit issued hereunder.



     “Letter of Credit Application” means an application and agreement for the issuance or
amendment of a Letter of Credit in the form from time to time in use by the L/C Issuer.



     “Letter of Credit Expiration Date” means the day that is seven days prior to the Maturity Date
then in effect for the Revolving Credit Facility (or, if such day is not a Business Day, the next
preceding Business Day).



     “Letter of Credit Fee” has the meaning specified in Section 2.03(i).



16









 





     “Letter of Credit Sublimit” means an amount equal to $15,000,000. The Letter of Credit
Sublimit is part of, and not in addition to, the Revolving Credit Facility.



     “Lien” means any mortgage, pledge, hypothecation, assignment, deposit arrangement,
encumbrance, lien (statutory or other), charge, or preference, priority or other security interest
or preferential arrangement in the nature of a security interest of any kind or nature whatsoever
(including any conditional sale or other title retention agreement, any easement, right of way or
other encumbrance on title to real property, and any financing lease having substantially the same
economic effect as any of the foregoing).



     “Loan” means an extension of credit by a Lender to the Borrower under Section 2 in the form of
a Term Loan or a Revolving Credit Loan.



     “Loan Documents” means, collectively, (a) this Agreement, (b) the Notes, (c) the Fee Letter
and (d) each Issuer Document.



     “Loan Parties” means, collectively, the Borrower and the Guarantors.



     “Material Adverse Effect” means (a) a material adverse change in, or a material adverse effect
upon, the operations, business, assets, properties, liabilities (actual or contingent), condition
(financial or otherwise) or prospects of the Borrower and its Subsidiaries (including the Acquired
Company) taken as a whole; (b) a material impairment of the rights and remedies of the
Administrative Agent or any Lender under any Loan Document, or of the ability of any Loan Party to
perform its obligations under any Loan Document to which it is a party; or (c) a material adverse
effect upon the legality, validity, binding effect or enforceability against any Loan Party of any
Loan Document to which it is a party.



     “Material Insurance Subsidiary” means, at any date, (a) Century, (b) Star Insurance and (c)
any other Insurance Subsidiary that, together with its Subsidiaries, (i) is the owner of at least
5% of the consolidated total assets of the Borrower and its Subsidiaries as of the end of the most
recently ended fiscal quarter of the Borrower or (ii) produces at least 5% of the consolidated
revenues of the Borrower and its Subsidiaries for the most recently ended fiscal quarter of the
Borrower.



     “Material Subsidiary” means, at any date, (a) Meadowbrook, Inc., (b) Crest Financial and (c)
any other Non-Regulated Subsidiary that, together with its Subsidiaries, (i) is the owner of at
least 5% of the consolidated total assets of the Borrower and its Subsidiaries as of the end of the
most recently ended fiscal quarter of the Borrower or (ii) produces at least 5% of the consolidated
revenues of the Borrower and its Subsidiaries for the most recently ended fiscal quarter of the
Borrower.



     “Maturity Date” means July 31, 2013; provided, however, that, if such date is
not a Business Day, the Maturity Date shall be the next preceding Business Day.



     “Meadowbrook Inc.” has the meaning specified in the Preliminary Statements.



     “Measurement Period” means, at any date of determination, the most recently completed four
fiscal quarters of the Borrower.



17









 





     “Merger Agreement” has the meaning specified in the Preliminary Statements.



     “Moody’s” means Moody’s Investors Service, Inc. and any successor thereto.



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



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



     “Net Cash Proceeds” means, with respect to any Disposition by the Borrower or any of its
Subsidiaries, or any Extraordinary Receipt received or paid to the account of the Borrower or any
of its Subsidiaries, the excess, if any, of (i) the sum of cash and Cash Equivalents received in
connection with such transaction (including any cash or Cash Equivalents received by way of
deferred payment pursuant to, or by monetization of, a note receivable or otherwise, but only as
and when so received) over (ii) the sum of (A) the principal amount of any Indebtedness that is
secured by the applicable asset and that is required to be repaid in connection with such
transaction (other than Indebtedness under the Loan Documents), (B) the reasonable and customary
out-of-pocket expenses incurred by the Borrower or such Subsidiary in connection with such
transaction and (C) income taxes reasonably estimated to be actually payable within two years of
the date of the relevant transaction as a result of any gain recognized in connection therewith;
provided that, if the amount of any estimated taxes pursuant to subclause (C) exceeds the
amount of taxes actually required to be paid in cash in respect of such Disposition, the aggregate
amount of such excess shall constitute Net Cash Proceeds.



     “Net Income” means, for any Measurement Period for any Person, the net income (or loss) of
such Person, determined in accordance with GAAP.



     “Non-Regulated Subsidiary” means a Subsidiary that is not an Insurance Subsidiary or a
Subsidiary of an Insurance Subsidiary.



     “Note” means a Term Loan Note or a Revolving Credit Note, as the context may require.



     “Obligations” means all advances to, and debts, liabilities, obligations, covenants and duties
of, any Loan Party arising under any Loan Document or otherwise with respect to any Loan, Letter of
Credit, Guaranteed Cash Management Agreement or Guaranteed Hedge Agreement, in each case whether
direct or indirect (including those acquired by assumption), absolute or contingent, due or to
become due, now existing or hereafter arising and including interest and fees that accrue after the
commencement by or against any Loan Party or any Affiliate thereof of any proceeding under any
Debtor Relief Laws naming such Person as the debtor in such proceeding, regardless of whether such
interest and fees are allowed claims in such proceeding.



     “Organization Documents” means, (a) with respect to any corporation, the certificate or
articles of incorporation and the bylaws (or equivalent or comparable constitutive documents with
respect to any non-U.S. jurisdiction); (b) with respect to any limited liability company, the



18









 







certificate or articles of formation or organization and operating agreement; and (c) with
respect to any partnership, joint venture, trust or other form of business entity, the partnership,
joint venture or other applicable agreement of formation or organization and any agreement,
instrument, filing or notice with respect thereto filed in connection with its formation or
organization with the applicable Governmental Authority in the jurisdiction of its formation or
organization and, if applicable, any certificate or articles of formation or organization of such
entity.



     “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
other Loan Document or from the execution, delivery or enforcement of, or otherwise with respect
to, this Agreement or any other Loan Document.



     “Outstanding Amount” means (a) with respect to Term Loans and Revolving Credit Loans on any
date, the aggregate outstanding principal amount thereof after giving effect to any borrowings and
prepayments or repayments of Term Loans and Revolving Credit Loans, as the case may be, occurring
on such date; and (b) with respect to any L/C Obligations on any date, the amount of such L/C
Obligations on such date after giving effect to any L/C Credit Extension occurring on such date and
any other changes in the aggregate amount of the L/C Obligations as of such date, including as a
result of any reimbursements by the Borrower of Unreimbursed Amounts.



     “Participant” has the meaning specified in Section 11.06(d).



     “PBGC” means the Pension Benefit Guaranty Corporation.



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



     “Person” means any natural person, corporation, limited liability company, trust, joint
venture, association, company, partnership, Governmental Authority or other entity.



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



     “Platform” has the meaning specified in Section 6.02.



     “Priority Indebtedness” means Consolidated Funded Indebtedness that is (a) secured, (b) of a
shorter term than the Term Loan Facility, or (c) owing by a Subsidiary of the Borrower that is not
a Loan Party.



     “Public Lender” has the meaning specified in Section 6.02.



19









 





     “Quarterly Statement” means the quarterly statutory financial statement of any Insurance
Subsidiary as required to be filed with its Supervisory Authority, together with all exhibits and
schedules filed therewith, prepared in accordance with SAP.



     “Register” has the meaning specified in Section 11.06(c).



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



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



     “Request for Credit Extension” means (a) with respect to a Borrowing, conversion or
continuation of Term Loans or Revolving Credit Loans, a Committed Loan Notice and (b) with respect
to an L/C Credit Extension, a Letter of Credit Application.



     “Required Lenders” means, as of any date of determination, Lenders holding more than 50% of
the sum of the (a) Total Outstandings (with the aggregate amount of each Revolving Credit Lender’s
risk participation and funded participation in L/C Obligations being deemed “held” by such
Revolving Credit Lender for purposes of this definition) and (b) aggregate unused Revolving Credit
Commitments; provided that the unused Revolving Credit Commitment of, and the portion of
the Total Outstandings held or deemed held by, any Defaulting Lender shall be excluded for purposes
of making a determination of Required Lenders.



     “Required Revolving Lenders” means, as of any date of determination, Revolving Credit Lenders
holding more than 50% of the sum of the (a) Total Revolving Credit Outstandings (with the aggregate
amount of each Revolving Credit Lender’s risk participation and funded participation in L/C
Obligations being deemed “held” by such Revolving Credit Lender for purposes of this definition)
and (b) aggregate unused Revolving Credit Commitments; provided that the unused Revolving
Credit Commitment of, and the portion of the Total Revolving Credit Outstandings held or deemed
held by, any Defaulting Lender shall be excluded for purposes of making a determination of Required
Revolving Lenders.



     “Required Term Loan Lenders” means, as of any date of determination, Term Loan Lenders holding
more than 50% of the Term Loan Facility on such date; provided that the portion of the Term
Loan Facility held by any Defaulting Lender shall be excluded for purposes of making a
determination of Required Term Loan Lenders.



     “Responsible Officer” means the chief executive officer, president, chief financial officer,
treasurer, assistant treasurer or controller of a Loan Party. Any document delivered hereunder
that is signed by a Responsible Officer of a Loan Party shall be conclusively presumed to have been
authorized by all necessary corporate, partnership and/or other action on the part of such Loan
Party and such Responsible Officer shall be conclusively presumed to have acted on behalf of such
Loan Party.



     “Restricted Payment” means (a) any dividend or other distribution (whether in cash, securities
or other property) with respect to any capital stock or other Equity Interest of any



20









 







Person or any of its Subsidiaries, (b) any payment (whether in cash, securities or other
property), including any sinking fund or similar deposit, on account of the purchase, redemption,
retirement, defeasance, acquisition, cancellation or termination of any such capital stock or other
Equity Interest, or on account of any return of capital to any Person’s stockholders, partners or
members (or the equivalent of any thereof), (c) any option, warrant or other right to acquire any
such dividend or other distribution or payment or (d) any prepayment of Consolidated Funded
Indebtedness other than the Obligations.



     “Revolving Credit Borrowing” means a borrowing consisting of simultaneous Revolving Credit
Loans of the same Type and, in the case of Eurodollar Rate Loans, having the same Interest Period
made by each of the Revolving Credit Lenders pursuant to Section 2.01(b).



     “Revolving Credit Commitment” means, as to each Revolving Credit Lender, its obligation to (a)
make Revolving Credit Loans to the Borrower pursuant to Section 2.01(b), and (b) purchase
participations in L/C Obligations, in an aggregate principal amount at any one time outstanding not
to exceed the amount set forth opposite such Lender’s name on Schedule 2.01 under the caption
“Revolving Credit Commitment” or opposite such caption in the Assignment and Assumption pursuant to
which such Lender becomes a party hereto, as applicable, as such amount may be adjusted from time
to time in accordance with this Agreement.




     “Revolving Credit Facility”
means, at any time, the aggregate amount of the Revolving Credit
Lenders’ Revolving Credit Commitments at such time.



     “Revolving Credit Increase Effective Date” has the meaning specified in Section 2.13(d).



     “Revolving Credit Lender” means, at any time, any Lender that has a Revolving Credit
Commitment at such time.



     “Revolving Credit Loan” has the meaning specified in Section 2.01(b).



     “Revolving Credit Note” means a promissory note made by the Borrower in favor of a Revolving
Credit Lender evidencing Revolving Credit Loans made by such Revolving Credit Lender, substantially
in the form of Exhibit B-2.



     “Risk Based Capital Ratio” means, as of any date of determination, with respect to any
Insurance Subsidiary, the ratio (expressed as a percentage) of the Total Adjusted Capital of such
Insurance Subsidiary to the Company Action Level of such Insurance Subsidiary.



     “S&P” means Standard & Poor’s Ratings Services, a division of The McGraw-Hill Companies, Inc.,
and any successor thereto.



     “SAP” shall mean statutory accounting principles prescribed or permitted by the applicable
Supervisory Authority.



     “SEC” means the Securities and Exchange Commission, or any Governmental Authority succeeding
to any of its principal functions.




21












 





     “Shareholders’ Equity” means, as of any date of determination, consolidated shareholders’
equity of the Borrower and its Subsidiaries as of that date determined in accordance with GAAP.



     “Solvent” and “Solvency” mean, with respect to any Person on any date of determination, that
on such date (a) the fair value of the property of such Person is greater than the total amount of
liabilities, including contingent liabilities, of such Person, (b) the present fair salable value
of the assets of such Person is not less than the amount that will be required to pay the probable
liability of such Person on its debts as they become absolute and matured, (c) such Person does not
intend to, and does not believe that it will, incur debts or liabilities beyond such Person’s
ability to pay such debts and liabilities as they mature, (d) such Person is not engaged in
business or a transaction, and is not about to engage in business or a transaction, for which such
Person’s property would constitute an unreasonably small capital, and (e) such Person is able to
pay its debts and liabilities, contingent obligations and other commitments as they mature in the
ordinary course of business. The amount of contingent liabilities at any time shall be computed as
the amount that, in the light of all the facts and circumstances existing at such time, represents
the amount that can reasonably be expected to become an actual or matured liability.



     “Star Insurance” means Star Insurance Company.



     “Subsidiary” of a Person means a corporation, partnership, joint venture, limited liability
company or other business entity of which a majority of the shares of securities or other interests
having ordinary voting power for the election of directors or other governing body (other than
securities or interests having such power only by reason of the happening of a contingency) are at
the time beneficially owned, or the management of which is otherwise controlled, directly, or
indirectly through one or more intermediaries, or both, by such Person. Unless otherwise
specified, all references herein to a “Subsidiary” or to “Subsidiaries” shall refer to a Subsidiary
or Subsidiaries of the Borrower. A Subsidiary may be an Insurance Subsidiary or a Non-Regulated
Subsidiary.



     “Supervisory Authority” means, with respect to the Borrower or any Insurance Subsidiary, the
department of insurance of the state or other jurisdiction of domicile of the Borrower or such
Insurance Subsidiary, as the case may be.



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



22









 







any related schedules, a “Master Agreement”), including any such obligations or liabilities under any Master
Agreement.



     “Swap Termination Value” means, in respect of any one or more Swap Contracts, after taking
into account the effect of any legally enforceable netting agreement relating to such Swap
Contracts, for any date on or after the date such Swap Contracts have been closed out and
termination value(s) determined in accordance therewith, such termination value(s).



     “Synthetic Debt” means, with respect to any Person as of any date of determination thereof,
all obligations of such Person in respect of transactions entered into by such Person that are
intended to function primarily as a borrowing of funds but are not otherwise included in the
definition of “Indebtedness” or as a liability on the consolidated balance sheet of such Person and
its Subsidiaries in accordance with GAAP.



     “Synthetic Lease Obligation” means the monetary obligation of a Person under (a) a so-called
synthetic, off-balance sheet or tax retention lease, or (b) an agreement for the use or possession
of property (including sale and leaseback transactions), in each case, creating obligations that do
not appear on the balance sheet of such Person but which, upon the application of any Debtor Relief
Laws to such Person, would be characterized as the indebtedness of such Person (without regard to
accounting treatment).



     “Taxes” means all present or future taxes, levies, imposts, duties, deductions, withholdings
(including backup withholding), assessments, fees or other charges imposed by any Governmental
Authority, including any interest, additions to tax or penalties applicable thereto.



     “Term Loan” means an advance made by any Term Loan Lender under the Term Loan Facility.



     “Term Loan Borrowing” means a borrowing consisting of simultaneous Term Loans of the same Type
and, in the case of Eurodollar Rate Loans, having the same Interest Period made by each of the Term
Loan Lenders pursuant to Section 2.01(a).



     “Term Loan Commitment” means, as to each Term Loan Lender, its obligation to make Term Loans
to the Borrower pursuant to Section 2.01(a) in an aggregate principal amount at any one time
outstanding not to exceed the amount set forth opposite such Term Loan Lender’s name on Schedule
2.01 under the caption “Term Loan Commitment” or opposite such caption in the Assignment and
Assumption pursuant to which such Term Loan Lender becomes a party hereto, as applicable, as such
amount may be adjusted from time to time in accordance with this Agreement.



     “Term Loan Facility” means, at any time, (a) on or prior to the date the Term Loans are made,
the aggregate amount of the Term Loan Commitments at such time and (b) thereafter, the aggregate
principal amount of the Term Loans of all Term Loan Lenders outstanding at such time.



     “Term Loan Lender” means (a) at any time on or prior to the date the Term Loans are made, any
Lender that has a Term Loan Commitment at such time and (b) at any time after the date the Term
Loans are made, any Lender that holds Term Loans at such time.



23









 





     “Term Loan Note” means a promissory note made by the Borrower in favor of a Term Loan Lender
evidencing Term Loans made by such Term Loan Lender, substantially in the form of Exhibit B-1.



     “Threshold Amount” means $5,000,000.



     “Total Adjusted Capital” means “Total Adjusted Capital” as defined by the NAIC from time to
time and as applied in the context of the Risk Based Capital Guidelines promulgated by the NAIC (or
any term substituted therefor by the NAIC).



     “Total Revolving Credit Outstandings” means the aggregate Outstanding Amount of all Revolving
Credit Loans and L/C Obligations.



     “Total Outstandings” means the aggregate Outstanding Amount of all Loans and all L/C
Obligations.



     “Transaction” means (a) the consummation of the Merger and the initial Credit Extension
hereunder, (b) the entering into by the Loan Parties and their applicable Subsidiaries of the Loan
Documents and the Merger Agreement and any related documents to which they are or are intended to
be a party, (c) the refinancing of certain outstanding Indebtedness of the Borrower and its
Subsidiaries and the termination of all commitments with respect thereto, and (d) the payment of
the fees and expenses incurred in connection with the consummation of the foregoing.



     “Type” means, with respect to a Loan, its character as a Base Rate Loan or a Eurodollar Rate
Loan.



     “Unfunded Pension Liability” means the excess of a Pension Plan’s benefit liabilities under
Section 4001(a)(16) of ERISA, over the current value of that Pension Plan’s assets, determined in
accordance with the assumptions used for funding the Pension Plan pursuant to Section 412 of the
Code for the applicable plan year.



     “United States” and “U.S.” mean the United States of America.



     “Unreimbursed Amount” has the meaning specified in Section 2.03(c)(i).



     1.02. Other Interpretive Provisions. With reference to this Agreement and each other Loan
Document, unless otherwise specified herein or in such other Loan Document:




     (a) The definitions of terms herein shall apply equally to the singular and plural
forms of the terms defined. Whenever the context may require, any pronoun shall include the
corresponding masculine, feminine and neuter forms. The words “include,” “includes” and
“including” shall be deemed to be followed by the phrase “without limitation.” The word
“will” shall be construed to have the same meaning and effect as the word “shall.” Unless
the context requires otherwise, (i) any definition of or reference to any agreement,
instrument or other document (including any Organization Document) shall be construed as
referring to such agreement, instrument or other document as from time to time amended,
supplemented or otherwise modified (subject to any restrictions on



24









 







such amendments, supplements or modifications set forth herein or in any other Loan
Document), (ii) any reference herein to any Person shall be construed to include such
Person’s successors and assigns, (iii) the words “herein,” “hereof” and “hereunder,” and
words of similar import when used in any Loan Document, shall be construed to refer to such
Loan Document in its entirety and not to any particular provision thereof, (iv) all
references in a Loan Document to Sections, Preliminary Statements, Exhibits and Schedules
shall be construed to refer to Sections of, and Preliminary Statements, Exhibits and
Schedules to, the Loan Document in which such references appear, (v) any reference to any
law shall include all statutory and regulatory provisions consolidating, amending, replacing
or interpreting such law and any reference to any law or regulation shall, unless otherwise
specified, refer to such law or regulation as amended, modified or supplemented from time to
time, and (vi) the words “asset” and “property” shall be construed to have the same meaning
and effect and to refer to any and all tangible and intangible assets and properties,
including cash, securities, accounts and contract rights.




     (b) In the computation of periods of time from a specified date to a later specified
date, the word “from” means “from and including;” the words “to” and “until” each mean “to
but excluding;” and the word “through” means “to and including.”




     (c) Section headings herein and in the other Loan Documents are included for
convenience of reference only and shall not affect the interpretation of this Agreement or
any other Loan Document.



     1.03. Accounting Terms.




     (a) Generally. All accounting terms not specifically or completely defined
herein shall be construed in conformity with, and all financial data (including financial
ratios and other financial calculations) required to be submitted pursuant to this Agreement
shall be prepared in conformity with, GAAP or SAP, as may be applicable, applied on a
consistent basis, as in effect from time to time, applied in a manner consistent with that
used in preparing the Audited Financial Statements, except as otherwise specifically
prescribed herein.




     (b) Changes in GAAP. If at any time any change in GAAP would affect the
computation of any financial ratio or requirement set forth in any Loan Document, and either
the Borrower or the Required Lenders shall so request, the Administrative Agent, the Lenders
and the Borrower shall negotiate in good faith to amend such ratio or requirement to
preserve the original intent thereof in light of such change in GAAP (subject to the
approval of the Required Lenders); provided that, until so amended, (i) such ratio
or requirement shall continue to be computed in accordance with GAAP prior to such change
therein and (ii) the Borrower shall provide to the Administrative Agent and the Lenders
financial statements and other documents required under this Agreement or as reasonably
requested hereunder setting forth a reconciliation between calculations of such ratio or
requirement made before and after giving effect to such change in GAAP.



25









 





     1.04. Rounding. Any financial ratios required to be maintained by the Borrower pursuant to this
Agreement shall be calculated by dividing the appropriate component by the other component, carrying the result to one place more than the number of places by which such
ratio is expressed herein and rounding the result up or down to the nearest number (with a
rounding-up if there is no nearest number).



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



     1.06. Letter of Credit Amounts. Unless otherwise specified herein, the amount of a Letter of
Credit at any time shall be deemed to be the stated amount of such Letter of Credit in effect at
such time; provided, however, that with respect to any Letter of Credit that, by
its terms or the terms of any Issuer Document related thereto, provides for one or more automatic
increases in the stated amount thereof, the amount of such Letter of Credit shall be deemed to be
the maximum stated amount of such Letter of Credit after giving effect to all such increases,
whether or not such maximum stated amount is in effect at such time.



2. THE COMMITMENTS AND CREDIT EXTENSIONS




     2.01. The Loans.




     (a) The Term Loan Borrowing. Subject to the terms and conditions set forth
herein, each Term Loan Lender severally agrees to make a single loan to the Borrower on the
Closing Date in an amount not to exceed such Term Loan Lender’s Term Loan Commitment
Percentage of the Term Loan Facility. The Term Loan Borrowing shall consist of Term Loans
made simultaneously by the Term Loan Lenders in accordance with their respective Applicable
Percentage of the Term Loan Facility. Amounts borrowed under this Section 2.01(a) and
repaid or prepaid may not be reborrowed. Term Loans may be Base Rate Loans or Eurodollar
Rate Loans, as further provided herein.




     (b) The Revolving Credit Borrowings. Subject to the terms and conditions set
forth herein, each Revolving Credit Lender severally agrees to make loans (each such loan, a
“Revolving Credit Loan”) to the Borrower from time to time, on any Business Day during the
Availability Period, in an aggregate amount not to exceed at any time outstanding the amount
of such Lender’s Revolving Credit Commitment; provided, however, that after
giving effect to any Revolving Credit Borrowing, (i) the Total Revolving Credit Outstandings
shall not exceed the Revolving Credit Facility, and (ii) the aggregate Outstanding Amount of
the Revolving Credit Loans of any Lender, plus such Revolving Credit Lender’s Applicable
Revolving Credit Percentage of the Outstanding Amount of all L/C Obligations shall not
exceed such Revolving Credit Lender’s Revolving Credit Commitment; and provided,
further, however that the Total Revolving Credit Outstandings may not exceed
$15,000,000 from the 16th to the 30th day after the date of the
initial Credit Extension hereunder. Within the limits of each Revolving Credit Lender’s
Revolving Credit Commitment, and subject to the other terms and conditions hereof, the
Borrower may borrow under this Section 2.01(b), prepay under Section 2.04, and reborrow
under this Section 2.01(b). Revolving Credit Loans may be Base Rate Loans or Eurodollar
Rate Loans, as further provided herein.



26









 





     2.02. Borrowings, Conversions and Continuations of Loans.




     (a) The Term Loan Borrowing, each Revolving Credit Borrowing, each conversion of Term
Loans or Revolving Credit Loans from one Type to the other, and each continuation of
Eurodollar Rate Loans shall be made upon the Borrower’s irrevocable notice to the
Administrative Agent, which may be given by telephone. Each such notice must be received by
the Administrative Agent not later than 11:00 a.m. (i) three Business Days prior to the
requested date of any Borrowing of, conversion to or continuation of Eurodollar Rate Loans
or of any conversion of Eurodollar Rate Loans to Base Rate Loans, and (ii) on the requested
date of any Borrowing of Base Rate Loans. Each telephonic notice by the Borrower pursuant
to this Section 2.02(a) must be confirmed promptly by delivery to the Administrative Agent
of a written Committed Loan Notice, appropriately completed and signed by a Responsible
Officer of the Borrower. Each Borrowing of, conversion to or continuation of Eurodollar
Rate Loans shall be in a principal amount of $1,000,000 or a whole multiple of $250,000 in
excess thereof. Except as provided in Section 2.03(c), each Borrowing of or conversion to
Base Rate Loans shall be in a principal amount of $250,000 or a whole multiple of $100,000
in excess thereof. Each Committed Loan Notice (whether telephonic or written) shall
specify (i) whether the Borrower is requesting the Term Loan Borrowing, a Revolving Credit
Borrowing, a conversion of Term Loans or Revolving Credit Loans from one Type to the other,
or a continuation of Eurodollar Rate Loans, (ii) the requested date of the Borrowing,
conversion or continuation, as the case may be (which shall be a Business Day), (iii) the
principal amount of Loans to be borrowed, converted or continued, (iv) the Type of Loans to
be borrowed or to which existing Term Loans or Revolving Credit Loans are to be converted,
and (v) if applicable, the duration of the Interest Period with respect thereto. If the
Borrower fails to specify a Type of Loan in a Committed Loan Notice or if the Borrower fails
to give a timely notice requesting a conversion or continuation, then the applicable Term
Loans or Revolving Credit Loans shall be made as, or converted to, Base Rate Loans. Any
such automatic conversion to Base Rate Loans shall be effective as of the last day of the
Interest Period then in effect with respect to the applicable Eurodollar Rate Loans. If the
Borrower requests a Borrowing of, conversion to, or continuation of Eurodollar Rate Loans in
any such Committed Loan Notice, but fails to specify an Interest Period, it will be deemed
to have specified an Interest Period of one month.




     (b) Following receipt of a Committed Loan Notice, the Administrative Agent shall
promptly notify each Lender of the amount of its Applicable Percentage under the applicable
Facility of the applicable Term Loans or Revolving Credit Loans, and if no timely notice of
a conversion or continuation is provided by the Borrower, the Administrative Agent shall
notify each Lender of the details of any automatic conversion to Base Rate Loans described
in Section 2.02(a). In the case of the Term Loan Borrowing or a Revolving Credit Borrowing,
each Appropriate Lender shall make the amount of its Loan available to the Administrative
Agent in immediately available funds at the Administrative Agent’s Office not later than
1:00 p.m. on the Business Day specified in the applicable Committed Loan Notice. Upon
satisfaction of the applicable conditions set forth in Section 4.02 (and, if such Borrowing
is the initial Credit Extension, Section 4.01), the Administrative Agent shall make all
funds so received



27









 







available to the Borrower in like funds as received by the Administrative Agent either
by (i) crediting the account of the Borrower on the books of Bank of America with the amount
of such funds or (ii) wire transfer of such funds, in each case in accordance with
instructions provided to (and reasonably acceptable to) the Administrative Agent by the
Borrower; provided, however, that if, on the date a Committed Loan Notice
with respect to a Revolving Credit Borrowing is given by the Borrower, there are L/C
Borrowings outstanding, then the proceeds of such Revolving Credit Borrowing, first,
shall be applied to the payment in full of any such L/C Borrowings, and second,
shall be made available to the Borrower as provided above.




     (c) Except as otherwise provided herein, a Eurodollar Rate Loan may be continued or
converted only on the last day of an Interest Period for such Eurodollar Rate Loan. During
the existence of a Default, no Loans may be requested as, converted to or continued as
Eurodollar Rate Loans without the consent of the Required Lenders.




     (d) The Administrative Agent shall promptly notify the Borrower and the Lenders of the
interest rate applicable to any Interest Period for Eurodollar Rate Loans upon determination
of such interest rate. At any time that Base Rate Loans are outstanding, the Administrative
Agent shall notify the Borrower and the Lenders of any change in Bank of America’s prime
rate used in determining the Base Rate promptly following the public announcement of such
change.




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



     2.03. Letters of Credit.




     (a) The Letter of Credit Commitment.




     (i) Subject to the terms and conditions set forth herein, (A) the L/C Issuer
agrees, in reliance upon the agreements of the Revolving Credit Lenders set forth in
this Section 2.03, (1) from time to time on any Business Day during the period from
the date of this Agreement until the Letter of Credit Expiration Date, to issue
Letters of Credit for the account of the Borrower or its Subsidiaries, and to amend
or extend Letters of Credit previously issued by it, in accordance with Section
2.03(b), and (2) to honor drawings under the Letters of Credit; and (B) the
Revolving Credit Lenders severally agree to participate in Letters of Credit issued
for the account of the Borrower or its Subsidiaries and any drawings thereunder;
provided that after giving effect to any L/C Credit Extension with respect
to any Letter of Credit, (x) the Total Revolving Credit Outstandings shall not
exceed the Revolving Credit Facility, (y) the aggregate Outstanding Amount of the
Revolving Credit Loans of any Revolving Credit Lender, plus such Lender’s



28









 







Applicable Revolving Credit Percentage of the Outstanding Amount of all L/C
Obligations shall not exceed such Lender’s Revolving Credit Commitment, and (z) the
Outstanding Amount of the L/C Obligations shall not exceed the Letter of Credit
Sublimit. Each request by the Borrower for the issuance or amendment of a Letter of
Credit shall be deemed to be a representation by the Borrower that the L/C Credit
Extension so requested complies with the conditions set forth in the proviso to the
preceding sentence. Within the foregoing limits, and subject to the terms and
conditions hereof, the Borrower’s ability to obtain Letters of Credit shall be fully
revolving, and accordingly the Borrower may, during the foregoing period, obtain
Letters of Credit to replace Letters of Credit that have expired or that have been
drawn upon and reimbursed.




     (ii) The L/C Issuer shall not issue any Letter of Credit if:




     (A) subject to Section 2.03(b)(iii), the expiry date of such requested
Letter of Credit would occur more than twelve months after the date of
issuance or last extension, unless the Required Revolving Lenders have
approved such expiry date; or




     (B) the expiry date of such requested Letter of Credit would occur more
than twelve months after the Maturity Date of the Revolving Credit Facility
unless all the Revolving Credit Lenders have approved such expiry date.




     (iii) The L/C Issuer shall not be under any obligation to issue any Letter of
Credit if:




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




     (B) the issuance of such Letter of Credit would violate one or more
policies of the L/C Issuer applicable to letters of credit generally;




     (C) except as otherwise agreed by the Administrative Agent and the L/C
Issuer, such Letter of Credit is in an initial stated amount less than
$100,000;



29









 






     (D) such Letter of Credit is to be denominated in a currency other than
Dollars; or




     (E) a default of any Lender’s obligations to fund under Section 2.03(c)
exists or any Lender is at such time a Defaulting Lender hereunder, unless
the L/C Issuer has entered into satisfactory arrangements with the Borrower
or such Lender to eliminate the L/C Issuer’s risk with respect to such
Lender.




     (iv) The L/C Issuer shall not amend any Letter of Credit if the L/C Issuer
would not be permitted at such time to issue such Letter of Credit in its amended
form under the terms hereof.




     (v) The L/C Issuer shall be under no obligation to amend any Letter of Credit
if (A) the L/C Issuer would have no obligation at such time to issue such Letter of
Credit in its amended form under the terms hereof, or (B) the beneficiary of such
Letter of Credit does not accept the proposed amendment to such Letter of Credit.




     (vi) The L/C Issuer shall act on behalf of the Revolving Credit Lenders with
respect to any Letters of Credit issued by it and the documents associated
therewith, and the L/C Issuer shall have all of the benefits and immunities (A)
provided to the Administrative Agent in Section 9 with respect to any acts taken or
omissions suffered by the L/C Issuer in connection with Letters of Credit issued by
it or proposed to be issued by it and Issuer Documents pertaining to such Letters of
Credit as fully as if the term “Administrative Agent” as used in Section 9 included
the L/C Issuer with respect to such acts or omissions, and (B) as additionally
provided herein with respect to the L/C Issuer.




     (b) Procedures for Issuance and Amendment of Letters of Credit; Auto-Extension
Letters of Credit.




     (i) Each Letter of Credit shall be issued or amended, as the case may be, upon
the request of the Borrower delivered to the L/C Issuer (with a copy to the
Administrative Agent) in the form of a Letter of Credit Application, appropriately
completed and signed by a Responsible Officer of the Borrower. Such Letter of
Credit Application must be received by the L/C Issuer and the Administrative Agent
not later than 11:00 a.m. two Business Days (or such shorter date and time as the
Administrative Agent and the L/C Issuer may agree in a particular instance in their
sole discretion) prior to the proposed issuance date or date of amendment, as the
case may be. In the case of a request for an initial issuance of a Letter of
Credit, such Letter of Credit Application shall specify in form and detail
satisfactory to the L/C Issuer: (A) the proposed issuance date of the requested
Letter of Credit (which shall be a Business Day); (B) the amount thereof; (C) the
expiry date thereof; (D) the name and address of the beneficiary thereof; (E) the
documents to be presented by such beneficiary in case of any drawing thereunder; (F)
the full text of any certificate to be presented by such



30









 







beneficiary in case of any drawing thereunder; (G) the purpose and nature of
the requested Letter of Credit; and (H) such other matters as the L/C Issuer may
require. In the case of a request for an amendment of any outstanding Letter of
Credit, such Letter of Credit Application shall specify in form and detail
satisfactory to the L/C Issuer (1) the Letter of Credit to be amended; (2) the
proposed date of amendment thereof (which shall be a Business Day); (3) the nature
of the proposed amendment; and (4) such other matters as the L/C Issuer may require.
Additionally, the Borrower shall furnish to the L/C Issuer and the Administrative
Agent such other documents and information pertaining to such requested Letter of
Credit issuance or amendment, including any Issuer Documents, as the L/C Issuer or
the Administrative Agent may require.




     (ii) Promptly after receipt of any Letter of Credit Application, the L/C Issuer
will confirm with the Administrative Agent (by telephone or in writing) that the
Administrative Agent has received a copy of such Letter of Credit Application from
the Borrower and, if not, the L/C Issuer will provide the Administrative Agent with
a copy thereof. Unless the L/C Issuer has received written notice from any
Revolving Credit Lender, the Administrative Agent or any Loan Party, at least one
Business Day prior to the requested date of issuance or amendment of the applicable
Letter of Credit, that one or more applicable conditions contained in Section 4
shall not then be satisfied, then, subject to the terms and conditions hereof, the
L/C Issuer shall, on the requested date, issue a Letter of Credit for the account of
the Borrower (or the applicable Subsidiary) or enter into the applicable amendment,
as the case may be, in each case in accordance with the L/C Issuer’s usual and
customary business practices. Immediately upon the issuance of each Letter of
Credit, each Revolving Credit Lender shall be deemed to, and hereby irrevocably and
unconditionally agrees to, purchase from the L/C Issuer a risk participation in such
Letter of Credit in an amount equal to the product of such Revolving Credit Lender’s
Applicable Revolving Credit Percentage times the amount of such Letter of
Credit.




     (iii) If the Borrower so requests in any applicable Letter of Credit
Application, the L/C Issuer may, in its sole and absolute discretion, agree to issue
a Letter of Credit that has automatic extension provisions (each, an “Auto-Extension
Letter of Credit”); provided that any such Auto-Extension Letter of Credit
must permit the L/C Issuer to prevent any such extension at least once in each
twelve-month period (commencing with the date of issuance of such Letter of Credit)
by giving prior notice to the beneficiary thereof not later than a day (the
“Non-Extension Notice Date”) in each such twelve-month period to be agreed upon at
the time such Letter of Credit is issued, which Non-Extension Notice Date shall be
not more than 60 days prior to the then current expiration date of such Letter of
Credit. Unless otherwise directed by the L/C Issuer, the Borrower shall not be
required to make a specific request to the L/C Issuer for any such extension. Once
an Auto-Extension Letter of Credit has been issued, the Revolving Credit Lenders
shall be deemed to have authorized (but may not require) the L/C Issuer to permit
the extension of such Letter of Credit at any time to an expiry date not later than
the Letter of Credit Expiration Date; provided,



31









 







however, that the L/C Issuer shall not permit any such extension if (A)
the L/C Issuer has determined that it would not be permitted, or would have no
obligation at such time to issue such Letter of Credit in its revised form (as
extended) under the terms hereof (by reason of the provisions of clause (ii) or
(iii) of Section 2.03(a) or otherwise), or (B) it has received notice (which may be
by telephone or in writing) on or before the day that is seven Business Days before
the Non-Extension Notice Date (1) from the Administrative Agent that the Required
Revolving Lenders have elected not to permit such extension or (2) from the
Administrative Agent, any Revolving Credit Lender or the Borrower that one or more
of the applicable conditions specified in Section 4.02 is not then satisfied, and in
each such case directing the L/C Issuer not to permit such extension.




     (iv) Promptly after its delivery of any Letter of Credit or any amendment to a
Letter of Credit to an advising bank with respect thereto or to the beneficiary
thereof, the L/C Issuer will also deliver to the Borrower and the Administrative
Agent a true and complete copy of such Letter of Credit or amendment.




     (c) Drawings and Reimbursements; Funding of Participations.




     (i) Upon receipt from the beneficiary of any Letter of Credit of any notice of
a drawing under such Letter of Credit, the L/C Issuer shall notify the Borrower and
the Administrative Agent thereof. Not later than 11:00 a.m. on the date of any
payment by the L/C Issuer under a Letter of Credit (each such date, an “Honor
Date”), the Borrower shall reimburse the L/C Issuer through the Administrative Agent
in an amount equal to the amount of such drawing. If the Borrower fails to so
reimburse the L/C Issuer by such time, the Administrative Agent shall promptly
notify each Revolving Credit Lender of the Honor Date, the amount of the
unreimbursed drawing (the “Unreimbursed Amount”), and the amount of such Revolving
Credit Lender’s Applicable Revolving Credit Percentage thereof. In such event, the
Borrower shall be deemed to have requested a Revolving Credit Borrowing of Base Rate
Loans to be disbursed on the Honor Date in an amount equal to the Unreimbursed
Amount, without regard to the minimum and multiples specified in Section 2.02 for
the principal amount of Base Rate Loans, but subject to the amount of the unutilized
portion of the Revolving Credit Commitments and the conditions set forth in Section
4.02 (other than the delivery of a Committed Loan Notice). Any notice given by the
L/C Issuer or the Administrative Agent pursuant to this Section 2.03(c)(i) may be
given by telephone if immediately confirmed in writing; provided that the
lack of such an immediate confirmation shall not affect the conclusiveness or
binding effect of such notice.




     (ii) Each Revolving Credit Lender shall upon any notice pursuant to Section
2.03(c)(i) make funds available to the Administrative Agent for the account of the
L/C Issuer at the Administrative Agent’s Office in an amount equal to its Applicable
Revolving Credit Percentage of the Unreimbursed Amount not



32









 







later than 1:00 p.m. on the Business Day specified in such notice by the Administrative Agent, whereupon, subject to the provisions of Section
2.03(c)(iii), each Revolving Credit Lender that so makes funds available shall be
deemed to have made a Base Rate Loan to the Borrower in such amount. The
Administrative Agent shall remit the funds so received to the L/C Issuer.




     (iii) With respect to any Unreimbursed Amount that is not fully refinanced by a
Revolving Credit Borrowing of Base Rate Loans because the conditions set forth in
Section 4.02 cannot be satisfied or for any other reason, the Borrower shall be
deemed to have incurred from the L/C Issuer an L/C Borrowing in the amount of the
Unreimbursed Amount that is not so refinanced, which L/C Borrowing shall be due and
payable on demand (together with interest) and shall bear interest at the Default
Rate. In such event, each Revolving Credit Lender’s payment to the Administrative
Agent for the account of the L/C Issuer pursuant to Section 2.03(c)(ii) shall be
deemed payment in respect of its participation in such L/C Borrowing and shall
constitute an L/C Advance from such Lender in satisfaction of its participation
obligation under this Section 2.03.




     (iv) Until each Revolving Credit Lender funds its Revolving Credit Loan or L/C
Advance pursuant to this Section 2.03(c) to reimburse the L/C Issuer for any amount
drawn under any Letter of Credit, interest in respect of such Lender’s Applicable
Revolving Credit Percentage of such amount shall be solely for the account of the
L/C Issuer.




     (v) Each Revolving Credit Lender’s obligation to make Revolving Credit Loans or
L/C Advances to reimburse the L/C Issuer for amounts drawn under Letters of Credit,
as contemplated by this Section 2.03(c), shall be absolute and unconditional and
shall not be affected by any circumstance, including (A) any setoff, counterclaim,
recoupment, defense or other right which such Lender may have against the L/C
Issuer, the Borrower or any other Person for any reason whatsoever; (B) the
occurrence or continuance of a Default, or (C) any other occurrence, event or
condition, whether or not similar to any of the foregoing; provided,
however, that each Revolving Credit Lender’s obligation to make Revolving
Credit Loans pursuant to this Section 2.03(c) is subject to the conditions set forth
in Section 4.02 (other than delivery by the Borrower of a Committed Loan Notice ).
No such making of an L/C Advance shall relieve or otherwise impair the obligation of
the Borrower to reimburse the L/C Issuer for the amount of any payment made by the
L/C Issuer under any Letter of Credit, together with interest as provided herein.




     (vi) If any Revolving Credit Lender fails to make available to the
Administrative Agent for the account of the L/C Issuer any amount required to be
paid by such Lender pursuant to the foregoing provisions of this Section 2.03(c) by
the time specified in Section 2.03(c)(ii), the L/C Issuer shall be entitled to
recover from such Lender (acting through the Administrative Agent), on demand, such
amount with interest thereon for the period from the date such payment is required
to the date on which such payment is immediately available to the L/C



33









 







Issuer at a rate per annum equal to the greater of the Federal Funds Rate and a rate
determined by the L/C Issuer in accordance with banking industry rules on
interbank compensation, plus any administrative, processing or similar fees
customarily charged by the L/C Issuer in connection with the foregoing. If such
Lender pays such amount (with interest and fees as aforesaid), the amount so paid
shall constitute such Lender’s Committed Loan included in the relevant Committed
Borrowing or L/C Advance in respect of the relevant L/C Borrowing, as the case may
be. A certificate of the L/C Issuer submitted to any Revolving Credit Lender
(through the Administrative Agent) with respect to any amounts owing under this
Section 2.03(c)(vi) shall be conclusive absent manifest error.




     (d) Repayment of Participations.




     (i) At any time after the L/C Issuer has made a payment under any Letter of
Credit and has received from any Revolving Credit Lender such Lender’s L/C Advance
in respect of such payment in accordance with Section 2.03(c), if the Administrative
Agent receives for the account of the L/C Issuer any payment in respect of the
related Unreimbursed Amount or interest thereon (whether directly from the Borrower
or otherwise, including proceeds of Cash Collateral applied thereto by the
Administrative Agent), the Administrative Agent will distribute to such Lender its
Applicable Revolving Credit Percentage thereof in the same funds as those received
by the Administrative Agent.




     (ii) If any payment received by the Administrative Agent for the account of the
L/C Issuer pursuant to Section 2.03(c)(i) is required to be returned under any of
the circumstances described in Section 11.05 (including pursuant to any settlement
entered into by the L/C Issuer in its discretion), each Revolving Credit Lender
shall pay to the Administrative Agent for the account of the L/C Issuer its
Applicable Revolving Credit Percentage thereof on demand of the Administrative
Agent, plus interest thereon from the date of such demand to the date such
amount is returned by such Lender, at a rate per annum equal to the Federal Funds
Rate from time to time in effect. The obligations of the Lenders under this clause
shall survive the payment in full of the Obligations and the termination of this
Agreement.




     (e) Obligations Absolute. The obligation of the Borrower to reimburse the L/C
Issuer for each drawing under each Letter of Credit and to repay each L/C Borrowing shall be
absolute, unconditional and irrevocable, and shall be paid strictly in accordance with the
terms of this Agreement under all circumstances, including the following:




     (i) any lack of validity or enforceability of such Letter of Credit, this
Agreement, or any other Loan Document;




     (ii) the existence of any claim, counterclaim, setoff, defense or other right
that the Borrower or any Subsidiary may have at any time against any beneficiary or
any transferee of such Letter of Credit (or any Person for whom any such beneficiary
or any such transferee may be acting), the L/C Issuer or any



34









 







other Person, whether in connection with this Agreement, the transactions contemplated hereby or by such Letter of Credit or any agreement or instrument
relating thereto, or any unrelated transaction;




     (iii) any draft, demand, certificate or other document presented under such
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; or any
loss or delay in the transmission or otherwise of any document required in order to
make a drawing under such Letter of Credit;




     (iv) any payment by the L/C Issuer under such Letter of Credit against
presentation of a draft or certificate that does not strictly comply with the terms
of such Letter of Credit; or any payment made by the L/C Issuer under such Letter of
Credit to any Person purporting to be a trustee in bankruptcy, debtor-in-possession,
assignee for the benefit of creditors, liquidator, receiver or other representative
of or successor to any beneficiary or any transferee of such Letter of Credit,
including any arising in connection with any proceeding under any Debtor Relief Law;
or




     (v) any other circumstance or happening whatsoever, whether or not similar to
any of the foregoing, including any other circumstance that might otherwise
constitute a defense available to, or a discharge of, the Borrower or any of its
Subsidiaries.



     The Borrower shall promptly examine a copy of each Letter of Credit and each amendment thereto
that is delivered to it and, in the event of any claim of noncompliance with the Borrower’s
instructions or other irregularity, the Borrower will immediately notify the L/C Issuer. The
Borrower shall be conclusively deemed to have waived any such claim against the L/C Issuer and its
correspondents unless such notice is given as aforesaid.




     (f) Role of L/C Issuer. Each Lender and the Borrower agree that, in paying any
drawing under a Letter of Credit, the L/C Issuer shall not have any responsibility to obtain
any document (other than any sight draft, certificates and documents expressly required by
the Letter of Credit) or to ascertain or inquire as to the validity or accuracy of any such
document or the authority of the Person executing or delivering any such document. None of
the L/C Issuer, the Administrative Agent, any of their respective Related Parties nor any
correspondent, participant or assignee of the L/C Issuer shall be liable to any Lender for
(i) any action taken or omitted in connection herewith at the request or with the approval
of the Revolving Credit Lenders or the Required Revolving Lenders, as applicable; (ii) any
action taken or omitted in the absence of gross negligence or willful misconduct; or (iii)
the due execution, effectiveness, validity or enforceability of any document or instrument
related to any Letter of Credit or Issuer Document. The Borrower hereby assumes all risks
of the acts or omissions of any beneficiary or transferee with respect to its use of any
Letter of Credit; provided, however, that this assumption is not intended
to, and shall not, preclude the Borrower’s pursuing such rights and remedies as it may have
against the beneficiary or transferee at law or under any other agreement. None of the L/C
Issuer, the Administrative Agent, any of their



35









 







respective Related Parties nor any correspondent, participant or assignee of the L/C Issuer shall be liable or responsible for any of the matters described in clauses (i)
through (v) of Section 2.03(e); provided, however, that anything in such
clauses to the contrary notwithstanding, the Borrower may have a claim against the L/C
Issuer, and the L/C Issuer may be liable to the Borrower, to the extent, but only to the
extent, of any direct, as opposed to consequential or exemplary, damages suffered by the
Borrower which the Borrower proves were caused by the L/C Issuer’s willful misconduct or
gross negligence or the L/C Issuer’s willful failure to pay under any Letter of Credit after
the presentation to it by the beneficiary of a sight draft and certificate(s) strictly
complying with the terms and conditions of a Letter of Credit. In furtherance and not in
limitation of the foregoing, the L/C Issuer may accept documents that appear on their face
to be in order, without responsibility for further investigation, regardless of any notice
or information to the contrary, and the L/C Issuer shall not be responsible for the validity
or sufficiency of any instrument transferring or assigning or purporting to transfer or
assign a Letter of Credit or the rights or benefits thereunder or proceeds thereof, in whole
or in part, which may prove to be invalid or ineffective for any reason.




     (g) Cash Collateral. Upon the request of the Required Lenders, (i) if the L/C
Issuer has honored any full or partial drawing request under any Letter of Credit and such
drawing has resulted in an L/C Borrowing, or (ii) if, as of the Maturity Date of the
Revolving Credit Facility, any L/C Obligation for any reason remains outstanding, the
Borrower shall, in each case, immediately Cash Collateralize the then Outstanding Amount of
all L/C Obligations. Sections 2.04 and 8.02(c) set forth certain additional requirements to
deliver Cash Collateral hereunder. For purposes of this Section 2.03, Section 2.04 and
Section 8.02(c), “Cash Collateralize” means to pledge and deposit with or deliver to the
Administrative Agent, for the benefit of the L/C Issuer and the Lenders, as collateral for
the L/C Obligations, cash or deposit account balances pursuant to documentation in form and
substance satisfactory to the Administrative Agent and the L/C Issuer (which documents are
hereby consented to by the Lenders). Derivatives of such term have corresponding meanings.
The Borrower hereby grants to the Administrative Agent, for the benefit of the L/C Issuer
and the Lenders, a security interest in all such cash, deposit accounts and all balances
therein and all proceeds of the foregoing. Cash Collateral shall be maintained in blocked,
interest bearing deposit accounts at Bank of America. If at any time the Administrative
Agent determines that any funds held as Cash Collateral are subject to any right or claim of
any Person other than the Administrative Agent or that the total amount of such funds is
less than the aggregate Outstanding Amount of all L/C Obligations, the Borrower will,
forthwith upon demand by the Administrative Agent, pay to the Administrative Agent, as
additional funds to be deposited as Cash Collateral, an amount equal to the excess of (x)
such aggregate Outstanding Amount over (y) the total amount of funds, if any, then held as
Cash Collateral that the Administrative Agent determines to be free and clear of any such
right and claim. Upon the drawing of any Letter of Credit for which funds are on deposit as
Cash Collateral, such funds shall be applied, to the extent permitted under applicable Laws,
to reimburse the L/C Issuer.



36









 






     (h) Applicability of ISP. Unless otherwise expressly agreed by the L/C Issuer
and the Borrower when a Letter of Credit is issued, the rules of the ISP shall apply to each
Letter of Credit.




     (i) Letter of Credit Fees. The Borrower shall pay to the Administrative Agent
for the account of each Revolving Credit Lender in accordance with its Applicable Revolving
Credit Percentage a Letter of Credit fee (the “Letter of Credit Fee”) for each Letter of
Credit equal to the Applicable Rate times the daily amount available to be drawn
under such Letter of Credit. For purposes of computing the daily amount available to be
drawn under any Letter of Credit, the amount of such Letter of Credit shall be determined in
accordance with Section 1.06. Letter of Credit Fees shall be (i) due and payable on the
first Business Day after the end of each March, June, September and December, commencing
with the first such date to occur after the issuance of such Letter of Credit, on the Letter
of Credit Expiration Date and thereafter on demand and (ii) computed on a quarterly basis in
arrears. If there is any change in the Applicable Rate during any quarter, the daily amount
available to be drawn under each Letter of Credit shall be computed and multiplied by the
Applicable Rate separately for each period during such quarter that such Applicable Rate was
in effect. Notwithstanding anything to the contrary contained herein, upon the request of
the Required Revolving Lenders, while any Event of Default exists, all Letter of Credit Fees
shall accrue at the Default Rate.




     (j) Fronting Fee and Documentary and Processing Charges Payable to L/C Issuer.
The Borrower shall pay directly to the L/C Issuer for its own account a fronting fee with
respect to each Letter of Credit, at the rate per annum specified in the Fee Letter,
computed on the daily amount available to be drawn under such Letter of Credit on a
quarterly basis in arrears. Such fronting fee shall be due and payable on the tenth
Business Day after the end of each March, June, September and December in respect of the
most recently-ended quarterly period (or portion thereof, in the case of the first payment),
commencing with the first such date to occur after the issuance of such Letter of Credit, on
the Letter of Credit Expiration Date and thereafter on demand. For purposes of computing
the daily amount available to be drawn under any Letter of Credit, the amount of such Letter
of Credit shall be determined in accordance with Section 1.06. In addition, the Borrower
shall pay directly to the L/C Issuer for its own account the customary issuance,
presentation, amendment and other processing fees, and other standard costs and charges, of
the L/C Issuer relating to letters of credit as from time to time in effect. Such customary
fees and standard costs and charges are due and payable on demand and are nonrefundable.




     (k) Conflict with Issuer Documents. In the event of any conflict between the
terms hereof and the terms of any Issuer Document, the terms hereof shall control.



     2.04. Prepayments.




     (a) Optional. Subject to the last sentence of this Section 2.04(a), the
Borrower may, upon notice to the Administrative Agent, at any time or from time to time
voluntarily prepay Term Loans and Revolving Credit Loans in whole or in part without



37









 







premium or penalty; provided that (i) such notice must be received by the Administrative
Agent not later than 11:00 a.m. (A) three Business Days prior to any date of prepayment of
Eurodollar Rate Loans and (B) on the date of prepayment of Base Rate Loans; (ii) any
prepayment of Eurodollar Rate Loans shall be in a principal amount of $1,000,000 or a whole
multiple of $250,000 in excess thereof; and (iii) any prepayment of Base Rate Loans shall be in a principal amount of $250,000 or a whole multiple of $100,000 in
excess thereof or, in each case, if less, the entire principal amount thereof then
outstanding. Each such notice shall specify the date and amount of such prepayment and the
Type(s) of Loans to be prepaid and, if Eurodollar Rate Loans are to be prepaid, the Interest
Period(s) of such Loans. The Administrative Agent will promptly notify each Lender of its
receipt of each such notice, and of the amount of such Lender’s ratable portion of such
prepayment (based on such Lender’s Applicable Percentage in respect of the relevant
Facility). If such notice is given by the Borrower, the Borrower shall make such prepayment
and the payment amount specified in such notice shall be due and payable on the date
specified therein. Any prepayment of a Eurodollar Rate Loan shall be accompanied by all
accrued interest on the amount prepaid, together with any additional amounts required
pursuant to Section 3.05. Each prepayment of the outstanding Term Loans pursuant to this
Section 2.04(a) shall be applied to the principal repayment installments thereof on a
pro-rata basis, and each such prepayment shall be paid to the Lenders in accordance with
their respective Applicable Percentages in respect of each of the relevant Facilities.




     (b) Mandatory.




     (i) If the Borrower or any of its Subsidiaries Disposes of any property (other
than any Disposition of any property permitted by Section 7.05) in a single
transaction or series of related transactions which results in the realization by
such Person of Net Cash Proceeds of at least $2,500,000, the Borrower shall prepay
an aggregate principal amount of the Term Loans equal to 100% of such Net Cash
Proceeds immediately upon receipt thereof by such Person.




     (ii) Upon any Extraordinary Receipt received by or paid to or for the account
of the Borrower or any of its Subsidiaries, and not otherwise included in clause (i)
of this Section 2.04(b), the Borrower shall prepay an aggregate principal amount of
the Term Loans equal to 100% of all Net Cash Proceeds received therefrom immediately
upon receipt thereof by the Borrower or such Subsidiary.




     (iii) Each prepayment of the Term Loans pursuant to the foregoing provisions of
this Section 2.04(b) shall be applied to the principal repayment installments
thereof in inverse order of maturity.




     (iv) If for any reason the Total Revolving Credit Outstandings at any time
exceed the Revolving Credit Facility at such time, or if the Total Revolving Credit
Outstandings exceed $15,000,000 on the 16th day after the date of the
initial Credit Extension hereunder, the Borrower shall immediately prepay Revolving
Credit Loans and L/C Borrowings and/or Cash Collateralize the L/C



38









 







Obligations (other than the L/C Borrowings) in an aggregate amount equal to such excess.




     (v) Prepayments of the Revolving Credit Facility made pursuant to this Section
2.04(b), first, shall be applied ratably to the L/C Borrowings,
second, shall be applied ratably to the outstanding Revolving Credit Loans, and,
third, shall be used to Cash Collateralize the remaining L/C Obligations.
Upon the drawing of any Letter of Credit that has been Cash Collateralized, the
funds held as Cash Collateral shall be applied (without any further action by or
notice to or from the Borrower or any other Loan Party) to reimburse the L/C Issuer
or the Revolving Credit Lenders, as applicable.



     2.05. Termination or Reduction of Commitments.




     (a) Optional. The Borrower may, upon notice to the Administrative Agent,
terminate the Revolving Credit Facility or the Letter of Credit Sublimit, or from time to
time permanently reduce the Revolving Credit Facility or the Letter of Credit Sublimit;
provided that (i) any such notice shall be received by the Administrative Agent not
later than 11:00 a.m. five Business Days prior to the date of termination or reduction, (ii)
any such partial reduction shall be in an aggregate amount of $1,000,000 or any whole
multiple of $250,000 in excess thereof and (iii) the Borrower shall not terminate or reduce
(A) the Revolving Credit Facility if, after giving effect thereto and to any concurrent
prepayments hereunder, the Total Revolving Credit Outstandings would exceed the Revolving
Credit Facility, or (B) the Letter of Credit Sublimit if, after giving effect thereto, the
Outstanding Amount of L/C Obligations not fully Cash Collateralized hereunder would exceed
the Letter of Credit Sublimit.




     (b) Mandatory.




     (i) The aggregate Term Loan Commitments shall be automatically and permanently
reduced to zero immediately after the Term Loan Borrowing.




     (ii) If after giving effect to any reduction or termination of Revolving Credit
Commitments under this Section 2.05, the Letter of Credit Sublimit exceeds the
Revolving Credit Facility at such time, the Letter of Credit Sublimit shall be
automatically reduced by the amount of such excess.




     (c) Application of Commitment Reductions; Payment of Fees. The Administrative
Agent will promptly notify the Lenders of any termination or reduction of the Letter of
Credit Sublimit or the Revolving Credit Commitment under this Section 2.05. Upon any
reduction of the Revolving Credit Commitments, the Revolving Credit Commitment of each
Revolving Credit Lender shall be reduced by such Lender’s Applicable Revolving Credit
Percentage of such reduction amount. All fees in respect of the Revolving Credit Facility
accrued until the effective date of any termination of the Revolving Credit Facility shall
be paid on the effective date of such termination.



39









 





     2.06. Repayment of Loans.




     (a) Term Loans. The Borrower shall repay to the Term Loan Lenders the
aggregate outstanding principal amount of the Term Loans on the following dates in the
respective amounts set forth opposite such dates (which amounts shall be reduced as a result
of the application of prepayments in accordance with the order of priorities set forth in
Section 2.04):



	 	 	 	 	 
	Date	 	Amount
	September 30, 2008

	 	$	2,375,000	 
	December 31, 2008

	 	$	2,375,000	 
	March 31, 2009

	 	$	2,375,000	 
	June 30, 2009

	 	$	2,375,000	 
	September 30, 2009

	 	$	2,812,500	 
	December 31, 2009

	 	$	2,812,500	 
	March 31, 2010

	 	$	2,812,500	 
	June 30, 2010

	 	$	2,812,500	 
	September 30, 2010

	 	$	3,250,000	 
	December 31, 2010

	 	$	3,250,000	 
	March 31, 2011

	 	$	3,250,000	 
	June 30, 2011

	 	$	3,250,000	 
	September 30, 2011

	 	$	3,687,500	 
	December 31, 2011

	 	$	3,687,500	 
	March 31, 2012

	 	$	3,687,500	 
	June 30, 2012

	 	$	3,687,500	 
	September 30, 2012

	 	$	4,125,000	 
	December 31, 2012

	 	$	4,125,000	 
	March 31, 2013

	 	$	4,125,000	 





and the final principal repayment installment of the Term Loans shall be repaid on the Maturity
Date for the Term Loan Facility and in any event shall be in an amount equal to the aggregate
principal amount of all Term Loans outstanding on such date.





     (b) Revolving Credit Loans. The Borrower shall repay to the Revolving Credit
Lenders on the Maturity Date for the Revolving Credit Facility the aggregate principal
amount of all Revolving Credit Loans outstanding on such date.



     2.07. Interest.




     (a) Subject to the provisions of Section 2.07(b), (i) each Eurodollar Rate Loan under a
Facility shall bear interest on the outstanding principal amount thereof for each Interest
Period at a rate per annum equal to the Eurodollar Rate for such Interest Period
plus the Applicable Rate for such Facility; and (ii) each Base Rate Loan under a
Facility shall bear interest on the outstanding principal amount thereof from the applicable



40









 







borrowing date at a rate per annum equal to the Base Rate plus the Applicable Rate
for such Facility.




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




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




     (iii) Upon the request of the Required Lenders, while any Event of Default
exists, the Borrower shall pay interest on the principal amount of all outstanding
Obligations hereunder at a fluctuating interest rate per annum at all times equal to
the Default Rate to the fullest extent permitted by applicable Laws.




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




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



     2.08. Fees. In addition to certain fees described in Sections 2.03(i) and (j):




     (a) Commitment Fee. The Borrower shall pay to the Administrative Agent for the
account of each Revolving Credit Lender in accordance with its Applicable Revolving Credit
Percentage, a commitment fee equal to the Applicable Fee Rate times the actual daily
amount by which the Revolving Credit Facility exceeds the sum of (i) the Outstanding Amount
of Revolving Credit Loans and (ii) the Outstanding Amount of L/C Obligations. The
commitment fee shall accrue at all times during the Availability Period, including at any
time during which one or more of the conditions in Section 4 is not met, and shall be due
and payable quarterly in arrears on the last Business Day of each March, June, September and
December, commencing with the first such date to occur after the date of this Agreement, and
on the last day of the Availability Period for the Revolving Credit Facility. The
commitment fee shall be calculated quarterly in arrears, and if there is any change in the
Applicable Fee Rate during any quarter, the actual daily amount shall be computed and
multiplied by the Applicable Fee Rate separately for each period during such quarter that
such Applicable Fee Rate was in effect.




41











 






     (b) Other Fees.




     (i) The Borrower shall pay to the Arranger and the Administrative Agent for
their own respective accounts fees in the amounts and at the times specified in the
Fee Letter. Such fees shall be fully earned when paid and shall not be refundable
for any reason whatsoever.




     (ii) The Borrower shall pay to the Lenders such fees as shall have been
separately agreed upon in writing in the amounts and at the times so specified.
Such fees shall be fully earned when paid and shall not be refundable for any reason
whatsoever.



     2.09. Computation of Interest and Fees; Retroactive Adjustments of Applicable Rate.




     (a) All computations of interest for Base Rate Loans when the Base Rate is determined
by Bank of America’s “prime rate” shall be made on the basis of a year of 365 or 366 days,
as the case may be, and actual days elapsed. All other computations of fees and interest
shall be made on the basis of a 360-day year and actual days elapsed (which results in more
fees or interest, as applicable, being paid than if computed on the basis of a 365-day
year). Interest shall accrue on each Loan for the day on which the Loan is made, and shall
not accrue on a Loan, or any portion thereof, for the day on which the Loan or such portion
is paid, provided that any Loan that is repaid on the same day on which it is made
shall, subject to Section 2.11(a), bear interest for one day. Each determination by the
Administrative Agent of an interest rate or fee hereunder shall be conclusive and binding
for all purposes, absent manifest error.




     (b) If, as a result of any restatement of or other adjustment to the financial
statements of the Borrower or for any other reason, the Borrower or the Lenders determine
that (i) the Consolidated Leverage Ratio as calculated by the Borrower as of any applicable
date was inaccurate and (ii) a proper calculation of the Consolidated Leverage Ratio would
have resulted in higher pricing for such period, the Borrower shall immediately and
retroactively be obligated to pay to the Administrative Agent for the account of the
applicable Lenders or the L/C Issuer, as the case may be, promptly on demand by the
Administrative Agent (or, after the occurrence of an actual or deemed entry of an order for
relief with respect to the Borrower under the Bankruptcy Code of the United States,
automatically and without further action by the Administrative Agent, any Lender or the L/C
Issuer), an amount equal to the excess of the amount of interest and fees that should have
been paid for such period over the amount of interest and fees actually paid for such
period. This paragraph shall not limit the rights of the Administrative Agent, any Lender
or the L/C Issuer, as the case may be, under Section 2.03(c)(iii), 2.03(i) or 2.07(b) or
under Section 8. The Borrower’s obligations under this paragraph shall survive the
termination of the Aggregate Commitments and the repayment of all other Obligations
hereunder.



42









 





     2.10. Evidence of Debt.




     (a) The Credit Extensions made by each Lender shall be evidenced by one or more
accounts or records maintained by such Lender and by the Administrative Agent in the
ordinary course of business. The accounts or records maintained by the Administrative Agent
and each Lender shall be conclusive absent manifest error of the amount of the Credit
Extensions made by the Lenders to the Borrower and the interest and payments thereon. Any
failure to so record or any error in doing so shall not, however, limit or otherwise affect
the obligation of the Borrower hereunder to pay any amount owing with respect to the
Obligations. In the event of any conflict between the accounts and records maintained by
any Lender and the accounts and records of the Administrative Agent in respect of such
matters, the accounts and records of the Administrative Agent shall control in the absence
of manifest error. Upon the request of any Lender made through the Administrative Agent,
the Borrower shall execute and deliver to such Lender (through the Administrative Agent) a
Note, which shall evidence such Lender’s Loans in addition to such accounts or records.
Each Lender may attach schedules to its Note and endorse thereon the date, Type (if
applicable), amount and maturity of its Loans and payments with respect thereto.




     (b) In addition to the accounts and records referred to in Section 2.10(a), each Lender
and the Administrative Agent shall maintain in accordance with its usual practice accounts
or records evidencing the purchases and sales by such Lender of participations in Letters of
Credit. In the event of any conflict between the accounts and records maintained by the
Administrative Agent and the accounts and records of any Lender in respect of such matters,
the accounts and records of the Administrative Agent shall control in the absence of
manifest error.



     2.11. Payments Generally; Administrative Agent’s Clawback.




     (a) General. All payments to be made by the Borrower shall be made without
condition or deduction for any counterclaim, defense, recoupment or setoff. Except as
otherwise expressly provided herein, all payments by the Borrower hereunder shall be made to
the Administrative Agent, for the account of the respective Lenders to which such payment is
owed, at the Administrative Agent’s Office in Dollars and in immediately available funds not
later than 2:00 p.m. on the date specified herein. The Administrative Agent will promptly
distribute to each Lender its Applicable Percentage in respect of the relevant Facility (or
other applicable share as provided herein) of such payment in like funds as received by wire
transfer to such Lender’s Lending Office. All payments received by the Administrative Agent
after 2:00 p.m. shall be deemed received on the next succeeding Business Day and any
applicable interest or fee shall continue to accrue. If any payment to be made by the
Borrower shall come due on a day other than a Business Day, payment shall be made on the
next following Business Day, and such extension of time shall be reflected on computing
interest or fees, as the case may be.




     (b) (i) Funding by Lenders; Presumption by Administrative Agent. Unless the
Administrative Agent shall have received notice from a Lender prior to the proposed date of
any Borrowing of Eurodollar Rate Loans (or, in the case of any Borrowing of Base



43









 







Rate Loans, prior to 12:00 noon on the date of such Borrowing) that such Lender will
not make available to the Administrative Agent such Lender’s share of such Borrowing, the
Administrative Agent may assume that such Lender has made such share available on such date
in accordance with Section 2.02 and may, in reliance upon such assumption, make available to
the Borrower a corresponding amount. In such event, if a Lender has not in fact made its
share of the applicable Borrowing available to the Administrative Agent, then the applicable
Lender and the Borrower severally agree to pay to the Administrative Agent forthwith on
demand such corresponding amount in immediately available funds with interest thereon, for
each day from and including the date such amount is made available to the Borrower to but
excluding the date of payment to the Administrative Agent, at (A) in the case of a payment
to be made by such Lender, the greater of the Federal Funds Rate and a rate determined by
the Administrative Agent in accordance with banking industry rules on interbank
compensation, plus any administrative, processing or similar fees customarily charged by the
Administrative Agent in connection with the foregoing, and (B) in the case of a payment to
be made by the Borrower, the interest rate applicable to Base Rate Loans. If the Borrower
and such Lender shall pay such interest to the Administrative Agent for the same or an
overlapping period, the Administrative Agent shall promptly remit to the Borrower the amount
of such interest paid by the Borrower for such period. If such Lender pays its share of the
applicable Borrowing to the Administrative Agent, then the amount so paid shall constitute
such Lender’s Loan included in such Borrowing. Any payment by the Borrower shall be without
prejudice to any claim the Borrower may have against a Lender that shall have failed to make
such payment to the Administrative Agent.




     (ii) Payments by Borrower; Presumptions by Administrative Agent.
Unless the Administrative Agent shall have received notice from the Borrower prior
to the time at which any payment is due to the Administrative Agent for the account
of the Lenders or the L/C Issuer hereunder that the Borrower will not make such
payment, the Administrative Agent may assume that the Borrower has made such payment
on such date in accordance herewith and may, in reliance upon such assumption,
distribute to the Appropriate Lenders or the L/C Issuer, as the case may be, the
amount due. In such event, if the Borrower has not in fact made such payment, then
each of the Appropriate Lenders or the L/C Issuer, as the case may be, severally
agrees to repay to the Administrative Agent forthwith on demand the amount so
distributed to such Lender or the L/C Issuer, in immediately available funds with
interest thereon, for each day from and including the date such amount is
distributed to it to but excluding the date of payment to the Administrative Agent,
at the greater of the Federal Funds Rate and a rate determined by the Administrative
Agent in accordance with banking industry rules on interbank compensation.



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




     (c) Failure to Satisfy Conditions Precedent. If any Lender makes available to
the Administrative Agent funds for any Loan to be made by such Lender as provided in the
foregoing provisions of this Section 2 and such funds are not made available to the



44









 







Borrower by the Administrative Agent because the conditions to the applicable Credit
Extension set forth in Section 4 are not satisfied or waived in accordance with the terms
hereof, the Administrative Agent shall return such funds (in like funds as received from
such Lender) to such Lender, without interest.




     (d) Obligations of Lenders Several. The obligations of the Lenders hereunder
to make Term Loans and Revolving Credit Loans, to fund participations in Letters of Credit
and to make payments pursuant to Section 11.04(c) are several and not joint. The failure of
any Lender to make any Loan, to fund any such participation or to make any payment under
Section 11.04(c) on any date required hereunder shall not relieve any other Lender of its
corresponding obligation to do so on such date, and no Lender shall be responsible for the
failure of any other Lender to so make its Loan, to purchase its participation or to make
its payment under Section 11.04(c).




     (e) Funding Source. Nothing herein shall be deemed to obligate any Lender to
obtain the funds for any Loan in any particular place or manner or to constitute a
representation by any Lender that it has obtained or will obtain the funds for any Loan in
any particular place or manner.




     (f) Insufficient Funds. If at any time insufficient funds are received by and
available to the Administrative Agent to pay fully all amounts of principal, L/C Borrowings,
interest and fees then due hereunder, such funds shall be applied (i) first, toward
payment of interest and fees then due hereunder, ratably among the parties entitled thereto
in accordance with the amounts of interest and fees then due to such parties, and (ii)
second, toward payment of principal and L/C Borrowings then due hereunder, ratably
among the parties entitled thereto in accordance with the amounts of principal and L/C
Borrowings then due to such parties.



     2.12. Sharing of Payments by Lenders. If any Lender shall, by exercising any right of setoff or
counterclaim or otherwise, obtain payment in respect of (a) Obligations in respect of any the
Facilities due and payable to such Lender hereunder and under the other Loan Documents at such time
in excess of its ratable share (according to the proportion of (i) the amount of such Obligations
due and payable to such Lender at such time to (ii) the aggregate amount of the Obligations in
respect of the Facilities due and payable to all Lenders hereunder and under the other Loan
Documents at such time) of payments on account of the Obligations in respect of the Facilities due
and payable to all Lenders hereunder and under the other Loan Documents at such time obtained by
all the Lenders at such time or (b) Obligations in respect of any of the Facilities owing (but not
due and payable) to such Lender hereunder and under the other Loan Documents at such time in excess
of its ratable share (according to the proportion of (i) the amount of such Obligations owing (but
not due and payable) to such Lender at such time to (ii) the aggregate amount of the Obligations in
respect of the Facilities owing (but not due and payable) to all Lenders hereunder and under the
other Loan Parties at such time) of payment on account of the Obligations in respect of the
Facilities owing (but not due and payable) to all Lenders hereunder and under the other Loan
Documents at such time obtained by all of the Lenders at such time then the Lender receiving such
greater proportion shall (a) notify the Administrative Agent of such fact, and (b) purchase (for
cash at face value) participations in the Loans and subparticipations in L/C Obligations of the
other Lenders, or make such other



45









 







adjustments as shall be equitable, so that the benefit of all such payments shall be shared by the
Lenders ratably in accordance with the aggregate amount of Obligations in respect of the Facilities
then due and payable to the Lenders or owing (but not due and payable) to the Lenders, as the case
may be, provided that:




     (i) if any such participations or subparticipations are purchased and all or
any portion of the payment giving rise thereto is recovered, such participations or
subparticipations shall be rescinded and the purchase price restored to the extent
of such recovery, without interest; and




     (ii) the provisions of this Section shall not be construed to apply to (A) any
payment made by the Borrower pursuant to and in accordance with the express terms of
this Agreement or (B) any payment obtained by a Lender as consideration for the
assignment of or sale of a participation in any of its Loans or subparticipations in
L/C Obligations to any assignee or participant, other than to the Borrower or any
Subsidiary thereof (as to which the provisions of this Section shall apply).



     Each Loan Party consents to the foregoing and agrees, to the extent it may effectively do so
under applicable law, that any Lender acquiring a participation pursuant to the foregoing
arrangements may exercise against such Loan Party rights of setoff and counterclaim with respect to
such participation as fully as if such Lender were a direct creditor of such Loan Party in the
amount of such participation.



     2.13. Increase in Revolving Credit Facility.




     (a) Request for Increase. Provided there exists no Default, upon notice to the
Administrative Agent (which shall promptly notify the Revolving Credit Lenders), the
Borrower may from time to time, request an increase in the Revolving Credit Facility by an
amount (for all such requests) not exceeding $10,000,000; provided that any such
request for an increase shall be in a minimum amount of $5,000,000. At the time of sending
such notice, the Borrower (in consultation with the Administrative Agent) shall specify
which Revolving Credit Lenders shall be asked to increase its Revolving Credit Commitment
and the time period within which each such Revolving Credit Lender is requested to respond
(which shall in no event be less than ten Business Days from the date of delivery of such
notice to such Revolving Credit Lenders).




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




     (c) Notification by Administrative Agent; Additional Revolving Credit Lenders.
The Administrative Agent shall notify the Borrower and each Revolving Credit Lender of the
applicable Revolving Credit Lenders’ responses to each request made



46









 







hereunder. To achieve the full amount of a requested increase, and subject to the
approval of the Administrative Agent and the L/C Issuer (which approvals shall not be
unreasonably withheld), the Borrower may also invite additional Eligible Assignees to become
Revolving Credit Lenders pursuant to a joinder agreement in form and substance satisfactory
to the Administrative Agent and its counsel.




     (d) Effective Date and Allocations. If the Revolving Credit Facility is
increased in accordance with this Section 2.13, the Administrative Agent and the Borrower
shall determine the effective date (the “Revolving Credit Increase Effective Date”) and the
final allocation of such increase. The Administrative Agent shall promptly notify the
Borrower and the Revolving Credit Lenders of the final allocation of such increase and the
Revolving Credit Increase Effective Date.




     (e) Conditions to Effectiveness of Increase. As a condition precedent to such
increase, the Borrower shall deliver to the Administrative Agent a certificate of each Loan
Party dated as of the Revolving Credit Increase Effective Date (in sufficient copies for
each Lender) signed by a Responsible Officer of such Loan Party (i) certifying and attaching
the resolutions adopted by such Loan Party approving or consenting to such increase, and
(ii) in the case of the Borrower, certifying that, before and after giving effect to such
increase, (A) the representations and warranties contained in Section 5 and the other Loan
Documents are true and correct on and as of the Revolving Credit Increase Effective Date,
except to the extent that such representations and warranties specifically refer to an
earlier date, in which case they are true and correct as of such earlier date, and except
that for purposes of this Section 2.13, the representations and warranties contained in
subsections (a) and (b) of Section 5.05 shall be deemed to refer to the most recent
statements furnished pursuant to clauses (a) and (b), respectively, of Section 6.01, and (B)
no Default exists. The Borrower shall prepay any Revolving Credit Loans outstanding on the
Revolving Credit Increase Effective Date (and pay any additional amounts required pursuant
to Section 3.05) to the extent necessary to keep the outstanding Revolving Credit Loans
ratable with any revised Applicable Revolving Credit Percentages arising from any nonratable
increase in the Revolving Credit Commitments under this Section.




     (f) Conflicting Provisions. This Section shall supersede any provisions in
Section 2.12 or 11.01 to the contrary.



3. TAXES, YIELD PROTECTION AND ILLEGALITY




     3.01. Taxes.




     (a) Payments Free of Taxes; Obligation to Withhold; Payments on Account of
Taxes. (i) Any and all payments by or on account of any obligation of the Borrower or
the Guarantors hereunder or under any other Loan Document shall to the extent permitted by
applicable Laws be made free and clear of and without reduction or withholding for any
Taxes. If, however, applicable Laws require the Borrower, the Guarantors, or the
Administrative Agent to withhold or deduct any Tax, such Tax shall be withheld or deducted
in accordance with such Laws as determined by the Borrower, the Guarantors



47









 







or the Administrative Agent, as the case may be, upon the basis of the information and
documentation to be delivered pursuant to subsection (e) below.




     (ii) If the Borrower, the Guarantors or the Administrative Agent shall be
required by the Code to withhold or deduct any Taxes, including both United States
Federal backup withholding and withholding taxes, from any payment, then (A) the
Administrative Agent shall withhold or make such deductions as are determined by the
Administrative Agent to be required based upon the information and documentation it
has received pursuant to subsection (e) below, (B) the Administrative Agent shall
timely pay the full amount withheld or deducted to the relevant Governmental
Authority in accordance with the Code, and (C) to the extent that the withholding or
deduction is made on account of Indemnified Taxes or Other Taxes, the sum payable by
the Borrower or the Guarantors, as the case may be, shall be increased as necessary
so that after any required withholding or the making of all required deductions
(including deductions applicable to additional sums payable under this Section) the
Administrative Agent, Lender or L/C Issuer, as the case may be, receives an amount
equal to the sum it would have received had no such withholding or deduction been
made.




     (b) Payment of Other Taxes by the Borrower and the Guarantors. Without
limiting the provisions of subsection (a) above, the Borrower and the Guarantors shall
timely pay any Other Taxes to the relevant Governmental Authority in accordance with
applicable law.




     (c) Tax Indemnifications.




     (i) Without limiting the provisions of subsection (a) or (b) above, the
Borrower and the Guarantors shall, and do hereby, jointly and severally, indemnify
the Administrative Agent, each Lender and the L/C Issuer, and shall make payment in
respect thereof within 20 days after demand therefor, for the full amount of any
Indemnified Taxes or Other Taxes (including Indemnified Taxes or Other Taxes imposed
or asserted on or attributable to amounts payable under this Section) withheld or
deducted by the Borrower, the Guarantors or the Administrative Agent or paid by the
Administrative Agent, such Lender or the L/C Issuer, as the case may be, and any
penalties, interest and reasonable expenses arising therefrom or with respect
thereto, whether or not such Indemnified Taxes or Other Taxes were correctly or
legally imposed or asserted by the relevant Governmental Authority. The Borrower
and the Guarantors shall also, and do hereby, jointly and severally, indemnify the
Administrative Agent, and shall make payment in respect thereof within 10 days after
demand therefor, for any amount which a Lender or the L/C Issuer for any reason
fails to pay indefeasibly to the Administrative Agent as required by clause (ii) of
this subsection. A certificate as to the amount of any such payment or liability
delivered to the Borrower and the Guarantors by a Lender or the L/C Issuer (with a
copy to the Administrative Agent), or by the Administrative Agent on its own



48









 







behalf or on behalf of a Lender or the L/C Issuer, shall be conclusive absent
manifest error.




     (ii) Without limiting the provisions of subsection (a) or (b) above, each
Lender and the L/C Issuer shall, and does hereby, indemnify the Borrower, the
Guarantors and the Administrative Agent, and shall make payment in respect thereof
within 10 days after demand therefor, against any and all Taxes and any and all
related losses, claims, liabilities, penalties, interest and expenses (including the
fees, charges and disbursements of any counsel for the Borrower, the Guarantors or
the Administrative Agent) incurred by or asserted against the Borrower or the
Administrative Agent by any Governmental Authority as a result of the failure by
such Lender or the L/C Issuer, as the case may be, to deliver, or as a result of the
inaccuracy, inadequacy or deficiency of, any documentation required to be delivered
by such Lender or the L/C Issuer, as the case may be, to the Borrower, the
Guarantors or the Administrative Agent pursuant to subsection (e). Each Lender and
the L/C Issuer hereby authorizes the Administrative Agent to set off and apply any
and all amounts at any time owing to such Lender or the L/C Issuer, as the case may
be, under this Agreement or any other Loan Document against any amount due to the
Administrative Agent under this clause (ii). The agreements in this clause (ii)
shall survive the resignation and/or replacement of the Administrative Agent, any
assignment of rights by, or the replacement of, a Lender or the L/C Issuer, the
termination of the Aggregate Commitments and the repayment, satisfaction or
discharge of all other Obligations.




     (d) Evidence of Payments. Upon request by the Borrower, the Guarantors or the
Administrative Agent, as the case may be, after any payment of Taxes by the Borrower, the
Guarantors or the Administrative Agent to a Governmental Authority as provided in this
Section 3.01, the Borrower and the Guarantors shall each deliver to the Administrative Agent
or the Administrative Agent shall deliver to the Borrower and the Guarantors, as the case
may be, the original or a certified copy of a receipt issued by such Governmental Authority
evidencing such payment, a copy of any return required by Laws to report such payment or
other evidence of such payment reasonably satisfactory to the Borrower, the Guarantors or
the Administrative Agent, as the case may be.




     (e) Status of Lenders; Tax Documentation.




     (i) Each Lender shall deliver to the Borrower, the Guarantors and to the
Administrative Agent, at the time or times prescribed by applicable Laws or when
reasonably requested by the Borrower, the Guarantors or the Administrative Agent,
such properly completed and executed documentation prescribed by applicable Laws or
by the taxing authorities of any jurisdiction and such other reasonably requested
information as will permit the Borrower, the Guarantors, or the Administrative
Agent, as the case may be, to determine (A) whether or not payments made hereunder
or under any other Loan Document are subject to Taxes, (B) if applicable, the
required rate of withholding or deduction, and (C) such Lender’s entitlement to any
available exemption from, or reduction of,



49









 







applicable Taxes in respect of all payments to be made to such Lender by the
Borrower or the Guarantors, as the case may be, pursuant to this Agreement or
otherwise to establish such Lender’s status for withholding tax purposes in the
applicable jurisdiction.




     (ii) Without limiting the generality of the foregoing, if the Borrower or any
Guarantor, as the case may be, is resident for tax purposes in the United States,




     (A) any Lender that is a “United States person” within the meaning of
Section 7701(a)(30) of the Code shall deliver to the Borrower, the
Guarantors and the Administrative Agent executed originals of Internal
Revenue Service Form W-9 or such other documentation or information
prescribed by applicable Laws or reasonably requested by the Borrower, the
Guarantors or the Administrative Agent as will enable the Borrower, the
Guarantors or the Administrative Agent, as the case may be, to determine
whether or not such Lender is subject to backup withholding or information
reporting requirements; and




     (B) each Foreign Lender that is entitled under the Code or any
applicable treaty to an exemption from or reduction of withholding tax with
respect to payments hereunder or under any other Loan Document shall deliver
to the Borrower, the Guarantors and the Administrative Agent (in such number
of copies as shall be requested by the recipient) on or prior to the date on
which such Foreign Lender becomes a Lender under this Agreement (and from
time to time thereafter upon the request of the Borrower, the Guarantors or
the Administrative Agent, but only if such Foreign Lender is legally
entitled to do so), whichever of the following is applicable:




     (1) executed originals of Internal Revenue Service Form W-8BEN
claiming eligibility for benefits of an income tax treaty to which
the United States is a party,




     (2) executed originals of Internal Revenue Service Form W-8ECI,




     (3) executed originals of Internal Revenue Service Form W-8IMY
and all required supporting documentation,




     (4) in the case of a Foreign Lender claiming the benefits of the
exemption for portfolio interest under Section 881(c) of the Code,
(x) a certificate to the effect that such Foreign Lender is not (A) a
“bank” within the meaning of Section 881(c)(3)(A) of the Code, (B) a
“10 percent shareholder” of the Borrower or any Guarantor within the
meaning of Section 881(c)(3)(B) of the Code, or (C) a “controlled
foreign



50









 







corporation” described in Section 881(c)(3)(C) of the Code and (y) executed
originals of Internal Revenue Service Form W-8BEN, or




     (5) executed originals of any other form prescribed by
applicable Laws as a basis for claiming exemption from or a reduction
in United States Federal withholding tax together with such
supplementary documentation as may be prescribed by applicable Laws
to permit the Borrower, the Guarantors or the Administrative Agent to
determine the withholding or deduction required to be made.




     (iii) Each Lender shall promptly (A) notify the Borrower, the Guarantors and
the Administrative Agent of any change in circumstances which would modify or render
invalid any claimed exemption or reduction, and (B) take such steps as shall not be
materially disadvantageous to it, in the reasonable judgment of such Lender, and as
may be reasonably necessary (including the re-designation of its Lending Office) to
avoid any requirement of applicable Laws of any jurisdiction that the Borrower, the
Guarantors or the Administrative Agent make any withholding or deduction for taxes
from amounts payable to such Lender.




     (f) Treatment of Certain Refunds. Unless required by applicable Laws, at no
time shall the Administrative Agent have any obligation to file for or otherwise pursue on
behalf of a Lender or the L/C Issuer, or have any obligation to pay to any Lender or the L/C
Issuer, any refund of Taxes withheld or deducted from funds paid for the account of such
Lender or the L/C Issuer, as the case may be. If the Administrative Agent, any Lender or
the L/C Issuer 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 the Guarantors,
as the case may be, or with respect to which the Borrower or the Guarantors, as the case may
be, has paid additional amounts pursuant to this Section, it shall pay to the Borrower or
the Guarantors, as the case may be, an amount equal to such refund (but only to the extent
of indemnity payments made, or additional amounts paid, by the Borrower or the Guarantors,
as the case may be, under this Section with respect to the Taxes or Other Taxes giving rise
to such refund), net of all out-of-pocket expenses incurred by the Administrative Agent,
such Lender or the L/C Issuer, 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 or the Guarantors, as the case may be,, upon the request
of the Administrative Agent, such Lender or the L/C Issuer, agrees to repay the amount paid
over to the Borrower or the Guarantors, as the case may be, (plus any penalties, interest or
other charges imposed by the relevant Governmental Authority) to the Administrative Agent,
such Lender or the L/C Issuer in the event the Administrative Agent, such Lender or the L/C
Issuer is required to repay such refund to such Governmental Authority. This subsection
shall not be construed to require the Administrative Agent, any Lender or the L/C Issuer to
make available its tax returns (or any other information relating to its taxes that it deems
confidential) to the Borrower, the Guarantors or any other Person.



51









 





     3.02. Illegality. If any Lender determines that any Law has made it unlawful, or that any
Governmental Authority has asserted that it is unlawful, for any Lender or its applicable Lending
Office to make, maintain or fund Eurodollar Rate Loans, or to determine or charge interest rates
based upon the Eurodollar Rate, or any Governmental Authority has imposed material restrictions on
the authority of such Lender to purchase or sell, or to take deposits of, Dollars in the London
interbank market, then, on notice thereof by such Lender to the Borrower through the Administrative
Agent, any obligation of such Lender to make or continue Eurodollar Rate Loans or to convert Base
Rate Loans to Eurodollar Rate Loans shall be suspended until such Lender notifies the
Administrative Agent and the Borrower that the circumstances giving rise to such determination no
longer exist. Upon receipt of such notice, the Borrower shall, upon demand from such Lender (with
a copy to the Administrative Agent), prepay or, if applicable, convert all Eurodollar Rate Loans of
such Lender to Base Rate Loans, either on the last day of the Interest Period therefor, if such
Lender may lawfully continue to maintain such Eurodollar Rate Loans to such day, or immediately, if
such Lender may not lawfully continue to maintain such Eurodollar Rate Loans. Upon any such
prepayment or conversion, the Borrower shall also pay accrued interest on the amount so prepaid or
converted.



     3.03. Inability to Determine Rates. If the Required Lenders determine that for any reason in
connection with any request for a Eurodollar Rate Loan or a conversion to or continuation thereof
that (a) Dollar deposits are not being offered to banks in the London interbank eurodollar market
for the applicable amount and Interest Period of such Eurodollar Rate Loan, (b) adequate and
reasonable means do not exist for determining the Eurodollar Rate for any requested Interest Period
with respect to a proposed Eurodollar Rate Loan, or (c) the Eurodollar Rate for any requested
Interest Period with respect to a proposed Eurodollar Rate Loan does not adequately and fairly
reflect the cost to such Lenders of funding such Loan, the Administrative Agent will promptly so
notify the Borrower and each Lender. Thereafter, the obligation of the Lenders to make or maintain
Eurodollar Rate Loans shall be suspended until the Administrative Agent (upon the instruction of
the Required Lenders) revokes such notice. Upon receipt of such notice, the Borrower may revoke
any pending request for a Borrowing of, conversion to or continuation of Eurodollar Rate Loans or,
failing that, will be deemed to have converted such request into a request for a Committed
Borrowing of Base Rate Loans in the amount specified therein.



     3.04. Increased Costs; Reserves on Eurodollar Rate Loans.




     (a) Increased Costs Generally. If any Change in Law shall:




     (i) impose, modify or deem applicable any reserve, special deposit, compulsory
loan, insurance charge or similar requirement against assets of, deposits with or
for the account of, or credit extended or participated in by, any Lender (except any
reserve requirement contemplated by Section 3.04(e)) or the L/C Issuer;




     (ii) subject any Lender or the L/C Issuer to any tax of any kind whatsoever
with respect to this Agreement, any Letter of Credit, any participation in a Letter
of Credit or any Eurodollar Rate Loan made by it, or change the basis of taxation of
payments to such Lender or the L/C Issuer in respect thereof



52









 






     (except for Indemnified Taxes or Other Taxes covered by Section 3.01 and the
imposition of, or any change in the rate of, any Excluded Tax payable by such Lender
or the L/C Issuer); or




     (iii) impose on any Lender or the L/C Issuer or the London interbank market any
other condition, cost or expense affecting this Agreement or Eurodollar Rate Loans
made by such Lender or any Letter of Credit or participation therein;


and the result of any of the foregoing shall be to increase the cost to such Lender of making or
maintaining any Eurodollar Rate Loan (or of maintaining its obligation to make any such Loan), or
to increase the cost to such Lender or the L/C Issuer of participating in, issuing or maintaining
any Letter of Credit (or of maintaining its obligation to participate in or to issue any Letter of
Credit), or to reduce the amount of any sum received or receivable by such Lender or the L/C Issuer
hereunder (whether of principal, interest or any other amount) then, upon request of such Lender or
the L/C Issuer, the Borrower will pay to such Lender or the L/C Issuer, as the case may be, such
additional amount or amounts as will compensate such Lender or the L/C Issuer, as the case may be,
for such additional costs incurred or reduction suffered.





     (b) Capital Requirements. If any Lender or the L/C Issuer determines that any
Change in Law affecting such Lender or the L/C Issuer or any Lending Office of such Lender
or such Lender’s or the L/C Issuer’s holding company, if any, regarding capital requirements
has or would have the effect of reducing the rate of return on such Lender’s or the L/C
Issuer’s capital or on the capital of such Lender’s or the L/C Issuer’s holding company, if
any, as a consequence of this Agreement, the Commitments of such Lender or the Loans made
by, or participations in Letters of Credit held by, such Lender, or the Letters of Credit
issued by the L/C Issuer, to a level below that which such Lender or the L/C Issuer or such
Lender’s or the L/C Issuer’s holding company could have achieved but for such Change in Law
(taking into consideration such Lender’s or the L/C Issuer’s policies and the policies of
such Lender’s or the L/C Issuer’s holding company with respect to capital adequacy), then
from time to time the Borrower will pay to such Lender or the L/C Issuer, as the case may
be, such additional amount or amounts as will compensate such Lender or the L/C Issuer or
such Lender’s or the L/C Issuer’s holding company for any such reduction suffered.




     (c) Certificates for Reimbursement. A certificate of a Lender or the L/C
Issuer setting forth the amount or amounts necessary to compensate such Lender or the L/C
Issuer or its holding company, as the case may be, as specified in subsection (a) and (b) of
this Section and delivered to the Borrower shall be conclusive absent manifest error. The
Borrower shall pay such Lender or the L/C Issuer, as the case may be, the amount shown as
due on any such certificate within 10 days after receipt thereof.




     (d) Delay in Requests. Failure or delay on the part of any Lender or the L/C
Issuer to demand compensation pursuant to the foregoing provisions of this Section shall not
constitute a waiver of such Lender’s or the L/C Issuer’s right to demand such compensation,
provided that the Borrower shall not be required to compensate a Lender or the L/C
Issuer pursuant to the foregoing provisions of this Section for any increased



53









 







costs incurred or reductions suffered more than nine months prior to the date that such
Lender or the L/C Issuer, 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 the L/C Issuer’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 nine-month period referred to
above shall be extended to include the period of retroactive effect thereof).




     (e) Reserves on Eurodollar Rate Loans. The Borrower shall pay to each Lender,
as long as such Lender shall be required to maintain reserves with respect to liabilities or
assets consisting of or including Eurocurrency funds or deposits (currently known as
“Eurocurrency liabilities”), additional interest on the unpaid principal amount of each
Eurodollar Rate Loan equal to the actual costs of such reserves allocated to such Loan by
such Lender (as determined by such Lender in good faith, which determination shall be
conclusive), which shall be due and payable on each date on which interest is payable on
such Loan, provided the Borrower shall have received at least 10 days’ prior notice
(with a copy to the Administrative Agent) of such additional interest from such Lender. If
a Lender fails to give notice 10 days prior to the relevant Interest Payment Date, such
additional interest shall be due and payable 10 days from receipt of such notice.



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




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




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




     (c) any assignment of a Eurodollar Rate Loan on a day other than the last day of the
Interest Period therefor as a result of a request by the Borrower pursuant to Section 11.13;


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



For purposes of calculating amounts payable by the Borrower to the Lenders under this Section 3.05,
each Lender shall be deemed to have funded each Eurodollar Rate Loan made by it at the Eurodollar
Rate for such Loan by a matching deposit or other borrowing in the London interbank eurodollar
market for a comparable amount and for a comparable period, whether or not such Eurodollar Rate
Loan was in fact so funded.




54









 








     3.06. Mitigation Obligations; Replacement of Lenders.




     (a) Designation of a Different Lending Office. If any Lender requests
compensation under Section 3.04, or the Borrower is required to pay any additional amount to
any Lender, the L/C Issuer, or any Governmental Authority for the account of any Lender or
the L/C Issuer pursuant to Section 3.01, or if any Lender gives a notice pursuant to Section
3.02, then such Lender or the L/C Issuer shall, as applicable, use reasonable efforts to
designate a different Lending Office for funding or booking its Loans hereunder or to assign
its rights and obligations hereunder to another of its offices, branches or affiliates, if,
in the judgment of such Lender or the L/C Issuer, such designation or assignment (i) would
eliminate or reduce amounts payable pursuant to Section 3.01 or 3.04, as the case may be, in
the future, or eliminate the need for the notice pursuant to Section 3.02, as applicable,
and (ii) in each case, would not subject such Lender or the L/C Issuer, as the case may be,
to any unreimbursed cost or expense and would not otherwise be disadvantageous to such
Lender or the L/C Issuer, as the case may be. The Borrower hereby agrees to pay all
reasonable costs and expenses incurred by any Lender or the L/C Issuer in connection with
any such designation or assignment.




     (b) Replacement of Lenders. If any Lender requests compensation under Section
3.04, 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 3.01, the Borrower
may replace such Lender in accordance with Section 11.13.



     3.07. Survival. All of the Borrower’s obligations under this Section 3 shall survive termination
of the Aggregate Commitments, repayment of all other Obligations hereunder, and resignation of the
Administrative Agent.



4. CONDITIONS PRECEDENT TO CREDIT EXTENSIONS




     4.01. Conditions of Initial Credit Extension. The obligation of the L/C Issuer and each Lender to
make its initial Credit Extension hereunder is subject to satisfaction of the following conditions
precedent:




     (a) The Administrative Agent’s receipt of the following, each of which shall be
originals or telecopies (followed promptly by originals) unless otherwise specified, each
properly executed by a Responsible Officer of the signing Loan Party, each dated the date of
this Agreement (or, in the case of certificates of governmental officials, a recent date
before the date of this Agreement) and each in form and substance satisfactory to the
Administrative Agent and each of the Lenders:




     (i) executed counterparts of this Agreement, sufficient in number for
distribution to the Administrative Agent, each Lender and the Borrower;




     (ii) a Note executed by the Borrower in favor of each Lender requesting a Note;




     (iii) such certificates of resolutions or other action, incumbency certificates
and/or other certificates of Responsible Officers of each Loan Party as



55









 







the Administrative Agent may require evidencing the identity, authority and
capacity of each Responsible Officer thereof authorized to act as a Responsible
Officer in connection with this Agreement and the other Loan Documents to which such
Loan Party is a party or is to be a party;




     (iv) such documents and certifications as the Administrative Agent may
reasonably require to evidence that each Loan Party is duly organized or formed, and
that each of the Loan Parties is validly existing, in good standing and qualified to
engage in business in each jurisdiction where its ownership, lease or operation of
properties or the conduct of its business requires such qualification, except to the
extent that failure to do so could not reasonably be expected to have a Material
Adverse Effect;




     (v) a favorable opinion of Plunkett Cooney, P.C., counsel to the Loan Parties,
addressed to the Administrative Agent and each Lender, as to the matters set forth
in Exhibit E and such other matters concerning the Loan Parties and the Loan
Documents as the Administrative Agent may reasonably request;




     (vi) a certificate of a Responsible Officer of each Loan Party either (A)
attaching copies of all consents, licenses and approvals required in connection with
the consummation by such Loan Party of the Transaction and the execution, delivery
and performance by such Loan Party and the validity against such Loan Party of the
Loan Documents to which it is a party, and such consents, licenses and approvals
shall be in full force and effect, or (B) stating that no such consents, licenses or
approvals are so required;




     (vii) a certificate signed by a Responsible Officer of the Borrower certifying
(A) that the conditions specified in Sections 4.02(a) and (b) have been satisfied,
and (B) that there has been no event or circumstance since December 31, 2007, that
has had or could be reasonably expected to have, either individually or in the
aggregate, a Material Adverse Effect; (C) a calculation demonstrating compliance
with the financial covenants set forth in Section 7.11 on a pro forma basis after
giving effect to the Transaction occurring on the date the Initial Credit Extension
is made hereunder and (D) that Star Insurance and Century each have an A.M. Best
Company financial strength rating of A- or better;




     (viii) pro forma consolidated financial statements of the Borrower and its
Subsidiaries that give effect to the Transaction and forecasts or projections
prepared by management of the Borrower, in form satisfactory to the Administrative
Agent, consisting of consolidated balance sheets and statements of income or
operations and cash flows of the Borrower and its Subsidiaries on an annual basis
for the term of the Facilities;




     (ix) certificates attesting to the Solvency of each Loan Party before and after
giving effect to the Transaction, from its chief financial officer;



56









 






     (x) evidence that the Existing Credit Agreements have been or concurrently with
the Closing Date are being terminated, all obligations under the Existing Credit
Agreements have been or concurrently with the Closing Date are being repaid and all
Liens securing obligations under the Existing Credit Agreements have been or
concurrently with the Closing Date are being released;




     (xi) certified copies of each of the Merger Agreement and such documents and
instruments related thereto as the Administrative Agent may request, duly executed
by the parties thereto, together with evidence that the Merger has occurred, or
concurrently with the initial Credit Extension hereunder will occur, in accordance
with the terms and conditions of the Merger Agreement and on or before August 29,
2008; and




     (xii) such other assurances, certificates, documents, consents or opinions as
the Administrative Agent reasonably may require.




     (b) (i) All fees required to be paid to the Administrative Agent and the Arranger on or
before the Closing Date shall have been paid and (ii) all fees required to be paid to the
Lenders on or before the Closing Date shall have been paid.




     (c) Unless waived by the Administrative Agent, the Borrower shall have paid all fees,
charges and disbursements of counsel to the Administrative Agent (directly to such counsel
if requested by the Administrative Agent) to the extent invoiced prior to or on the Closing
Date, plus such additional amounts of such fees, charges and disbursements as shall
constitute its reasonable estimate of such fees, charges and disbursements incurred or to be
incurred by it through the closing proceedings (provided that such estimate shall
not thereafter preclude a final settling of accounts between the Borrower and the
Administrative Agent).



     Without limiting the generality of the provisions of the last paragraph of Section 9.03, for
purposes of determining compliance with the conditions specified in this Section 4.01, each Lender
that has signed this Agreement 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 a Lender unless the Administrative Agent shall have received
notice from such Lender prior to the proposed Closing Date specifying its objection thereto.



     4.02. Conditions to all Credit Extensions. The obligation of each Lender to honor any Request for
Credit Extension (other than a Committed Loan Notice requesting only a conversion of Loans to the
other Type, or a continuation of Eurodollar Rate Loans) is subject to the following conditions
precedent:




     (a) The representations and warranties of the Borrower and each other Loan Party
contained in Section 5 or any other Loan Document, or which are contained in any document
furnished at any time under or in connection herewith or therewith, shall be true and
correct on and as of the date of such Credit Extension, except to the extent that such
representations and warranties specifically refer to an earlier date, in which case



57









 







they shall be true and correct as of such earlier date, and except that for purposes of
this Section 4.02, the representations and warranties contained in Sections 5.05(a) and (b)
shall be deemed to refer to the most recent statements furnished pursuant to Sections
6.01(a) and (b), respectively.




     (b) No Default shall exist, or would result from such proposed Credit Extension or from
the application of the proceeds thereof.




     (c) The Administrative Agent and, if applicable, the L/C Issuer shall have received a
Request for Credit Extension in accordance with the requirements hereof.



     Each Request for Credit Extension (other than a Committed Loan Notice requesting only a
conversion of Loans to the other Type or a continuation of Eurodollar Rate Loans) submitted by the
Borrower shall be deemed to be a representation and warranty that the conditions specified in
Sections 4.02(a) and (b) have been satisfied on and as of the date of the applicable Credit
Extension.



5. REPRESENTATIONS AND WARRANTIES. The Borrower represents and warrants to the Administrative Agent
and the Lenders that:




     5.01. Existence, Qualification and Power. Each Loan Party and each of its Subsidiaries (a) is duly
organized or formed, validly existing and, as applicable, in good standing under the Laws of the
jurisdiction of its incorporation or organization, (b) has all requisite power and authority and
all requisite governmental licenses, authorizations, consents and approvals to (i) own or lease its
assets and carry on its business and (ii) execute, deliver and perform its obligations under the
Loan Documents to which it is a party and consummate the Transaction, and (c) is duly qualified and
is licensed and, as applicable, in good standing under the Laws of each jurisdiction where its
ownership, lease or operation of properties or the conduct of its business requires such
qualification or license; except in each case referred to in clause (b)(i) or (c), to the extent
that failure to do so could not reasonably be expected to have a Material Adverse Effect.



     5.02. Authorization; No Contravention. The execution, delivery and performance by each Loan Party
of each Loan Document to which such Person is or is to be a party have been duly authorized by all
necessary corporate or other organizational action, and do not and will not (a) contravene the
terms of any of such Person’s Organization Documents; (b) conflict with or result in any breach or
contravention of, or the creation of any Lien under, or require any payment to be made under (i)
any Contractual Obligation to which such Person is a party or affecting such Person or the
properties of such Person or any of its Subsidiaries or (ii) any order, injunction, writ or decree
of any Governmental Authority or any arbitral award to which such Person or its property is
subject; or (c) violate any Law.



     5.03. Governmental Authorization; Other Consents. No approval, consent, exemption, authorization,
or other action by, or notice to, or filing with, any Governmental Authority or any other Person is
necessary or required in connection with (a) the execution, delivery or performance by, or
enforcement against, any Loan Party of this Agreement or any other Loan Document, or for the
consummation of the Transaction or (b) the exercise by the



58









 







Administrative Agent or any Lender of its rights under the Loan Documents. All applicable waiting
periods in connection with the Transaction have expired without any action having been taken by any
Governmental Authority restraining, preventing or imposing materially adverse conditions upon the
Transaction or the rights of the Loan Parties or their Subsidiaries freely to transfer or otherwise
dispose of, or to create any Lien on, any properties now owned or hereafter acquired by any of
them.



     5.04. Binding Effect. This Agreement has been, and each other Loan Document, when delivered
hereunder, will have been, duly executed and delivered by each Loan Party that is party thereto.
This Agreement constitutes, and each other Loan Document when so delivered will constitute, a
legal, valid and binding obligation of such Loan Party, enforceable against each Loan Party that is
party thereto in accordance with its terms.



     5.05. Financial Statements; No Material Adverse Effect.




     (a) The Audited Financial Statements (i) were prepared in accordance with GAAP
consistently applied throughout the period covered thereby, except as otherwise expressly
noted therein; (ii) fairly present the financial condition of the Borrower and its
Subsidiaries and of the Acquired Company and its Subsidiaries as of the date thereof and
their results of operations for the period covered thereby in accordance with GAAP
consistently applied throughout the period covered thereby, except as otherwise expressly
noted therein; and (iii) show all material indebtedness and other liabilities, direct or
contingent, of the Borrower and its Subsidiaries and of the Acquired Company and its
Subsidiaries as of the date thereof, including liabilities for taxes, material commitments
and Indebtedness.




     (b) The unaudited consolidated and consolidating balance sheets of the Borrower and its
Subsidiaries and of the Acquired Company and its Subsidiaries dated March 31, 2008, and the
related consolidated and consolidating statements of income or operations, shareholders’
equity and cash flows for the fiscal quarter ended on that date (i) were prepared in
accordance with GAAP consistently applied throughout the period covered thereby, except as
otherwise expressly noted therein, and (ii) fairly present the financial condition of the
Borrower and its Subsidiaries and of the Acquired Company and its Subsidiaries as of the
date thereof and their results of operations for the period covered thereby, subject, in the
case of clauses (i) and (ii), to the absence of footnotes and to normal year-end audit
adjustments.




     (c) The Annual Statement of each Material Insurance Subsidiary for the fiscal year
ended December 31, 2007 heretofore delivered to the Lenders (i) was prepared in accordance
with SAP consistently applied throughout the period covered thereby, except as otherwise
expressly noted therein; and (ii) fairly presents in all material respects the statutory
financial condition of such Material Insurance Subsidiary as of the date thereof and its
results of operations for the period covered thereby in accordance with SAP consistently
applied throughout the period covered thereby, except as otherwise expressly noted therein.
Each such Annual Statement complied in all material respects with applicable Law when filed,
and no deficiency has been asserted in writing with respect to any such Annual Statement by
the applicable Supervisory Authority.



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     (d) The Quarterly Statement of each Material Insurance Subsidiary for the fiscal
quarter ended March 31, 2008 heretofore delivered to the Lenders (i) was prepared in
accordance with SAP consistently applied throughout the period covered thereby, except as
otherwise expressly noted therein; and (ii) fairly presents in all material respects the
statutory financial condition of such Material Insurance Subsidiary as of the date thereof
and its results of operations for the period covered thereby in accordance with SAP
consistently applied throughout the period covered thereby, except as otherwise expressly
noted therein. Each such Quarterly Statement complied in all material respects with
applicable Law when filed, and no deficiency has been asserted in writing with respect to
such Annual Statement by the applicable Supervisory Authority.




     (e) Since the date of the Audited Financial Statements, there has been no event or
circumstance, either individually or in the aggregate, that has had or could reasonably be
expected to have a Material Adverse Effect.




     (f) The consolidated forecasted balance sheets, statements of income and cash flows of
the Borrower and its Subsidiaries delivered pursuant to Section 4.01 or Section 6.01(e) were
prepared in good faith on the basis of the assumptions stated therein, which assumptions
were fair in light of the conditions existing at the time of delivery of such forecasts, and
represented, at the time of delivery, the Borrower’s best estimate of its future financial
condition and performance.



     5.06. Litigation. There are no actions, suits, proceedings, claims or disputes pending or, to the
knowledge of the Borrower after due and diligent investigation, threatened or contemplated, at law,
in equity, in arbitration or before any Governmental Authority, by or against the Borrower or any
of its Subsidiaries or against any of their properties or revenues that (a) purport to affect or
pertain to this Agreement, any other Loan Document or the consummation of the Transaction, or (b)
except as specifically disclosed in Schedule 5.06, either individually or in the aggregate, if
determined adversely, could reasonably be expected to have a Material Adverse Effect, and there has
been no adverse change in the status, or financial effect on any Loan Party or any Subsidiary
thereof, of the matters described in Schedule 5.06.



     5.07. No Default. Neither any Loan Party nor any Subsidiary thereof is in default under or with
respect to, or a party to, any Contractual Obligation that could, either individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect. No Default has occurred and
is continuing or would result from the consummation of the transactions contemplated by this
Agreement or any other Loan Document.



     5.08. Ownership of Property; Liens.




     (a) Each Loan Party and each of its Subsidiaries has good record and marketable title
in fee simple to, or valid leasehold interests in, all real property necessary or used in
the ordinary conduct of its business, except for such defects in title as could not,
individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.



60









 






     (b) Schedule 5.08(b) sets forth a complete and accurate list of all Liens on the
property or assets of each Loan Party and each of its Subsidiaries, showing as of the date
hereof the lienholder thereof, the principal amount of the obligations secured thereby and
the property or assets of such Loan Party or such Subsidiary subject thereto. The property
of each Loan Party and each of its Subsidiaries is subject to no Liens, other than Liens set
forth on Schedule 5.08(b), and as otherwise permitted by Section 7.01.



     5.09. Environmental Compliance. The Loan Parties and their respective Subsidiaries conduct in the
ordinary course of business a review of the effect of existing Environmental Laws and claims
alleging potential liability or responsibility for violation of any Environmental Law on their
respective businesses, operations and properties, and as a result thereof the Borrower has
reasonably concluded that such Environmental Laws and claims could not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect.



     5.10. Insurance. The properties of the Borrower and its Subsidiaries are insured with financially
sound and reputable insurance companies not Affiliates of the Borrower, in such amounts, with such
deductibles and covering such risks as are customarily carried by companies engaged in similar
businesses and owning similar properties in localities where the Borrower or the applicable
Subsidiary operates.



     5.11. Taxes. The Borrower and its Subsidiaries have filed all Federal, state and other material
tax returns and reports required to be filed, and have paid all Federal, state and other material
taxes, assessments, fees and other governmental charges levied or imposed upon them or their
properties, income or assets otherwise due and payable, except those which are being contested in
good faith by appropriate proceedings diligently conducted and for which adequate reserves have
been provided in accordance with GAAP. There is no proposed tax assessment against the Borrower or
any Subsidiary that would, if made, have a Material Adverse Effect. Neither any Loan Party nor any
Subsidiary thereof is party to any tax sharing agreement.



     5.12. ERISA Compliance.




     (a) Each Plan is in compliance in all material respects with the applicable provisions
of ERISA, the Code and other Federal or state Laws. Each Plan that is intended to qualify
under Section 401(a) of the Code has received a favorable determination letter from the IRS
or an application for such a letter is currently being processed by the IRS with respect
thereto and, to the best knowledge of the Borrower, nothing has occurred which would
prevent, or cause the loss of, such qualification. The Borrower and each ERISA Affiliate
have made all required contributions to each Plan subject to Section 412 of the Code, and no
application for a funding waiver or an extension of any amortization period pursuant to
Section 412 of the Code has been made with respect to any Plan.




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



61









 







with respect to any Plan that has resulted or could reasonably be expected to result in
a Material Adverse Effect.




     (c) (i) No ERISA Event has occurred or is reasonably expected to occur; (ii) no Pension
Plan has any Unfunded Pension Liability; (iii) neither the Borrower nor any ERISA Affiliate
has incurred, or reasonably expects to incur, any liability under Title IV of ERISA with
respect to any Pension Plan (other than premiums due and not delinquent under Section 4007
of ERISA); (iv) neither the Borrower nor any ERISA Affiliate has incurred, or reasonably
expects to incur, any liability (and no event has occurred which, with the giving of notice
under Section 4219 of ERISA, would result in such liability) under Section 4201 or 4243 of
ERISA with respect to a Multiemployer Plan; and (v) neither the Borrower nor any ERISA
Affiliate has engaged in a transaction that could be subject to Section 4069 or 4212(c) of
ERISA.



     5.13. Subsidiaries; Equity Interests; Loan Parties. As of the date of this Agreement, Borrower has
no Subsidiaries other than those specifically disclosed in Schedule 5.13, and all of the
outstanding Equity Interests in such Subsidiaries have been validly issued, are fully paid and
non-assessable and are owned as set forth in Schedule 5.13 free and clear of all Liens. As of the
date of this Agreement, each Loan Party’s jurisdiction of incorporation and U.S. taxpayer
identification number is set forth on Schedule 5.13.



     5.14. Margin Regulations; Investment Company Act.




     (a) The Borrower is not engaged and will not engage, principally or as one of its
important activities, in the business of purchasing or carrying margin stock (within the
meaning of Regulation U issued by the FRB), or extending credit for the purpose of
purchasing or carrying margin stock.




     (b) None of the Borrower, any Person Controlling the Borrower, or any Subsidiary is or
is required to be registered as an “investment company” under the Investment Company Act of
1940.



     5.15. Disclosure. The Borrower has disclosed to the Administrative Agent and the Lenders all
agreements, instruments and corporate or other restrictions to which it or any of its Subsidiaries
is subject, and all other matters known to it, that, individually or in the aggregate, could
reasonably be expected to result in a Material Adverse Effect. No report, financial statement,
certificate or other information furnished (whether in writing or orally) by or on behalf of any
Loan Party to the Administrative Agent or any Lender in connection with the transactions
contemplated hereby and the negotiation of this Agreement or delivered hereunder or under any other
Loan Document (in each case as modified or supplemented by other information so furnished) contains
any material misstatement of fact or omits to state any material fact necessary to make the
statements therein, in the light of the circumstances under which they were made, not misleading;
provided that, with respect to projected financial information, the Borrower represents
only that such information was prepared in good faith based upon assumptions believed to be
reasonable at the time.




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     5.16. Compliance with Laws. Each Loan Party and each Subsidiary thereof is in compliance in all
material respects with the requirements of all Laws and all orders, writs, injunctions and decrees
applicable to it or to its properties, except in such instances in which (a) such requirement of
Law or order, writ, injunction or decree is being contested in good faith by appropriate
proceedings diligently conducted or (b) the failure to comply therewith, either individually or in
the aggregate, could not reasonably be expected to have a Material Adverse Effect.



     5.17. Intellectual Property; Licenses, Etc. The Borrower and each of its Subsidiaries own, or
possess the right to use, all of the trademarks, service marks, trade names, copyrights, patents,
patent rights, franchises, licenses and other intellectual property rights that are reasonably
necessary for the operation of their respective businesses, without conflict with the rights of any
other Person.



     5.18. Solvency. Each Loan Party is, individually and together with its Subsidiaries on a
consolidated basis, Solvent.



     5.19. Merger Agreement Representations and Warranties. The representations and warranties of the
Acquired Company contained in the Merger Agreement are, to the knowledge of the Borrower after due
and diligent investigation, true and correct on the date of this Agreement and on the Closing Date.



     5.20. Senior Debt. The Obligations are not subordinated in right of payment to any other
Indebtedness of any Loan Party.


6. AFFIRMATIVE COVENANTS. So long as any Lender shall have any Commitment hereunder, any Loan or
other Obligation hereunder shall remain unpaid or unsatisfied, or any Letter of Credit shall remain
outstanding, the Borrower shall, and shall (except in the case of the covenants set forth in
Sections 6.01, 6.02, 6.03, 6.11 and 6.13) cause each Subsidiary to:




     6.01. Financial Statements. Deliver to the Administrative Agent and each Lender, in form and
detail satisfactory to the Administrative Agent and the Required Lenders:




     (a) as soon as available, but in any event within 90 days after the end of each fiscal
year of the Borrower (commencing with the fiscal year ended December 31, 2008), a
consolidated and consolidating balance sheet of the Borrower and its Subsidiaries as at the
end of such fiscal year, and the related consolidated and consolidating statements of income
or operations, changes in shareholders’ equity, and cash flows for such fiscal year, setting
forth in each case in comparative form the figures for the previous fiscal year, all in
reasonable detail and prepared in accordance with GAAP, such consolidated statements to be
audited and accompanied by a report and opinion of an independent certified public
accountant of nationally recognized standing reasonably acceptable to the Required Lenders,
which report and opinion shall be prepared in accordance with generally accepted auditing
standards and shall not be subject to any “going concern” or like qualification or exception
or any qualification or exception as to the scope of such audit, and such consolidating
statements to be certified by the chief executive officer, chief financial officer,
treasurer or controller of the Borrower to the effect that such



63









 







statements are fairly stated in all material respects when considered in relation to
the consolidated financial statements of the Borrower and its Subsidiaries;




     (b) as soon as available, but in any event within 45 days after the end of each of the
first three fiscal quarters of each fiscal year of the Borrower (commencing with the fiscal
quarter ended September 30, 2008), a consolidated and consolidating balance sheet of the
Borrower and its Subsidiaries as at the end of such fiscal quarter, and the related
consolidated and consolidating statements of income or operations, changes in shareholders’
equity, and cash flows for such fiscal quarter and for the portion of the Borrower’s fiscal
year then ended, setting forth in each case in comparative form the figures for the
corresponding fiscal quarter of the previous fiscal year and the corresponding portion of
the previous fiscal year, all in reasonable detail, such consolidated statements to be
certified by a Responsible Officer of the Borrower as fairly presenting the financial
condition, results of operations, shareholders’ equity and cash flows of the Borrower and
its Subsidiaries in accordance with GAAP, subject only to normal year-end audit adjustments
and the absence of footnotes and such consolidating statements to be certified by a
Responsible Officer of the Borrower to the effect that such statements are fairly stated in
all material respects when considered in relation to the consolidated financial statements
of the Borrower and its Subsidiaries;




     (c) as soon as available, but in any event within 100 days after the end of each fiscal
year of each Material Insurance Subsidiary, a copy of the Annual Statement of such Material
Insurance Subsidiary for such fiscal year prepared in accordance with SAP and as filed with
its Supervisory Authority, certified by a Responsible Officer of such Material Insurance
Subsidiary as fairly presenting in all material respects the financial condition and results
of operations of such Material Insurance Subsidiary in accordance with SAP;




     (d) as soon as available, but in any event within 60 days after the end of each of the
first three fiscal quarters of each fiscal year of each Material Insurance Subsidiary, a
copy of the Quarterly Statement of such Material Insurance Subsidiary for such fiscal
quarter, prepared in accordance with SAP and as filed with its Supervisory Authority,
certified by a Responsible Officer of such Material Insurance Subsidiary as fairly
presenting in all material respects the financial condition and results of operations of
such Material Insurance Subsidiary in accordance with SAP, subject only to normal year-end
audit adjustments and the absence of footnotes; and




     (e) as soon as available, but in any event at least 15 days before the end of each
fiscal year of the Borrower, an annual business plan and budget of the Borrower and its
Subsidiaries on a consolidated basis, including forecasts prepared by management of the
Borrower, in form satisfactory to the Administrative Agent, of consolidated balance sheets
and statements of income or operations and cash flows of the Borrower and its Subsidiaries
on a quarterly basis for the immediately following fiscal year.



     As to any information contained in materials furnished pursuant to Section 6.02(d), the
Borrower shall not be separately required to furnish such information under Section 6.01(a) or (b)
above, but the foregoing shall not be in derogation of the obligation of the Borrower to



64









 







furnish the information and materials described in Sections 6.01(a) and (b) above at the times
specified therein.



     6.02. Certificates; Other Information. Deliver to the Administrative Agent and each Lender, in
form and detail satisfactory to the Administrative Agent and the Required Lenders:




     (a) concurrently with the delivery of the financial statements referred to in Section
6.01(a) (commencing with the delivery of the financial statements for the fiscal year ended
December 31, 2008), a certificate of its independent certified public accountants certifying
such financial statements and stating that in making the examination necessary therefor no
knowledge was obtained of any Default under the financial covenants set forth in Section
7.11 or, if any such Default shall exist, stating the nature and status of such event;




     (b) concurrently with the delivery of the financial statements referred to in Sections
6.01(a) and (b) (commencing with the delivery of the financial statements for the fiscal
quarter ended September 30. 2008), a duly completed Compliance Certificate signed by the
chief executive officer, chief financial officer, treasurer or controller of the Borrower,
and 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 7.11, a statement of reconciliation conforming
such financial statements to GAAP;




     (c) promptly after any request by the Administrative Agent or any Lender, copies of any
detailed audit reports, management letters or recommendations submitted to the board of
directors (or the audit committee of the board of directors) of any Loan Party by
independent accountants in connection with the accounts or books of any Loan Party or any of
its Subsidiaries, or any audit of any of them;




     (d) promptly after the same are available, copies of each annual report, proxy or
financial statement or other report or communication sent to the stockholders of the
Borrower, and copies of all annual, regular, periodic and special reports and registration
statements which the Borrower may file or be required to file with the SEC under Section 13
or 15(d) of the Securities Exchange Act of 1934, or with any national securities exchange,
and in any case not otherwise required to be delivered to the Administrative Agent pursuant
hereto;




     (e) promptly, and in any event within five Business Days after receipt thereof by any
Loan Party or any Subsidiary thereof, copies of each notice or other correspondence received
from the SEC concerning any investigation or possible investigation or other inquiry by such
agency regarding financial or other operational results of any Loan Party or any Subsidiary
thereof;




     (f) to the extent permitted by Law, not later than 30 days after received, a copy of
any material financial examination report or material market conduct examination report by
any Supervisory Authority with respect to any Insurance Subsidiary;



65









 






     (g) within five Business Days after received, notice of the actual suspension,
termination or revocation of any material license or permit of the Borrower or any Insurance
Subsidiary and notice of a hearing relating to such a suspension, termination or revocation,
including any request by a Supervisory Authority to take, or refrain from taking, any action
which could reasonably be expected to have a Material Adverse Effect;




     (h) to the extent permitted by Law, within five Business Days after received, notice of
any material pending or threatened investigation or regulatory proceeding (other than
routine periodic investigations or reviews) of the Borrower or any Insurance Subsidiary by
any Supervisory Authority; and




     (i) promptly, such additional information regarding the business, financial, legal or
corporate affairs of any Loan Party or any Subsidiary thereof, or compliance with the terms
of the Loan Documents, as the Administrative Agent or any Lender may from time to time
reasonably request.



     Documents required to be delivered pursuant to Section 6.01(a) or (b) or Section 6.02(d) (to
the extent any such documents are included in materials otherwise filed with the SEC) may be
delivered electronically and if so delivered, shall be deemed to have been delivered on the date
(i) on which the Borrower posts such documents, or provides a link thereto on the Borrower’s
website on the Internet at the website address listed on Schedule 11.02; or (ii) on which such
documents are posted on the Borrower’s behalf on an Internet or intranet website, if any, to which
each Lender and the Administrative Agent have access (whether a commercial, third-party website or
whether sponsored by the Administrative Agent); provided that: (i) the Borrower shall
deliver paper copies of such documents to the Administrative Agent or any Lender that requests the
Borrower to deliver such paper copies until a written request to cease delivering paper copies is
given by the Administrative Agent or such Lender and (ii) the Borrower shall notify the
Administrative Agent and each Lender (by telecopier or electronic mail) of the posting of any such
documents and provide to the Administrative Agent by electronic mail electronic versions
(i.e., soft copies) of such documents. Notwithstanding anything contained herein, in every
instance the Borrower shall be required to provide paper copies of the Compliance Certificates
required by Section 6.02(b) to the Administrative Agent. Except for such Compliance Certificates,
the Administrative Agent shall have no obligation to request the delivery or to maintain copies of
the documents referred to above, and in any event shall have no responsibility to monitor
compliance by the Borrower with any such request for delivery, and each Lender shall be solely
responsible for requesting delivery to it or maintaining its copies of such documents.



     The Borrower hereby acknowledges that (a) the Administrative Agent and/or the Arranger will
make available to the Lenders and the L/C Issuer materials and/or information provided by or on
behalf of the Borrower hereunder (collectively, “Borrower Materials”) by posting the Borrower
Materials on IntraLinks or another similar electronic system (the “Platform”) and (b) certain of
the Lenders (each, a “Public Lender”) may have personnel who do not wish to receive material
non-public information with respect to the Borrower or its Affiliates, or the respective securities
of any of the foregoing, and who may be engaged in investment and other market-related activities
with respect to such Persons’ securities. The Borrower hereby agrees that it will use commercially
reasonable efforts to identify that portion



66









 







of the Borrower Materials that may be distributed to the Public Lenders and that (w) all such
Borrower Materials shall be clearly and conspicuously marked “PUBLIC” which, at a minimum, shall
mean that the word “PUBLIC” shall appear prominently on the first page thereof; (x) by marking
Borrower Materials “PUBLIC,” the Borrower shall be deemed to have authorized the Administrative
Agent, the Arranger, the L/C Issuer and the Lenders to treat such Borrower Materials as not
containing any material non-public information (although it may be sensitive and proprietary) with
respect to the Borrower or its securities for purposes of United States Federal and state
securities laws (provided, however, that to the extent such Borrower Materials
constitute Information, they shall be treated as set forth in Section 11.07); (y) all Borrower
Materials marked “PUBLIC” are permitted to be made available through a portion of the Platform
designated “Public Side Information;” and (z) the Administrative Agent and the Arranger shall be
entitled to treat any Borrower Materials that are not marked “PUBLIC” as being suitable only for
posting on a portion of the Platform not designated “Public Side Information.”



     6.03. Notices. Promptly notify the Administrative Agent:




     (a) of the occurrence of any Default;




     (b) of any matter that has resulted or could reasonably be expected to result in a
Material Adverse Effect, including (i) breach or non-performance of, or any default under, a
Contractual Obligation of the Borrower or any Subsidiary; (ii) any dispute, litigation,
investigation, proceeding or suspension between the Borrower or any Subsidiary and any
Governmental Authority; or (iii) the commencement of, or any material development in, any
litigation or proceeding affecting the Borrower or any Subsidiary, including pursuant to any
applicable Environmental Laws;




     (c) of the occurrence of any ERISA Event;




     (d) of any material change in accounting policies or financial reporting practices by
any Loan Party or any Subsidiary thereof, including any determination by the Borrower
referred to in Section 2.09(b);




     (e) of the (i) occurrence of any Disposition of property or assets for which the
Borrower is required to make a mandatory prepayment pursuant to Section 2.04(b)(i), and (ii)
receipt of any Extraordinary Receipt for which the Borrower is required to make a mandatory
prepayment pursuant to Section 2.04(b)(ii); and




     (f) of any change in the financial strength rating of Star Insurance or Century by A.M.
Best Company.



     Each notice pursuant to Section 6.03 (other than Section 6.03(e) or (f)) shall be accompanied
by a statement of a Responsible Officer of the Borrower setting forth details of the occurrence
referred to therein and stating what action the Borrower has taken and proposes to take with
respect thereto. Each notice pursuant to Section 6.03(a) shall describe with particularity any and
all provisions of this Agreement and any other Loan Document that have been breached.



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     6.04. Payment of Obligations. Pay and discharge as the same shall become due and payable, all its
obligations and liabilities, including (a) all tax liabilities, assessments and governmental
charges or levies upon it or its properties or assets, unless the same are being contested in good
faith by appropriate proceedings diligently conducted and adequate reserves in accordance with GAAP
are being maintained by the Borrower or such Subsidiary; (b) all lawful claims which, if unpaid,
would by law become a Lien upon its property; and (c) all Indebtedness, as and when due and
payable, but subject to any subordination provisions contained in any instrument or agreement
evidencing such Indebtedness.



     6.05. Preservation of Existence, Etc. (a) Preserve, renew and maintain in full force and effect
its legal existence and good standing under the Laws of the jurisdiction of its organization except
in a transaction permitted by Section 7.04 or 7.05; (b) take all reasonable action to maintain all
rights, privileges, permits, licenses and franchises necessary or desirable in the normal conduct
of its business, except to the extent that failure to do so could not reasonably be expected to
have a Material Adverse Effect; and (c) preserve or renew all of its registered patents,
trademarks, trade names and service marks, the non-preservation of which could reasonably be
expected to have a Material Adverse Effect.



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



     6.07. Maintenance of Insurance. Maintain with financially sound and reputable insurance companies
not Affiliates of the Borrower, insurance with respect to its properties and business against loss
or damage of the kinds customarily insured against by Persons engaged in the same or similar
business, of such types and in such amounts as are customarily carried under similar circumstances
by such other Persons.



     6.08. Compliance with Laws. Comply in all material respects with the requirements of all Laws and
all orders, writs, injunctions and decrees applicable to it or to its business or property, except
in such instances in which (a) such requirement of Law or order, writ, injunction or decree is
being contested in good faith by appropriate proceedings diligently conducted; or (b) the failure
to comply therewith could not reasonably be expected to have a Material Adverse Effect.



     6.09. Books and Records. Maintain proper books of record and account, in which full, true and
correct entries in conformity with GAAP or SAP, as applicable, consistently applied shall be made
of all financial transactions and matters involving the assets and business of the Borrower or such
Subsidiary, as the case may be.



     6.10. Inspection Rights. Permit representatives and independent contractors of the Administrative
Agent and each Lender to, at their sole cost and expense, visit and inspect any of its properties,
to examine its corporate, financial and operating records, and make copies thereof or abstracts
therefrom, and to discuss its affairs, finances and accounts with its directors, officers, and
independent public accountants, all at such reasonable times during normal business hours



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and as often as may be reasonably desired, upon reasonable advance notice to the Borrower;
provided, however, that when an Event of Default exists the Administrative Agent or
any Lender (or any of their respective representatives or independent contractors) may do any of
the foregoing at the expense of the Borrower at any time during normal business hours and without
advance notice.



     6.11. Use of Proceeds. Use the proceeds of the Credit Extensions to consummate the Transaction and
for general corporate purposes not in contravention of any Law or of any Loan Document.



     6.12. Compliance with Environmental Laws. Comply, and cause all lessees and other Persons
operating or occupying its properties to comply, in all material respects, with all applicable
Environmental Laws.



     6.13. Guarantee by Material Subsidiaries. If any Subsidiary of the Borrower becomes a Material
Subsidiary or upon the formation or acquisition of any new Material Subsidiary by the Borrower,
then the Borrower shall, at the Borrower’s expense:




     (a) within 30 days after such occurrence, formation or acquisition, cause such Material
Subsidiary to duly execute and deliver to the Administrative Agent a joinder to the
Guaranty, in form and substance satisfactory to the Administrative Agent; and




     (b) within 60 days after such formation or acquisition, deliver to the Administrative
Agent, upon the request of the Administrative Agent, a signed copy of a favorable opinion,
addressed to the Administrative Agent and the other Guaranteed Parties, of counsel for the
Loan Parties acceptable to the Administrative Agent as to such matters as the Administrative
Agent may reasonably request, together with such other documents, instruments and evidences
as the Administrative Agent may reasonably request.



     6.14. Further Assurances. Promptly upon request by the Administrative Agent, or any Lender through
the Administrative Agent, (a) correct any material defect or error that may be discovered in any
Loan Document or in the execution, acknowledgment, filing or recordation thereof, and (b) do,
execute, acknowledge, deliver, record, re-record, file, re-file, register and re-register any and
all such further acts, deeds, certificates, assurances and other instruments as the Administrative
Agent, or any Lender through the Administrative Agent, may reasonably require from time to time in
order to carry out more effectively the purposes of the Loan Documents.



     6.15. Interest Rate Hedging. Enter into prior to December 31, 2008, and maintain at all times
thereafter, interest rate Swap Contracts with Persons and upon terms reasonably acceptable to the
Administrative Agent, covering a notional amount of not less than 50% of the aggregate outstanding
Indebtedness of the Borrower for borrowed money (other than the Total Revolving Credit
Outstandings).


7. NEGATIVE COVENANTS. So long as any Lender shall have any Commitment hereunder, any Loan or other
Obligation hereunder shall remain unpaid or unsatisfied, or any Letter of Credit shall remain
outstanding, the Borrower shall not, nor shall it permit any Subsidiary to, directly or indirectly:




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




     (a) Liens pursuant to any Loan Document;




     (b) Liens existing on the date hereof and listed on Schedule 5.08(b) and any renewals
or extensions thereof, provided that (i) the property covered thereby is not
changed, (ii) the amount secured or benefited thereby is not increased except as
contemplated by Section 7.02(d), (iii) the direct or any contingent obligor with respect
thereto is not changed, and (iv) any renewal or extension of the obligations secured or
benefited thereby is permitted by Section 7.02(d);




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




     (d) carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s or other like
Liens arising in the ordinary course of business which are not overdue for a period of more
than 30 days or which are being contested in good faith and by appropriate proceedings
diligently conducted, if adequate reserves with respect thereto are maintained on the books
of the applicable Person;




     (e) pledges or deposits in the ordinary course of business in connection with workers’
compensation, unemployment insurance and other social security legislation, other than any
Lien imposed by ERISA;




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




     (g) easements, rights-of-way, restrictions and other similar encumbrances affecting
real property which, in the aggregate, are not substantial in amount, and which do not in
any case materially detract from the value of the property subject thereto or materially
interfere with the ordinary conduct of the business of the applicable Person;




     (h) Liens securing judgments for the payment of money not constituting an Event of
Default under Section 8.01(h);




     (i) Liens securing Indebtedness permitted under Section 7.02(f); provided that
(i) such Liens do not at any time encumber any property other than the property financed by
such Indebtedness and (ii) the Indebtedness secured thereby does not exceed the cost or fair
market value, whichever is lower, of the property being acquired on the date of acquisition;
and




     (j) Liens securing Priority Indebtedness; provided that the aggregate amount of the
Consolidated Funded Indebtedness secured thereby does not exceed $5,000,000 at any time.



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     7.02. Indebtedness. Create, incur, assume or suffer to exist any Indebtedness, except:




     (a) obligations (contingent or otherwise) existing or arising under any Swap Contract,
provided that (i) such obligations are (or were) entered into by such Person in the
ordinary course of business for the purpose of directly mitigating risks associated with
fluctuations in interest rates or foreign exchange rates and (ii) such Swap Contract does
not contain any provision exonerating the non-defaulting party from its obligation to make
payments on outstanding transactions to the defaulting party;




     (b) Indebtedness of the Borrower owed to a Subsidiary of the Borrower and Indebtedness
of a Subsidiary of the Borrower owed to the Borrower or a wholly-owned Subsidiary of the
Borrower;




     (c) Indebtedness under the Loan Documents;




     (d) Indebtedness outstanding on the date hereof and listed on Schedule 7.02 and any
refinancings, refundings, renewals or extensions thereof; provided that the amount
of such Indebtedness is not increased at the time of such refinancing, refunding, renewal or
extension except by an amount equal to a reasonable premium or other reasonable amount paid,
and fees and expenses reasonably incurred, in connection with such refinancing and by an
amount equal to any existing commitments unutilized thereunder and the direct or any
contingent obligor with respect thereto is not changed, as a result of or in connection with
such refinancing, refunding, renewal or extension;




     (e) Guarantees of the Borrower or any Subsidiary in respect of Indebtedness otherwise
permitted hereunder of the Borrower or any wholly-owned Subsidiary;




     (f) Indebtedness in respect of Capitalized Leases, Synthetic Lease Obligations and
purchase money obligations for fixed or capital assets within the limitations set forth in
Section 7.01(i); provided, however, that, to the extent such Indebtedness
constitutes Priority Indebtedness, the aggregate amount of all such Indebtedness at any one
time outstanding shall not exceed $5,000,000; and




     (g) other Indebtedness that does not constitute Priority Indebtedness.



     7.03. Investments. Make or hold any Investments, except:




     (a) Investments held by the Borrower and its Subsidiaries in the form of Cash
Equivalents or marketable securities made in accordance with investment policies approved by
the Board of Directors of the Borrower or its Subsidiaries;




     (b) advances to officers, directors and employees of the Borrower and its Subsidiaries
in the ordinary course of business for travel, entertainment, relocation and analogous
ordinary business purposes;




     (c) Investments of the Borrower in any Subsidiary and Investments of any Subsidiary in
the Borrower or in another Subsidiary;



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     (d) Investments consisting of extensions of credit in the nature of accounts receivable
or notes receivable arising from the grant of trade credit in the ordinary course of
business, and Investments received in satisfaction or partial satisfaction thereof from
financially troubled account debtors to the extent reasonably necessary in order to prevent
or limit loss;




     (e) Guarantees permitted by Section 7.02;




     (f) the acquisition of the Acquired Company pursuant to the Merger Agreement and other
Investments existing or outstanding on the date of this Agreement, which other Investments
are listed on Schedule 7.03(f); and




     (g) other Investments not exceeding $10,000,000 at any time outstanding.



     7.04. Fundamental Changes. Merge, dissolve, liquidate, consolidate with or into another Person, or
Dispose of (whether in one transaction or in a series of transactions) all or substantially all of
its assets (whether now owned or hereafter acquired) to or in favor of any Person, except that, so
long as no Default exists or would result therefrom:




     (a) any Subsidiary may merge with (i) the Borrower; provided that the Borrower
shall be the continuing or surviving Person, or (ii) any one or more other Subsidiaries,
provided that when any Guarantor is merging with another Subsidiary, the Guarantor
shall be the continuing or surviving Person; and




     (b) any Subsidiary may Dispose of all or substantially all of its assets (upon
voluntary liquidation or otherwise) to the Borrower or to another Subsidiary; provided that
if the transferor in such a transaction is a Guarantor, then the transferee must either be
the Borrower or a Guarantor.



     7.05. Dispositions. Make any Disposition or enter into any agreement to make any Disposition,
except:




     (a) Dispositions of obsolete or worn out property, whether now owned or hereafter
acquired, in the ordinary course of business;




     (b) Dispositions of assets, including Investments, in the ordinary course of business;




     (c) Dispositions of equipment or real property to the extent that (i) such property is
exchanged for credit against the purchase price of similar replacement property or (ii) the
proceeds of such Disposition are reasonably promptly applied to the purchase price of such
replacement property;




     (d) Dispositions of property by any Subsidiary to the Borrower or to a wholly-owned
Subsidiary; provided that if the transferor of such property is a Guarantor, the
transferee thereof must either be the Borrower or a Guarantor; and



72









 






     (e) other Dispositions not exceeding $3,000,000 in the aggregate in any fiscal year of
the Borrower.


provided, however, that any Disposition pursuant to Section 7.05(a) through Section
7.05(e) shall be for fair market value.




     7.06. Restricted Payments. Declare or make, directly or indirectly, any Restricted Payment, or
incur any obligation (contingent or otherwise) to do so, except that each Subsidiary may make
Restricted Payments to the Borrower or any other Subsidiary and, so long as no Default shall have
occurred and be continuing at the time of any action described below or would result therefrom:




     (a) the Borrower may pay regular cash dividends on its capital stock consistent with
its historical dividend policies and practices;




     (b) the Borrower may declare and make dividend payments or other distributions payable
solely in the common stock or other common Equity Interests of the Borrower; and




     (c) in addition to the Restricted Payments permitted by clauses (a) and (b) preceding,
the Borrower and its Subsidiaries may make Restricted Payments not exceeding $5,000,000 in
any fiscal year of the Borrower; and




     (d) in addition to the Restricted Payments permitted by clauses (a), (b) and (c)
preceding, the Borrower and its Subsidiaries may make Restricted Payments if immediately
after giving pro forma effect to any such Restricted Payment, the Borrower shall have a
Consolidated Leverage Ratio (excluding, solely for this purpose, Indebtedness in respect of
trust preferred securities) of no more than 0.175:1.0.



     7.07. Change in Nature of Business. Engage in any material line of business substantially
different from those lines of business conducted by the Borrower and its Subsidiaries on the date
hereof or any business substantially related or incidental thereto.



     7.08. Transactions with Affiliates. Enter into any transaction of any kind with any Affiliate of
the Borrower, whether or not in the ordinary course of business, other than on arm’s length, fair
and reasonable terms and, if applicable, approved by any applicable Supervisory Authorities.



     7.09. Burdensome Agreements. Enter into or permit to exist any Contractual Obligation (other than
this Agreement or any other Loan Document and other than with a Supervisory Authority) that (a)
limits the ability (i) of any Subsidiary to make Restricted Payments to the Borrower or any other
Subsidiary or to otherwise transfer property to or invest in the Borrower or any other Subsidiary,
except for any agreement in effect (A) on the date hereof and set forth on Schedule 7.09 or (B) at
the time any Subsidiary becomes a Subsidiary of the Borrower, so long as such agreement was not
entered into solely in contemplation of such Person becoming a Subsidiary of the Borrower, (ii) of
any Subsidiary to Guarantee the Indebtedness of the Borrower or (iii) of the Borrower or any
Subsidiary to create, incur, assume or suffer to exist Liens on property of such Person;
provided, however, that this clause (iii) shall



73









 







not prohibit any negative pledge incurred or provided in favor of any holder of Indebtedness
permitted under Section 7.02(c) solely to the extent any such negative pledge relates to the
property financed by or the subject of such Indebtedness; or (b) requires the grant of a Lien to
secure an obligation of such Person if a Lien is granted to secure another obligation of such
Person.



     7.10. Use of Proceeds. Use the proceeds of any Credit Extension, whether directly or indirectly,
and whether immediately, incidentally or ultimately, to purchase or carry margin stock (within the
meaning of Regulation U of the FRB) or to extend credit to others for the purpose of purchasing or
carrying margin stock or to refund indebtedness originally incurred for such purpose.



     7.11. Financial Covenants.




     (a) Consolidated Net Worth. Permit Consolidated Net Worth at any time
(provided that the Borrower shall be required to certify compliance with this
covenant only as of the end of each fiscal quarter) to be less than the sum of (i)
$347,216,000, (ii) an amount equal to 50% of the positive Net Income of the Borrower earned
in each full fiscal quarter ending after the date of this Agreement (with no deduction for a
net loss in any such fiscal quarter), and (iii) an amount equal to 50% of the aggregate
increases in Shareholders’ Equity of the Borrower and its Subsidiaries after the date of
this Agreement by reason of the issuance and sale of Equity Interests of the Borrower or any
Subsidiary (other than issuances to the Borrower or a wholly-owned Subsidiary), including
upon any conversion of debt securities of the Borrower into such Equity Interests.




     (b) Risk Based Capital Ratio. Permit the Risk Based Capital Ratio of any
Material Insurance Subsidiary to be less than 175% at any time; provided that the
Borrower shall be required to certify compliance with this covenant only as of the end of
each fiscal year.




     (c) Consolidated Leverage Ratio. Permit the Consolidated Leverage Ratio of the
Borrower to exceed 0.35:1.00 as of the end of any fiscal quarter.




     (d) Consolidated Debt Service Coverage Ratio. Permit the Consolidated Debt
Service Coverage Ratio to be less than 1.25:1.00 as of the end of any fiscal quarter.




     (e) Financial Strength Rating. Permit the A.M. Best Company financial strength
rating of Star Insurance and Century to be lower than B++ at any time.



     7.12. Amendments of Organization Documents. Amend any of its Organization Documents in any respect
that could reasonably be expected to have a Material Adverse Effect.



     7.13. Accounting Changes. Make any change in (a) its accounting policies or reporting practices,
except as required by GAAP or SAP, or (b) its fiscal year.



     7.14. Prepayments, Etc. of Subordinated Indebtedness. Prepay, redeem, purchase, defease or
otherwise satisfy prior to the scheduled maturity thereof in any manner, or make any



74









 







payment in violation of any subordination terms of, any Indebtedness that is subordinated in right
of payment to the Obligations, except as otherwise permitted herein.



     7.15. Amendment, Etc. of Merger Agreement and Indebtedness. (a) Cancel or terminate the Merger
Agreement or any related documents or consent to or accept any cancellation or termination thereof,
(b) amend, modify or change in any manner any term or condition of the Merger Agreement or any
related documents or give any consent, waiver or approval thereunder, (c) waive any default under
or any breach of any term or condition of the Merger Agreement or any related documents, (d) take
any other action in connection with the Merger Agreement or any related documents that would impair
the value of the interest or rights of Borrower thereunder or that would impair the rights or
interests of the Administrative Agent or any Lender or (e) amend, modify or change in any manner
any term or condition of any Indebtedness set forth in Schedule 7.02, except for any refinancing,
refunding, renewal or extension thereof permitted by Section 7.02(d).



8. EVENTS OF DEFAULT AND REMEDIES




     8.01. Events of Default. Any of the following shall constitute an Event of Default:




     (a) Non-Payment. The Borrower or any other Loan Party fails to (i) pay when
and as required to be paid herein, any amount of principal of any Loan or any L/C Obligation
or deposit any funds as Cash Collateral in respect of L/C Obligations, or (ii) pay within
five days after the same becomes due, any interest on any Loan or on any L/C Obligation, or
any fee due hereunder, or (iii) pay within five days after the same becomes due, any other
amount payable hereunder or under any other Loan Document; or




     (b) Specific Covenants. (i) The Borrower fails to perform or observe any term,
covenant or agreement contained in any of Section 6.01, 6.02, 6.03, 6.05, 6.11, or Section
7, or (ii) any of the Guarantors fails to perform or observe any term, covenant or agreement
contained in Section 10; or




     (c) Other Defaults. Any Loan Party fails to perform or observe any other
covenant or agreement (not specified in Section 8.01(a) or (b) above) contained in any Loan
Document on its part to be performed or observed and such failure continues for 30 days; or




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




     (e) Cross-Default. (i) Any Loan Party or any Subsidiary thereof (A) fails to
make any payment when due (whether by scheduled maturity, required prepayment, acceleration,
demand, or otherwise) in respect of any Indebtedness or Guarantee (other than Indebtedness
hereunder and Indebtedness under Swap Contracts) having an aggregate principal amount
(including undrawn committed or available amounts and including amounts owing to all
creditors under any combined or syndicated credit



75









 







arrangement) of more than the Threshold Amount, or (B) fails to observe or perform any
other agreement or condition relating to any such Indebtedness or Guarantee or contained in
any instrument or agreement evidencing, securing or relating thereto, or any other event
occurs, the effect of which default or other event is to cause, or to permit the holder or
holders of such Indebtedness or the beneficiary or beneficiaries of such Guarantee (or a
trustee or agent on behalf of such holder or holders or beneficiary or beneficiaries) to
cause, with the giving of notice if required, such Indebtedness to be demanded or to become
due or to be repurchased, prepaid, defeased or redeemed (automatically or otherwise), or an
offer to repurchase, prepay, defease or redeem such Indebtedness to be made, prior to its
stated maturity, or such Guarantee to become payable or cash collateral in respect thereof
to be demanded; or (ii) there occurs under any Swap Contract an Early Termination Date (as
defined in such Swap Contract) resulting from (A) any event of default under such Swap
Contract as to which a Loan Party or any Subsidiary thereof is the Defaulting Party (as
defined in such Swap Contract) or (B) any Termination Event (as so defined) under such Swap
Contract as to which a Loan Party or any Subsidiary thereof is an Affected Party (as so
defined) and, in either event, the Swap Termination Value owed by such Loan Party or such
Subsidiary as a result thereof is greater than the Threshold Amount; or




     (f) Insolvency Proceedings, Etc. Any Loan Party or any Subsidiary thereof
institutes or consents to the institution of any proceeding under any Debtor Relief Law, or
makes an assignment for the benefit of creditors; or applies for or consents to the
appointment of any receiver, trustee, custodian, conservator, liquidator, rehabilitator or
similar officer for it or for all or any material part of its property; or any receiver,
trustee, custodian, conservator, liquidator, rehabilitator or similar officer is appointed
without the application or consent of such Person and the appointment continues undischarged
or unstayed for 60 calendar days; or any proceeding under any Debtor Relief Law relating to
any such Person or to all or any material part of its property is instituted without the
consent of such Person and continues undismissed or unstayed for 60 calendar days, or an
order for relief is entered in any such proceeding; or




     (g) Inability to Pay Debts; Attachment. (i) Any Loan Party or any Subsidiary
thereof becomes unable or admits in writing its inability or fails generally to pay its
debts as they become due, or (ii) any writ or warrant of attachment or execution or similar
process is issued or levied against all or any material part of the property of any such
Person and is not released, vacated or fully bonded within 30 days after its issue or levy;
or




     (h) Judgments. There is entered against any Loan Party or any Subsidiary
thereof (i) one or more final judgments or orders for the payment of money in an aggregate
amount (as to all such judgments and orders) exceeding the Threshold Amount (to the extent
not covered by independent third-party insurance as to which the insurer is rated at least
“A-” (with a stable or positive outlook) by A.M. Best Company, has been notified of the
potential claim and does not dispute coverage), or (ii) any one or more non-monetary final
judgments that have, or could reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect and, in either case, (A) enforcement proceedings are
commenced by any creditor upon such judgment or



76









 







order, or (B) there is a period of 30 consecutive days during which a stay of enforcement of
such judgment, by reason of a pending appeal or otherwise, is not in effect; or




     (i) ERISA. (i) An ERISA Event occurs with respect to a Pension Plan or
Multiemployer Plan which has resulted or could reasonably be expected to result in liability
of the Borrower under Title IV of ERISA to the Pension Plan, Multiemployer Plan or the PBGC
in an aggregate amount in excess of the Threshold Amount, or (ii) the Borrower or any ERISA
Affiliate fails to pay when due, after the expiration of any applicable grace period, any
installment payment with respect to its withdrawal liability under Section 4201 of ERISA
under a Multiemployer Plan in an aggregate amount in excess of the Threshold Amount; or




     (j) Invalidity of Loan Documents. Any provision of any Loan Document, at any
time after its execution and delivery and for any reason other than as expressly permitted
hereunder or thereunder or satisfaction in full of all the Obligations, ceases to be in full
force and effect and could reasonably be expected to have a Material Adverse Effect (within
the meaning of clause (c) of the definition of such term); or any Loan Party or any other
Person contests in any manner the validity or enforceability of any provision of any Loan
Document; or any Loan Party denies that it has any or further liability or obligation under
any provision of any Loan Document, or purports to revoke, terminate or rescind any
provision of any Loan Document; or




     (k) Change of Control. There occurs any Change of Control.




     (l) Loss of Licenses. Any Material Insurance Subsidiary loses any material
license or permit to engage in the insurance business that could reasonably be expected to
have a Material Adverse Effect.



     8.02. Remedies upon Event of Default. If any Event of Default occurs and is continuing, the
Administrative Agent shall, at the request of, or may, with the consent of, the Required Lenders,
take any or all of the following actions:




     (a) declare the commitment of each Lender to make Loans and any obligation of the L/C
Issuer to make L/C Credit Extensions to be terminated, whereupon such commitments and
obligation shall be terminated;




     (b) declare the unpaid principal amount of all outstanding Loans, all interest accrued
and unpaid thereon, and all other amounts owing or payable hereunder or under any other Loan
Document to be immediately due and payable, without presentment, demand, protest or other
notice of any kind, all of which are hereby expressly waived by the Borrower;




     (c) require that the Borrower Cash Collateralize the L/C Obligations (in an amount
equal to the then Outstanding Amount thereof); and




     (d) exercise on behalf of itself, the Lenders and the L/C Issuer all rights and
remedies available to it, the Lenders and the L/C Issuer under the Loan Documents;



77









 







provided, however, that upon the occurrence of an actual or deemed entry of an
order for relief with respect to the Borrower under the Bankruptcy Code of the United States, the
obligation of each Lender to make Loans and any obligation of the L/C Issuer to make L/C Credit
Extensions shall automatically terminate, the unpaid principal amount of all outstanding Loans and
all interest and other amounts as aforesaid shall automatically become due and payable, and the
obligation of the Borrower to Cash Collateralize the L/C Obligations as aforesaid shall
automatically become effective, in each case without further act of the Administrative Agent or any
Lender.



     8.03. Application of Funds. After the exercise of remedies provided for in Section 8.02 (or after
the Loans have automatically become immediately due and payable and the L/C Obligations have
automatically been required to be Cash Collateralized as set forth in the proviso to Section 8.02),
any amounts received on account of the Obligations shall be applied by the Administrative Agent in
the following order:




     First, to payment of that portion of the Obligations constituting fees,
indemnities, expenses and other amounts (including fees, charges and disbursements of
counsel to the Administrative Agent and amounts payable under Section 3) payable to the
Administrative Agent in its capacity as such;




     Second, to payment of that portion of the Obligations constituting fees,
indemnities and other amounts (other than principal, interest and Letter of Credit Fees)
payable to the Lenders and the L/C Issuer (including fees, charges and disbursements of
counsel to the respective Lenders and the L/C Issuer (including fees and time charges for
attorneys who may be employees of any Lender or the L/C Issuer) arising under the Loan
Documents and amounts payable under Section 3, ratably among them in proportion to the
respective amounts described in this clause Second payable to them;




     Third, to payment of that portion of the Obligations constituting accrued and
unpaid Letter of Credit Fees and interest on the Loans, L/C Borrowings and other Obligations
arising under the Loan Documents, ratably among the Lenders and the L/C Issuer in proportion
to the respective amounts described in this clause Third payable to them;




     Fourth, to payment of that portion of the Obligations constituting unpaid
principal of the Loans, L/C Borrowings and Obligations then owing under Guaranteed Hedge
Agreements and Guaranteed Cash Management Agreements, ratably among the Lenders, the L/C
Issuer, the Hedge Bank and the Cash Management Banks in proportion to the respective amounts
described in this clause Fourth held by them;




     Fifth, to the Administrative Agent for the account of the L/C Issuer, to Cash
Collateralize that portion of L/C Obligations comprised of the aggregate undrawn amount of
Letters of Credit; and




     Last, the balance, if any, after all of the Obligations have been indefeasibly
paid in full, to the Borrower or as otherwise required by Law.



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Subject to Section 2.03(c), amounts used to Cash Collateralize the aggregate undrawn amount of
Letters of Credit pursuant to clause Fifth above shall be applied to satisfy drawings under
such Letters of Credit as they occur. If any amount remains on deposit as Cash Collateral after
all Letters of Credit have either been fully drawn or expired, such remaining amount shall be
applied to the other Obligations, if any, in the order set forth above.



Notwithstanding the foregoing, Obligations arising under Guaranteed Cash Management Agreements and
Guaranteed Hedge Agreements shall be excluded from the application described above if the
Administrative Agent has not received written notice thereof, together with such supporting
documentation as the Administrative Agent may request, from the applicable Cash Management Bank or
Hedge Bank, as the case may be. Each Cash Management Bank or Hedge Bank not a party to the Credit
Agreement that has given the notice contemplated by the preceding sentence shall, by such notice,
be deemed to have acknowledged and accepted the appointment of the Administrative Agent pursuant to
the terms of Section 9 hereof for itself and its Affiliates as if a “Lender” party hereto.




9. ADMINISTRATIVE AGENT




     9.01. Appointment and Authority. Each of the Lenders and the L/C Issuer hereby irrevocably
appoints Bank of America to act on its behalf as the Administrative Agent hereunder and under the
other Loan Documents and authorizes the Administrative Agent to take such actions on its behalf and
to exercise such powers as are delegated to the Administrative Agent by the terms hereof or
thereof, together with such actions and powers as are reasonably incidental thereto. The
provisions of this Section are solely for the benefit of the Administrative Agent, the Lenders and
the L/C Issuer, and neither the Borrower nor any other Loan Party shall have rights as a third
party beneficiary of any of such provisions.



     9.02. Rights as a Lender. The Person serving as the Administrative Agent hereunder shall have the
same rights and powers in its capacity as a Lender as any other Lender and may exercise the same as
though it were not the Administrative Agent and the term “Lender” or “Lenders” shall, unless
otherwise expressly indicated or unless the context otherwise requires, include the Person serving
as the Administrative Agent hereunder in its individual capacity. Such Person and its Affiliates
may accept deposits from, lend money to, 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 Administrative Agent hereunder and without
any duty to account therefor to the Lenders.



     9.03. Exculpatory Provisions. The Administrative Agent shall not have any duties or obligations
except those expressly set forth herein and in the other Loan Documents. Without limiting the
generality of the foregoing, the Administrative Agent:




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




          (b) shall not have any duty to take any discretionary action or exercise any
discretionary powers, except discretionary rights and powers expressly contemplated hereby
or by the other Loan Documents that the Administrative Agent is required to



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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 or in the other Loan
Documents), provided that the Administrative Agent shall not be required to take any
action that, in its opinion or the opinion of its counsel, may expose the Administrative
Agent to liability or that is contrary to any Loan Document or applicable law; and




     (c) shall not, except as expressly set forth herein and in the other Loan Documents,
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 Administrative Agent or any of its Affiliates in any
capacity.




     (d) The Administrative 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 Administrative Agent shall
believe in good faith shall be necessary, under the circumstances as provided in Sections
11.01 and 8.02) or (ii) in the absence of its own gross negligence or willful misconduct.
The Administrative Agent shall be deemed not to have knowledge of any Default unless and
until notice describing such Default is given to the Administrative Agent by the Borrower, a
Lender or the L/C Issuer.




     (e) The Administrative 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 or any other Loan Document, (ii) the contents of any certificate, report or
other document delivered hereunder or thereunder or in connection herewith or therewith,
(iii) the performance or observance of any of the covenants, agreements or other terms or
conditions set forth herein or therein or the occurrence of any Default, (iv) the validity,
enforceability, effectiveness or genuineness of this Agreement, any other Loan Document or
any other agreement, instrument or document, or (v) the satisfaction of any condition set
forth in Section 4 or elsewhere herein, other than to confirm receipt of items expressly
required to be delivered to the Administrative Agent.



     9.04. Reliance by Administrative Agent. The Administrative 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 Administrative 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 a Loan, or the issuance of a Letter of
Credit, that by its terms must be fulfilled to the satisfaction of a Lender or the L/C Issuer, the
Administrative Agent may presume that such condition is satisfactory to such Lender or the L/C
Issuer unless the Administrative Agent shall have received notice to the contrary from such Lender
or the L/C Issuer prior to the making of such Loan or the issuance of such Letter of Credit. The
Administrative 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



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any action taken or not taken by it in accordance with the advice of any such counsel, accountants
or experts.



     9.05. Delegation of Duties. The Administrative Agent may perform any and all of its duties and
exercise its rights and powers hereunder or under any other Loan Document by or through any one or
more sub-agents appointed by the Administrative Agent. The Administrative 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 Section shall apply to any
such sub-agent and to the Related Parties of the Administrative Agent and any such sub-agent, and
shall apply to their respective activities in connection with the syndication of the credit
facilities provided for herein as well as activities as Administrative Agent.



     9.06. Resignation of Administrative Agent. The Administrative Agent may at any time give notice of
its resignation to the Lenders, the L/C Issuer 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 Administrative Agent gives notice of its resignation, then the retiring Administrative
Agent may on behalf of the Lenders and the L/C Issuer, appoint a successor Administrative Agent
meeting the qualifications set forth above; provided that if the Administrative Agent shall
notify the Borrower and the Lenders that no qualifying Person has accepted such appointment, then
such resignation shall nonetheless become effective in accordance with such notice and (a) the
retiring Administrative Agent shall be discharged from its duties and obligations hereunder and
under the other Loan Documents and (b) all payments, communications and determinations provided to
be made by, to or through the Administrative Agent shall instead be made by or to each Lender and
the L/C Issuer directly, until such time as the Required Lenders appoint a successor Administrative
Agent as provided for above in this Section. Upon the acceptance of a successor’s appointment as
Administrative Agent hereunder, such successor shall succeed to and become vested with all of the
rights, powers, privileges and duties of the retiring (or retired) Administrative Agent, and the
retiring Administrative Agent shall be discharged from all of its duties and obligations hereunder
or under the other Loan Documents (if not already discharged therefrom as provided above in this
Section). The fees payable by the Borrower to a successor Administrative Agent shall be the same
as those payable to its predecessor unless otherwise agreed between the Borrower and such
successor. After the retiring Administrative Agent’s resignation hereunder and under the other
Loan Documents, the provisions of this Section and Section 11.04 shall continue in effect for the
benefit of such retiring Administrative 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
Administrative Agent was acting as Administrative Agent.



     Any resignation by Bank of America as Administrative Agent pursuant to this Section shall also
constitute its resignation as L/C Issuer. Upon the acceptance of a successor’s appointment as
Administrative Agent hereunder, (i) such successor shall succeed to and become vested with all of
the rights, powers, privileges and duties of the retiring L/C Issuer, (ii) the retiring L/C Issuer
shall be discharged from all of their respective duties and obligations



81









 







hereunder or under the other Loan Documents, and (iii) the successor L/C Issuer shall issue
letters of credit in substitution for the Letters of Credit, if any, outstanding at the time of
such succession or make other arrangements satisfactory to the retiring L/C Issuer to effectively
assume the obligations of the retiring L/C Issuer with respect to such Letters of Credit.



     9.07. Non-Reliance on Administrative Agent and Other Lenders. Each Lender and the L/C Issuer
acknowledges that it has, independently and without reliance upon the Administrative 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 and the L/C Issuer also acknowledges that it will, independently and without reliance upon
the Administrative 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, any other Loan
Document or any related agreement or any document furnished hereunder or thereunder.



     9.08. No Other Duties, Etc. thing herein to the contrary notwithstanding, none of the Bookrunners,
Arrangers or other titles as necessary listed on the cover page hereof shall have any powers,
duties or responsibilities under this Agreement or any of the other Loan Documents, except in its
capacity, as applicable, as the Administrative Agent, a Lender or the L/C Issuer hereunder.



     9.09. Administrative Agent May File Proofs of Claim. In case of the pendency of any proceeding
under any Debtor Relief Law or any other judicial proceeding relative to any Loan Party, the
Administrative Agent (irrespective of whether the principal of any Loan or L/C Obligation shall
then be due and payable as herein expressed or by declaration or otherwise and irrespective of
whether the Administrative Agent shall have made any demand on the Borrower) shall be entitled and
empowered, by intervention in such proceeding or otherwise




     (a) to file and prove a claim for the whole amount of the principal and interest owing
and unpaid in respect of the Loans, L/C Obligations and all other Obligations that are owing
and unpaid and to file such other documents as may be necessary or advisable in order to
have the claims of the Lenders, the L/C Issuer and the Administrative Agent (including any
claim for the reasonable compensation, expenses, disbursements and advances of the Lenders,
the L/C Issuer and the Administrative Agent and their respective agents and counsel and all
other amounts due the Lenders, the L/C Issuer and the Administrative Agent under Sections
2.03(i) and (j), 2.08 and 11.04) allowed in such judicial proceeding; and




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


and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official
in any such judicial proceeding is hereby authorized by each Lender and the L/C Issuer to make such
payments to the Administrative Agent and, if the Administrative Agent shall consent to the making
of such payments directly to the Lenders and the L/C Issuer, to pay to the Administrative Agent any
amount due for the reasonable compensation, expenses, disbursements and advances


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of the Administrative Agent and its agents and counsel, and any other amounts due the
Administrative Agent under Sections 2.08 and 11.04.




     Nothing contained herein shall be deemed to authorize the Administrative Agent to authorize or
consent to or accept or adopt on behalf of any Lender or the L/C Issuer any plan of reorganization,
arrangement, adjustment or composition affecting the Obligations or the rights of any Lender or the
L/C Issuer to authorize the Administrative Agent to vote in respect of the claim of any Lender or
the L/C Issuer or in any such proceeding.



     9.10. Guaranty Matters. Each of the Lenders (including in its capacities as a potential Cash
Management Bank and a potential Hedge Bank) and the L/C Issuer irrevocably authorize the
Administrative Agent, at its option and in its discretion, to release any Guarantor from its
obligations under the Guaranty if such Person ceases to be a Subsidiary as a result of a
transaction permitted hereunder.



     Upon request by the Administrative Agent at any time, the Required Lenders will confirm in
writing the Administrative Agent’s authority to release any Guarantor from its obligations under
the Guaranty pursuant to this Section 9.10.



     9.11. Guaranteed Cash Management Agreements and Guaranteed Hedge Agreements. Except as
otherwise expressly set forth herein, no Cash Management Bank or Hedge Bank that obtains the
benefits of Section 8.03 or the Guaranty shall have any right to notice of any action or to consent
to, direct or object to any action hereunder or under any other Loan Document other than in its
capacity as a Lender and, in such case, only to the extent expressly provided in the Loan
Documents. Notwithstanding any other provision of this Section 9 to the contrary, the
Administrative Agent shall not be required to verify the payment of, or that other satisfactory
arrangements have been made with respect to, Obligations arising under Guaranteed Cash Management
Agreements and Guaranteed Hedge Agreements unless the Administrative Agent has received written
notice of such Obligations, together with such supporting documentation as the Administrative Agent
may request, from the applicable Cash Management Bank or Hedge Bank, as the case may be.



10. CONTINUING GUARANTY




     10.01. Guaranty. Each Guarantor hereby absolutely and unconditionally guarantees, as a guaranty of
payment and performance and not merely as a guaranty of collection, prompt payment when due,
whether at stated maturity, by required prepayment, upon acceleration, demand or otherwise, and at
all times thereafter, of any and all of the Obligations, whether for principal, interest, premiums,
fees, indemnities, damages, costs, expenses or otherwise, of the Borrower to the Guaranteed
Parties, and whether arising hereunder or under any other Loan Document, any Guaranteed Cash
Management Agreement or any Guaranteed Hedge Agreement (including all renewals, extensions,
amendments, refinancings and other modifications thereof and all costs, attorneys’ fees and
expenses incurred by the Guaranteed Parties in connection with the collection or enforcement
thereof). The Administrative Agent’s books and records showing the amount of the Obligations shall
be admissible in evidence in any action or proceeding, and shall be binding upon the Guarantors,
and conclusive for the purpose of establishing the amount of the Obligations. This Guaranty shall
not be affected by the genuineness, validity, regularity or



83









 







enforceability of the Obligations or any instrument or agreement evidencing any Obligations, or by
the existence, validity, enforceability, perfection, non-perfection or extent of any collateral
therefor, or by any fact or circumstance relating to the Obligations which might otherwise
constitute a defense to the obligations of any Guarantor under this Guaranty, and each Guarantor
hereby irrevocably waives any defenses it may now have or hereafter acquire in any way relating to
any or all of the foregoing.



     10.02. Rights of Lenders. Each Guarantor consents and agrees that the Guaranteed Parties may, at
any time and from time to time, without notice or demand, and without affecting the enforceability
or continuing effectiveness hereof: (a) amend, extend, renew, compromise, discharge, accelerate or
otherwise change the time for payment or the terms of the Obligations or any part thereof; (b)
take, hold, exchange, enforce, waive, release, fail to perfect, sell, or otherwise dispose of any
security for the payment of this Guaranty or any Obligations; (c) apply such security and direct
the order or manner of sale thereof as the Administrative Agent, the L/C Issuer and the Lenders in
their sole discretion may determine; and (d) release or substitute one or more of any endorsers or
other guarantors of any of the Obligations. Without limiting the generality of the foregoing, each
Guarantor consents to the taking of, or failure to take, any action which might in any manner or to
any extent vary the risks of such Guarantor under this Guaranty or which, but for this provision,
might operate as a discharge of such Guarantor.



     10.03. Certain Waivers. Each Guarantor waives (a) any defense arising by reason of any disability
or other defense of the Borrower or any other guarantor, or the cessation from any cause whatsoever
(including any act or omission of any Guaranteed Party) of the liability of the Borrower; (b) any
defense based on any claim that any Guarantor’s obligations exceed or are more burdensome than
those of the Borrower; (c) the benefit of any statute of limitations affecting any Guarantor’s
liability hereunder; (d) any right to proceed against the Borrower, proceed against or exhaust any
security for the Obligations, or pursue any other remedy in the power of any Guaranteed Party
whatsoever; and (e) to the fullest extent permitted by law, any and all other defenses or benefits
that may be derived from or afforded by applicable law limiting the liability of or exonerating
guarantors or sureties. Each Guarantor expressly waives all setoffs and counterclaims and all
presentments, demands for payment or performance, notices of nonpayment or nonperformance,
protests, notices of protest, notices of dishonor and all other notices or demands of any kind or
nature whatsoever with respect to the Obligations, and all notices of acceptance of this Guaranty
or of the existence, creation or incurrence of new or additional Obligations.



     10.04. Obligations Independent. The obligations of each Guarantor hereunder are those of primary
obligor, and not merely as surety, and are independent of the Obligations and the obligations of
any other guarantor, and a separate action may be brought against the Guarantors to enforce this
Guaranty whether or not the Borrower or any other person or entity is joined as a party.



     10.05. Subrogation. The Guarantors shall not exercise any right of subrogation, contribution,
indemnity, reimbursement or similar rights with respect to any payments such Guarantor makes under
this Guaranty until all of the Obligations and any amounts payable under this Guaranty have been
indefeasibly paid and performed in full and the Commitments and the Facilities are terminated. If
any amounts are paid to the Guarantors in violation of the foregoing



84









 







limitation, then such amounts shall be held in trust for the benefit of the Guaranteed Parties and
shall forthwith be paid to the Guaranteed Parties to reduce the amount of the Obligations, whether
matured or unmatured.



     10.06. Termination; Reinstatement. This Guaranty is a continuing and irrevocable guaranty of all
Obligations now or hereafter existing and shall remain in full force and effect until all
Obligations and any other amounts payable under this Guaranty are indefeasibly paid in full in cash
and the Commitments and the Facilities with respect to the Obligations are terminated.
Notwithstanding the foregoing, this Guaranty shall continue in full force and effect or be revived,
as the case may be, if any payment by or on behalf of the Borrower or the Guarantors is made, or
any of the Guaranteed Parties exercises its right of setoff, in respect of the Obligations and such
payment or the proceeds of such setoff or any part thereof is subsequently invalidated, declared to
be fraudulent or preferential, set aside or required (including pursuant to any settlement entered
into by any of the Guaranteed Parties in their discretion) to be repaid to a trustee, receiver or
any other party, in connection with any proceeding under any Debtor Relief Laws or otherwise, all
as if such payment had not been made or such setoff had not occurred and whether or not the
Guaranteed Parties are in possession of or have released this Guaranty and regardless of any prior
revocation, rescission, termination or reduction. The obligations of the Guarantors under this
paragraph shall survive termination of this Guaranty.



     10.07. Subordination. Each Guarantor hereby subordinates the payment of all obligations and
indebtedness of the Borrower owing to such Guarantor, whether now existing or hereafter arising,
including but not limited to any obligation of the Borrower to such Guarantor as subrogee of the
Guaranteed Parties or resulting from such Guarantor’s performance under this Guaranty, to the
indefeasible payment in full in cash of all Obligations. If the Guaranteed Parties so request, any
such obligation or indebtedness of the Borrower to the Guarantors shall be enforced and performance
received by the Guarantors as trustee for the Guaranteed Parties and the proceeds thereof shall be
paid over to the Guaranteed Parties on account of the Obligations, but without reducing or
affecting in any manner the liability of any Guarantor under this Guaranty.



     10.08. Stay of Acceleration. If acceleration of the time for payment of any of the Obligations is
stayed, in connection with any case commenced by or against any Guarantor or the Borrower under any
Debtor Relief Laws, or otherwise, all such amounts shall nonetheless be payable by such Guarantor
immediately upon demand by the Guaranteed Parties.



     10.09. Condition of Borrower. Each Guarantor acknowledges and agrees that it has the sole
responsibility for, and has adequate means of, obtaining from the Borrower and any other guarantor
such information concerning the financial condition, business and operations of the Borrower and
any such other guarantor as each Guarantor requires, and that none of the Guaranteed Parties has
any duty, and no Guarantor is relying on the Guaranteed Parties at any time, to disclose to such
Guarantor any information relating to the business, operations or financial condition of the
Borrower or any other guarantor (each Guarantor waiving any duty on the part of the Administrative
Agent to disclose such information and any defense relating to the failure to provide the same).




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11. MISCELLANEOUS




     11.01. Amendments, Etc. No amendment or waiver of any provision of this Agreement or any other
Loan Document, and no consent to any departure by the Borrower or any other Loan Party therefrom,
shall be effective unless in writing signed by the Required Lenders and the Borrower or the
applicable Loan Party, as the case may be, and acknowledged by the Administrative Agent, and each
such waiver or consent shall be effective only in the specific instance and for the specific
purpose for which given; provided, however, that no such amendment, waiver or
consent shall:




     (a) waive any condition set forth in Section 4.01 (other than Section 4.01(b)(i) or
(c)), or, in the case of the initial Credit Extension, Section 4.02, without the written
consent of each Lender;




     (b) without limiting the generality of clause (a) above, waive any condition set forth
in Section 4.02 as to any Credit Extension under a particular Facility without the written
consent of the Required Revolving Lenders or the Required Term Loan Lenders, as the case may
be;




     (c) extend or increase the Commitment of any Lender (or reinstate any Commitment
terminated pursuant to Section 8.02) without the written consent of such Lender;




     (d) postpone any date fixed by this Agreement or any other Loan Document for (i) any
payment (excluding mandatory prepayments) of principal, interest, fees or other amounts due
to the Lenders (or any of them) hereunder or under such other Loan Document without the
written consent of each Lender entitled to such payment or (ii) any scheduled reduction of
any Facility hereunder or under any other Loan Document without the written consent of each
Appropriate Lender;




     (e) reduce the principal of, or the rate of interest specified herein on, any Loan or
L/C Borrowing, or (subject to clause (iii) of the second proviso to this Section 11.01) any
fees or other amounts payable hereunder or under any other Loan Document, or change the
definition or manner of computation of the Consolidated Leverage Ratio (including any change
in any applicable defined term) used in determining the Applicable Rate and the Applicable
Fee Rate that would result in a reduction of any interest rate on any Loan or any fee
payable hereunder without the written consent of each Lender entitled to such amount;
provided, however, that only the consent of the Required Lenders shall be
necessary (i) to amend the definition of “Default Rate” or to waive any obligation of the
Borrower to pay interest or Letter of Credit Fees at the Default Rate or (ii) to amend any
financial covenant hereunder (or any defined term used therein) so long as the effect of
such amendment would not be to reduce the rate of interest on any Loan or L/C Borrowing or
to reduce any fee payable hereunder;




     (f) change (i) Section 8.03 in a manner that would alter the pro rata sharing of
payments required thereby without the written consent of each Lender, (ii) Section 2.12 in a
manner that would alter how payments received by a Lender from the exercise of any



86









 







right of setoff or counterclaim or otherwise are shared among all other Lenders without
the written consent of each Lender, or (iii) the order of application of any reduction in
the Commitments or any prepayment of Loans among the Facilities from the application thereof
set forth in the applicable provisions of Section 2.04(b) or 2.05(c), respectively, in any
manner that materially and adversely affects the Lenders under a Facility without the
written consent of (i) if such Facility is the Term Loan Facility, the Required Term Loan
Lenders and (ii) if such Facility is the Revolving Credit Facility, the Required Revolving
Lenders;




     (g) change (i) any provision of this Section 11.01 or the definition of “Required
Lenders” or any other provision hereof specifying the number or percentage of Lenders
required to amend, waive or otherwise modify any rights hereunder or make any determination
or grant any consent hereunder (other than the definitions specified in clause (ii) of this
Section 11.01(g)), without the written consent of each Lender or (ii) the definition of
“Required Revolving Lenders” or “Required Term Loan Lenders,” without the written consent of
each Lender under the applicable Facility;




     (h) release all or substantially all of the value of the Guaranty, without the written
consent of each Lender, except to the extent the release of any Subsidiary from the Guaranty
is permitted pursuant to Section 9.10 (in which case such release may be made by the
Administrative Agent acting alone); or




     (i) impose any greater restriction on the ability of any Lender under a Facility to
assign any of its rights or obligations hereunder without the written consent of (i) if such
Facility is the Term Loan Facility, the Required Term Loan Lenders and (ii) if such Facility
is the Revolving Credit Facility, the Required Revolving Lenders;


and provided, further, that (i) no amendment, waiver or consent shall, unless in
writing and signed by the L/C Issuer in addition to the Lenders required above, affect the rights
or duties of the L/C Issuer under this Agreement or any Issuer Document relating to any Letter of
Credit issued or to be issued by it; (ii) no amendment, waiver or consent shall, unless in writing
and signed by the Administrative Agent in addition to the Lenders required above, affect the rights
or duties of the Administrative Agent under this Agreement or any other Loan Document; and (iii)
the Fee Letter may be amended, or rights or privileges thereunder waived, in a writing executed
only by the parties thereto. Notwithstanding anything to the contrary herein, no Defaulting Lender
shall have any right to approve or disapprove any amendment, waiver or consent hereunder, except
that the Commitment of such Lender may not be increased or extended without the consent of such
Lender.




     11.02. Notices; Effectiveness; Electronic Communications.




     (a) Notices Generally. Except in the case of notices and other communications
expressly permitted to be given by telephone (and except as provided in subsection (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 telecopier as follows, and all notices and other



87









 







communications expressly permitted hereunder to be given by telephone shall be made to
the applicable telephone number, as follows:




     (i) if to the Borrower, the Guarantors, the Administrative Agent or the L/C
Issuer, to the address, telecopier number, electronic mail address or telephone
number specified for such Person on Schedule 11.02; and




     (ii) if to any other Lender, to the address, telecopier number, electronic mail
address or telephone number specified in its Administrative Questionnaire.


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





     (b) Electronic Communications. Notices and other communications to the Lenders
and the L/C Issuer hereunder may be delivered or furnished by electronic communication
(including e-mail and Internet or intranet websites) pursuant to procedures approved by the
Administrative Agent, provided that the foregoing shall not apply to notices to any
Lender or the L/C Issuer pursuant to Section 2 if such Lender or the L/C Issuer, as
applicable, has notified the Administrative Agent that it is incapable of receiving notices
under such Section by electronic communication. The Administrative 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 Administrative 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), provided that if such notice 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, and (ii) notices or communications posted to an Internet or intranet website
shall be deemed received upon the deemed receipt by the intended recipient at its e-mail address as
described in the foregoing clause (i) of notification that such notice or communication is
available and identifying the website address therefor.




     (c) The Platform. THE PLATFORM IS PROVIDED “AS IS” AND “AS AVAILABLE.” THE
AGENT PARTIES (AS DEFINED BELOW) DO NOT WARRANT THE ACCURACY OR COMPLETENESS OF THE BORROWER
MATERIALS OR THE ADEQUACY OF THE PLATFORM, AND EXPRESSLY DISCLAIM LIABILITY FOR ERRORS IN OR
OMISSIONS FROM THE BORROWER MATERIALS. NO WARRANTY OF ANY KIND, EXPRESS, IMPLIED



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OR STATUTORY, INCLUDING 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 BORROWER MATERIALS OR THE
PLATFORM. In no event shall the Administrative Agent or any of its Related Parties
(collectively, the “Agent Parties”) have any liability to the Borrower, any Lender, the L/C
Issuer or any other Person for losses, claims, damages, liabilities or expenses of any kind
(whether in tort, contract or otherwise) arising out of the Borrower’s or the Administrative
Agent’s transmission of Borrower Materials through the Internet, except to the extent that
such losses, claims, damages, liabilities or expenses are determined by a court of competent
jurisdiction by a final and nonappealable judgment to have resulted from the gross
negligence or willful misconduct of such Agent Party; provided, however,
that in no event shall any Agent Party have any liability to the Borrower, any Lender, the
L/C Issuer or any other Person for indirect, special, incidental, consequential or punitive
damages (as opposed to direct or actual damages).




     (d) Change of Address, Etc. Each of the Borrower, the Guarantors, the
Administrative Agent and the L/C Issuer may change its address, telecopier or telephone
number for notices and other communications hereunder by notice to the other parties hereto.
Each other Lender may change its address, telecopier or telephone number for notices and
other communications hereunder by notice to the Borrower, the Administrative Agent and the
L/C Issuer. In addition, each Lender agrees to notify the Administrative Agent from time to
time to ensure that the Administrative Agent has on record (i) an effective address, contact
name, telephone number, telecopier number and electronic mail address to which notices and
other communications may be sent and (ii) accurate wire instructions for such Lender.
Furthermore, each Public Lender agrees to cause at least one individual at or on behalf of
such Public Lender to at all times have selected the “Private Side Information” or similar
designation on the content declaration screen of the Platform in order to enable such Public
Lender or its delegate, in accordance with such Public Lender’s compliance procedures and
applicable Law, including United States Federal and state securities Laws, to make reference
to Borrower Materials that are not made available through the “Public Side Information”
portion of the Platform and that may contain material non-public information with respect to
the Borrower or its securities for purposes of United States Federal or state securities
laws.




     (e) Reliance by Administrative Agent, L/C Issuer and Lenders. The
Administrative Agent, the L/C Issuer and the Lenders shall be entitled to rely and act upon
any notices (including telephonic Committed Loan Notices) purportedly given by or on behalf
of the Borrower even if (i) such notices were not made in a manner specified herein, were
incomplete or were not preceded or followed by any other form of notice specified herein, or
(ii) the terms thereof, as understood by the recipient, varied from any confirmation
thereof. The Borrower shall indemnify the Administrative Agent, the L/C Issuer, each Lender
and the Related Parties of each of them from all losses, costs, expenses and liabilities
resulting from the reliance by such Person on each notice purportedly given by or on behalf
of the Borrower. All telephonic notices to and other



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telephonic communications with the Administrative Agent may be recorded by the
Administrative Agent, and each of the parties hereto hereby consents to such recording.



     11.03. No Waiver; Cumulative Remedies; Enforcement. No failure by any Lender, the L/C Issuer or
the Administrative Agent to exercise, and no delay by any such Person in exercising, any right,
remedy, power or privilege hereunder or under any other Loan Document shall operate as a waiver
thereof; nor shall any single or partial exercise of any right, remedy, power or privilege
hereunder preclude any other or further exercise thereof or the exercise of any other right,
remedy, power or privilege. The rights, remedies, powers and privileges herein provided, and
provided under each other Loan Document, are cumulative and not exclusive of any rights, remedies,
powers and privileges provided by law.



     Notwithstanding anything to the contrary contained herein or in any other Loan Document, the
authority to enforce rights and remedies hereunder and under the other Loan Documents against the
Loan Parties or any of them shall be vested exclusively in, and all actions and proceedings at law
in connection with such enforcement shall be instituted and maintained exclusively by, the
Administrative Agent in accordance with Section 8.02 for the benefit of all the Lenders and the L/C
Issuer; provided, however, that the foregoing shall not prohibit (a) the
Administrative Agent from exercising on its own behalf the rights and remedies that inure to its
benefit (solely in its capacity as Administrative Agent) hereunder and under the other Loan
Documents, (b) the L/C Issuer from exercising the rights and remedies that inure to its benefit
(solely in its capacity as L/C Issuer) hereunder and under the other Loan Documents, (c) any Lender
from exercising setoff rights in accordance with Section 11.08 (subject to the terms of Section
2.12), or (d) any Lender from filing proofs of claim or appearing and filing pleadings on its own
behalf during the pendency of a proceeding relative to any Loan Party under any Debtor Relief Law;
and provided, further, that if at any time there is no Person acting as
Administrative Agent hereunder and under the other Loan Documents, then (i) the Required Lenders
shall have the rights otherwise ascribed to the Administrative Agent pursuant to Section 8.02 and
(ii) in addition to the matters set forth in clauses (b), (c) and (d) of the preceding proviso and
subject to Section 2.12, any Lender may, with the consent of the Required Lenders, enforce any
rights and remedies available to it and as authorized by the Required Lenders.



     11.04. Expenses; Indemnity; Damage Waiver.




     (a) Costs and Expenses. The Borrower shall pay (i) all reasonable
out-of-pocket expenses incurred by the Administrative Agent and its Affiliates (including
the reasonable fees, charges and disbursements of counsel for the Administrative Agent), in
connection with the syndication of the credit facilities provided for herein, the
preparation, negotiation, execution, delivery and administration of this Agreement and the
other Loan Documents or any amendments, modifications or waivers of the provisions hereof or
thereof (whether or not the transactions contemplated hereby or thereby shall be
consummated), (ii) all reasonable out-of-pocket expenses incurred by the L/C Issuer in
connection with the issuance, amendment, renewal or extension of any Letter of Credit or any
demand for payment thereunder and (iii) all reasonable out-of-pocket expenses incurred by
the Administrative Agent, any Lender or the L/C Issuer (including the fees, charges and
disbursements of any counsel for the Administrative Agent, any Lender or the L/C Issuer),
and shall pay all reasonable fees



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and time charges for attorneys who may be employees of the Administrative Agent, any
Lender or the L/C Issuer, in connection with the enforcement or protection of its rights (A)
in connection with this Agreement and the other Loan Documents, including its rights under
this Section, or (B) in connection with Loans made or Letters of Credit issued hereunder,
including all such out-of-pocket expenses incurred during any workout, restructuring or
negotiations in respect of such Loans or Letters of Credit.




     (b) Indemnification by the Borrower. The Borrower shall indemnify the
Administrative Agent (and any sub-agent thereof), each Lender and the L/C Issuer, and each
Related Party of any of the foregoing Persons (each such Person being called an
“Indemnitee”) against, and hold each Indemnitee harmless from, any and all losses, claims,
damages, liabilities and related expenses (including the fees, charges and disbursements of
any counsel for any Indemnitee), and shall indemnify and hold harmless each Indemnitee from
all fees and time charges and disbursements for attorneys who may be employees of any
Indemnitee, incurred by any Indemnitee or asserted against any Indemnitee by any third party
or by the Borrower or any other Loan Party arising out of, in connection with, or as a
result of (i) the execution or delivery of this Agreement, any other Loan Document or any
agreement or instrument contemplated hereby or thereby, the performance by the parties
hereto of their respective obligations hereunder or thereunder or the consummation of the
transactions contemplated hereby or thereby, or, in the case of the Administrative Agent
(and any sub-agent thereof) and its Related Parties only, the administration of this
Agreement and the other Loan Documents, (ii) any Loan or Letter of Credit or the use or
proposed use of the proceeds therefrom (including any refusal by the L/C Issuer to honor a
demand for payment under a Letter of Credit if the documents presented in connection with
such demand do not strictly comply with the terms of such Letter of Credit), (iii) any
actual or alleged presence or release of Hazardous Materials on or from any property owned
or operated by the Borrower or any of its Subsidiaries, or any Environmental Liability
related in any way to the Borrower or any of its Subsidiaries, or (iv) any actual or
prospective claim, litigation, investigation or proceeding relating to any of the foregoing,
whether based on contract, tort or any other theory, whether brought by a third party or by
the Borrower or any other Loan Party, and regardless of whether any Indemnitee is a party
thereto; provided that such indemnity shall not, as to any Indemnitee, be available
to the extent that such losses, claims, damages, liabilities or related expenses (x) are
determined by a court of competent jurisdiction by final judgment to have resulted from the
gross negligence or willful misconduct of such Indemnitee or (y) result from a claim brought
by the Borrower or any other Loan Party against an Indemnitee for breach in bad faith of
such Indemnitee’s obligations hereunder or under any other Loan Document, if the Borrower or
such Loan Party has obtained a final judgment in its favor on such claim as determined by a
court of competent jurisdiction.




     (c) Reimbursement by Lenders. To the extent that the Borrower for any reason
fails to indefeasibly pay any amount required under subsection (a) or (b) of this Section to
be paid by it to the Administrative Agent (or any sub-agent thereof), the L/C Issuer or any
Related Party of any of the foregoing, each Lender severally agrees to pay to the
Administrative Agent (or any such sub-agent), the L/C Issuer or such Related Party, as the
case may be, such Lender’s Applicable Percentage (determined as of the



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time that the applicable unreimbursed expense or indemnity payment is sought) of such
unpaid amount, provided that the unreimbursed expense or indemnified loss, claim,
damage, liability or related expense, as the case may be, was incurred by or asserted
against the Administrative Agent (or any such sub-agent) or the L/C Issuer in its capacity
as such, or against any Related Party of any of the foregoing acting for the Administrative
Agent (or any such sub-agent) or L/C Issuer in connection with such capacity. The
obligations of the Lenders under this subsection (c) are subject to the provisions of
Section 2.11(d).




     (d) Waiver of Consequential Damages, Etc. To the fullest extent permitted by
applicable law, the Borrower shall not assert, and hereby waives, any claim against any
Indemnitee, on any theory of liability, for special, indirect, consequential or punitive
damages (as opposed to direct or actual damages) arising out of, in connection with, or as a
result of, this Agreement, any other Loan Document or any agreement or instrument
contemplated hereby, the transactions contemplated hereby or thereby, any Loan or Letter of
Credit or the use of the proceeds thereof. No Indemnitee referred to in subsection (b)
above shall be liable for any damages arising from the use by unintended recipients of any
information or other materials distributed to such unintended recipients by such Indemnitee
through telecommunications, electronic or other information transmission systems in
connection with this Agreement or the other Loan Documents or the transactions contemplated
hereby or thereby other than for direct or actual damages resulting from the gross
negligence or willful misconduct of such Indemnitee as determined by a final judgment of a
court of competent jurisdiction.




     (e) Payments. All amounts due under this Section shall be payable not later
than ten Business Days after demand therefor.




     (f) Survival. The agreements in this Section shall survive the resignation of
the Administrative Agent and the L/C Issuer, the replacement of any Lender, the termination
of the Aggregate Commitments and the repayment, satisfaction or discharge of all the other
Obligations.



     11.05. Payments Set Aside. To the extent that any payment by or on behalf of the Borrower is made
to the Administrative Agent, the L/C Issuer or any Lender, or the Administrative Agent, the L/C
Issuer or any Lender exercises its right of setoff, and such payment or the proceeds of such setoff
or any part thereof is subsequently invalidated, declared to be fraudulent or preferential, set
aside or required (including pursuant to any settlement entered into by the Administrative Agent,
the L/C Issuer or such Lender in its discretion) to be repaid to a trustee, receiver or any other
party, in connection with any proceeding under any Debtor Relief Law or otherwise, then (a) to the
extent of such recovery, the obligation or part thereof originally intended to be satisfied shall
be revived and continued in full force and effect as if such payment had not been made or such
setoff had not occurred, and (b) each Lender and the L/C Issuer severally agrees to pay to the
Administrative Agent upon demand its applicable share (without duplication) of any amount so
recovered from or repaid by the Administrative Agent, plus interest thereon from the date
of such demand to the date such payment is made at a rate per annum equal to the Federal Funds Rate
from time to time in effect. The obligations of



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the Lenders and the L/C Issuer under clause (b) of the preceding sentence shall survive the payment
in full of the Obligations and the termination of this Agreement.



     11.06. Successors and Assigns.




     (a) Successors and Assigns Generally. The provisions of this Agreement shall
be binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns permitted hereby, except that neither the Borrower nor any other Loan
Party may assign or otherwise transfer any of its rights or obligations hereunder without
the prior written consent of the Administrative Agent and each Lender and 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 Section 11.06(b), (ii) by way of participation
in accordance with the provisions of Section 11.06(d), or (iii) by way of pledge or
assignment of a security interest subject to the restrictions of Section 11.06(f) (and any
other attempted assignment or transfer by any party hereto 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 subsection (d) of this Section and, to the extent
expressly contemplated hereby, the Related Parties of each of the Administrative Agent, the
L/C Issuer 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(s) and the Loans (including for purposes of this Section
11.06(b), participations in L/C Obligations) 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 under any Facility and the Loans at the time
owing to it under such Facility 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 subsection (b)(i)(A) of this Section,
the aggregate amount of the Commitment (which for this purpose includes
Loans outstanding thereunder) or, if the Commitment is not then in effect,
the principal outstanding balance of the Loans 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
Administrative Agent or, if “Trade Date” is specified in the Assignment and
Assumption, as of the Trade Date, shall not be less than $5,000,000, in the
case of any assignment in respect of the Revolving Credit Facility, or
$1,000,000, in the case of any assignment in respect of the Term Loan
Facility, unless each of the Administrative Agent and, so



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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); provided, however, that concurrent
assignments to members of an Assignee Group and concurrent assignments from
members of an Assignee Group to a single Eligible Assignee (or to an
Eligible Assignee and members of its Assignee Group) will be treated as a
single assignment for purposes of determining whether such minimum amount
has been met;




     (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 Loans or the Commitment
assigned, except that this clause (ii) shall not prohibit any Lender from assigning
all or a portion of its rights and obligations among separate Facilities on a
non-pro rata basis;




     (iii) Required Consents. No consent shall be required for any
assignment except to the extent required by subsection (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 (1) an Event of Default has
occurred and is continuing at the time of such assignment or (2) such
assignment is to a Lender, an Affiliate of a Lender or an Approved Fund;




     (B) the consent of the Administrative Agent (such consent not to be
unreasonably withheld or delayed) shall be required for assignments in
respect of (1) any Term Loan Commitment or Revolving Credit Commitment if
such assignment is to a Person that is not a Lender with a Commitment in
respect of the applicable Facility, an Affiliate of such Lender or an
Approved Fund with respect to such Lender or (2) any Term Loan to a Person
that is not a Lender, an Affiliate of a Lender or an Approved Fund; and




     (C) the consent of the L/C Issuer (such consent not to be unreasonably
withheld or delayed) shall be required for any assignment that increases the
obligation of the assignee to participate in exposure under one or more
Letters of Credit (whether or not then outstanding).




     (iv) Assignment and Assumption. The parties to each assignment shall
execute and deliver to the Administrative Agent an Assignment and Assumption,
together with a processing and recordation fee in the amount of $3,500;
provided, however, that the Administrative 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
Administrative Agent an Administrative Questionnaire.



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     (v) No Assignment to Borrower. No such assignment shall be made to the
Borrower or any of the Borrower’s Affiliates or Subsidiaries.




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


Subject to acceptance and recording thereof by the Administrative Agent pursuant to subsection (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 3.01, 3.04, 3.05 and 11.04 with respect to facts and
circumstances occurring prior to the effective date of such assignment. Upon request, the Borrower
(at its expense) shall execute and deliver a Note to the assignee Lender. Any assignment or
transfer by a Lender of rights or obligations under this Agreement that does not comply with this
subsection 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 Section 11.06(d).





     (c) Register. The Administrative Agent, acting solely for this purpose as an
agent of the Borrower, shall maintain at the Administrative Agent’s Office a copy of each
Assignment and Assumption delivered to it and a register for the recordation of the names
and addresses of the Lenders, and the Commitments of, and principal amounts of the Loans and
L/C Obligations owing to, each Lender pursuant to the terms hereof from time to time (the
“Register”). The entries in the Register shall be conclusive, and the Borrower, the
Administrative Agent and the Lenders may treat each Person whose name is recorded in the
Register pursuant to the terms hereof as a Lender hereunder for all purposes of this
Agreement, notwithstanding notice to the contrary. The Register shall be available for
inspection by the Borrower and 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 Administrative Agent, sell participations to any Person
(other than a natural person or the Borrower or any of the Borrower’s Affiliates or
Subsidiaries) (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
Loans (including such Lender’s participations in L/C Obligations) 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 Administrative Agent, the
Lenders and the L/C Issuer shall continue to deal solely and directly with such Lender in
connection with such Lender’s rights and obligations under this Agreement. Any agreement or
instrument pursuant to which a Lender sells such a participation shall provide that such
Lender shall retain the sole right to enforce this Agreement and to approve any amendment,



95









 







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, waiver or other modification described in the first
proviso to Section 11.01 that affects such Participant. Subject to subsection (e) of this
Section, the Borrower agrees that each Participant shall be entitled to the benefits of
Sections 3.01, 3.04 and 3.05 to the same extent as if it were a Lender and had acquired its
interest by assignment pursuant to Section 11.06(b). To the extent permitted by law, each
Participant also shall be entitled to the benefits of Section 11.08 as though it were a
Lender, provided such Participant agrees to be subject to Section 2.12 as though it
were a Lender.




     (e) Limitations upon Participant Rights. A Participant shall not be entitled
to receive any greater payment under Section 3.01 or 3.04 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 3.01 unless the Borrower is notified of the
participation sold to such Participant and such Participant agrees, for the benefit of the
Borrower, to comply with Section 3.01(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 (including under its Note,
if any) to secure obligations of such Lender, including any pledge or assignment to secure
obligations to a Federal Reserve Bank; 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) Resignation as L/C Issuer after Assignment. Notwithstanding anything to
the contrary contained herein, if at any time Bank of America assigns all of its Revolving
Credit Commitment and Revolving Credit Loans pursuant to Section 11.06(b), Bank of America
may, upon 30 days’ notice to the Borrower and the Lenders, resign as L/C Issuer. In the
event of any such resignation as L/C Issuer, the Borrower shall be entitled to appoint from
among the Lenders a successor L/C Issuer hereunder; provided, however, that
no failure by the Borrower to appoint any such successor shall affect the resignation of
Bank of America as L/C Issuer. If Bank of America resigns as L/C Issuer, it shall retain
all the rights, powers, privileges and duties of the L/C Issuer hereunder with respect to
all Letters of Credit outstanding as of the effective date of its resignation as L/C Issuer
and all L/C Obligations with respect thereto (including the right to require the Lenders to
make Base Rate Loans or fund risk participations in Unreimbursed Amounts pursuant to Section
2.03(c)). Upon the appointment of a successor L/C Issuer, (a) such successor shall succeed
to and become vested with all of the rights, powers, privileges and duties of the retiring
L/C Issuer, and (b) the successor L/C Issuer shall issue letters of credit in substitution
for the Letters of Credit, if any, outstanding at the time of such succession or make other
arrangements satisfactory to Bank of America to effectively assume the obligations of Bank
of America with respect to such Letters of Credit.



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     11.07. Treatment of Certain Information; Confidentiality. Each of the Administrative Agent, the
Lenders and the L/C Issuer agrees to maintain the confidentiality of the Information (as defined
below), except that Information may be disclosed (a) to its Affiliates and to its and its
Affiliates’ respective partners, directors, officers, employees, agents, trustees, advisors and
representatives (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), (b) to the extent requested by any Supervisory Authority or other regulatory
authority purporting to have jurisdiction over it (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 hereto, (e) in
connection with the exercise of any remedies hereunder or under any other Loan Document or any
action or proceeding relating to this Agreement or any other Loan Document or the enforcement of
rights hereunder or thereunder, (f) subject to an agreement containing provisions substantially the
same as those of this Section, to (i) any assignee of or Participant in, or any prospective
assignee of or Participant in, any of its rights or obligations under this Agreement or any
Eligible Assignee invited to be a Lender pursuant to Section 2.13(c) or (ii) any actual or
prospective counterparty (or its advisors) to any swap or derivative transaction relating to the
Borrower and its obligations, (g) with the consent of the Borrower or (h) to the extent such
Information (i) becomes publicly available other than as a result of a breach of this Section or
(ii) becomes available to the Administrative Agent, any Lender, the L/C Issuer 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 any Loan Party
or any Subsidiary thereof relating to any Loan Party or any Subsidiary thereof or their respective
businesses, other than any such information that is available to the Administrative Agent, any
Lender or the L/C Issuer on a nonconfidential basis prior to disclosure by any Loan Party or any
Subsidiary thereof, provided that, in the case of information received from a Loan Party or
any such Subsidiary after the date hereof, such information is clearly identified at the time of
delivery as confidential. Any Person required to maintain the confidentiality of Information as
provided in this Section 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.



     Each of the Administrative Agent, the Lenders and the L/C Issuer acknowledges that (a) the
Information may include material non-public information concerning the Borrower or a Subsidiary, as
the case may be, (b) it has developed compliance procedures regarding the use of material
non-public information and (c) it will handle such material non-public information in accordance
with applicable Law, including United States Federal and state securities Laws.



     11.08. Right of Setoff. If an Event of Default shall have occurred and be continuing, each Lender,
the L/C Issuer and each of their respective Affiliates is hereby authorized at any time and from
time to time, to the fullest extent permitted by applicable law, to set off and apply any and all
deposits (general or special, time or demand, provisional or final, in whatever currency) at any
time held and other obligations (in whatever currency) at any time owing by such Lender, the L/C
Issuer or any such Affiliate to or for the credit or the account of the



97









 







Borrower or any other Loan Party against any and all of the obligations of the Borrower or such
Loan Party now or hereafter existing under this Agreement or any other Loan Document to such Lender
or the L/C Issuer, irrespective of whether or not such Lender or the L/C Issuer shall have made any
demand under this Agreement or any other Loan Document and although such obligations of the
Borrower or such Loan Party may be contingent or unmatured or are owed to a branch or office of
such Lender or the L/C Issuer different from the branch or office holding such deposit or obligated
on such indebtedness. The rights of each Lender, the L/C Issuer and their respective Affiliates
under this Section are in addition to other rights and remedies (including other rights of setoff)
that such Lender, the L/C Issuer or their respective Affiliates may have. Each Lender and the L/C
Issuer agrees to notify the Borrower and the Administrative Agent promptly after any such setoff
and application, provided that the failure to give such notice shall not affect the
validity of such setoff and application.



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



     11.10. Counterparts; Integration; Effectiveness. This Agreement may be executed in counterparts
(and by different parties hereto in different counterparts), each of which shall constitute an
original, but all of which when taken together shall constitute a single contract. This Agreement
and the other Loan Documents constitute the entire contract among the parties relating to the
subject matter hereof and supersede any and all previous agreements and understandings, oral or
written, relating to the subject matter hereof. Except as provided in Section 4.01, this Agreement
shall become effective when it shall have been executed by the Administrative Agent and when the
Administrative Agent shall have received counterparts hereof that, when taken together, bear the
signatures of each of the other parties hereto. Delivery of an executed counterpart of a signature
page of this Agreement by telecopy or other electronic imaging means shall be effective as delivery
of a manually executed counterpart of this Agreement.



     11.11. Survival of Representations and Warranties. All representations and warranties made
hereunder and in any other Loan Document or other document delivered pursuant hereto or thereto or
in connection herewith or therewith shall survive the execution and delivery hereof and thereof.
Such representations and warranties have been or will be relied upon by the Administrative Agent
and each Lender, regardless of any investigation made by the Administrative Agent or any Lender or
on their behalf and notwithstanding that the Administrative Agent or any Lender may have had notice
or knowledge of any Default at the time of any Credit Extension, and shall continue in full force
and effect as long as any Loan or



98









 







any other Obligation hereunder shall remain unpaid or unsatisfied or any Letter of Credit shall
remain outstanding.



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



     11.13. Replacement of Lenders. If any Lender requests compensation under Section 3.04, 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 3.01, if any Lender is a Defaulting Lender or if any
other circumstance exists hereunder that gives the Borrower the right to replace a Lender as a
party hereto, then the Borrower may, at its sole expense and effort, upon notice to such Lender and
the Administrative Agent, require such Lender to assign and delegate, without recourse (in
accordance with and subject to the restrictions contained in, and consents required by, Section
11.06), all of its interests, rights and obligations under this Agreement and the related Loan
Documents to an assignee that shall assume such obligations (which assignee may be another Lender,
if a Lender accepts such assignment), provided that:




     (a) the Borrower shall have paid to the Administrative Agent the assignment fee
specified in Section 11.06(b);




     (b) such Lender shall have received payment of an amount equal to the outstanding
principal of its Loans and L/C Advances, accrued interest thereon, accrued fees and all
other amounts payable to it hereunder and under the other Loan Documents (including any
amounts under Section 3.05) from the assignee (to the extent of such outstanding principal
and accrued interest and fees) or the Borrower (in the case of all other amounts);




     (c) in the case of any such assignment resulting from a claim for compensation under
Section 3.04 or payments required to be made pursuant to Section 3.01, such assignment will
result in a reduction in such compensation or payments thereafter; and




     (d) such assignment does not conflict with applicable Laws.



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



99









 





     11.14. Governing Law; Jurisdiction; Etc.




     (a) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF MICHIGAN.




     (b) SUBMISSION TO JURISDICTION. THE BORROWER AND EACH OTHER LOAN PARTY
IRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR ITSELF AND ITS PROPERTY, TO THE NONEXCLUSIVE
JURISDICTION OF THE COURTS OF THE STATE OF MICHIGAN SITTING IN OAKLAND COUNTY AND OF THE
UNITED STATES DISTRICT COURT OF THE EASTERN DISTRICT OF MICHIGAN, AND ANY APPELLATE COURT
FROM ANY THEREOF, IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT
OR ANY OTHER LOAN DOCUMENT, OR FOR RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND EACH OF
THE PARTIES HERETO IRREVOCABLY AND UNCONDITIONALLY AGREES THAT ALL CLAIMS IN RESPECT OF ANY
SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH MICHIGAN STATE COURT OR, TO
THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, IN SUCH FEDERAL COURT. EACH OF THE PARTIES
HERETO AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND
MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER
PROVIDED BY LAW. NOTHING IN THIS AGREEMENT OR IN ANY OTHER LOAN DOCUMENT SHALL AFFECT ANY
RIGHT THAT THE ADMINISTRATIVE AGENT, ANY LENDER OR THE L/C ISSUER MAY OTHERWISE HAVE TO
BRING ANY ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AGAINST
THE BORROWER OR ANY OTHER LOAN PARTY OR ITS PROPERTIES IN THE COURTS OF ANY JURISDICTION.




     (c) WAIVER OF VENUE. THE BORROWER AND EACH OTHER LOAN PARTY IRREVOCABLY AND
UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY OBJECTION
THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY ACTION OR PROCEEDING ARISING
OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT IN ANY COURT REFERRED TO IN
PARAGRAPH (B) OF THIS SECTION. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, THE DEFENSE OF AN INCONVENIENT FORUM TO THE
MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY SUCH COURT.




     (d) SERVICE OF PROCESS. EACH PARTY HERETO IRREVOCABLY CONSENTS TO SERVICE OF
PROCESS IN THE MANNER PROVIDED FOR NOTICES IN SECTION 11.02. NOTHING IN THIS AGREEMENT WILL
AFFECT THE RIGHT OF ANY PARTY HERETO TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY
APPLICABLE LAW



100









 





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



     11.16. No Advisory or Fiduciary Responsibility. In connection with all aspects of each transaction
contemplated hereby (including in connection with any amendment, waiver or other modification
hereof or of any other Loan Document), each of the Borrower and the other Loan Parties acknowledges
and agrees that: (i)(A) the arranging and other services regarding this Agreement provided by the
Administrative Agent and the Arranger are arm’s-length commercial transactions between the
Borrower, the other Loan Parties and their respective Affiliates, on the one hand, and the
Administrative Agent and the Arranger, on the other hand, (B) each of the Borrower and the other
Loan Parties has consulted its own legal, accounting, regulatory and tax advisors to the extent it
has deemed appropriate, and (C) each of the Borrower and the other Loan Parties is capable of
evaluating, and understands and accepts, the terms, risks and conditions of the transactions
contemplated hereby and by the other Loan Documents; (ii)(A) the Administrative Agent and the
Arranger each is and has been acting solely as a principal and, except as expressly agreed in
writing by the relevant parties, has not been, is not, and will not be acting as an advisor, agent
or fiduciary for the Borrower, the other Loan Parties or any of their respective Affiliates, or any
other Person and (B) neither the Administrative Agent nor the Arranger has any obligation to the
Borrower, the other Loan Parties or any of their respective Affiliates with respect to the
transactions contemplated hereby except those obligations expressly set forth herein and in the
other Loan Documents; and (iii) the Administrative Agent and the Arranger and their respective
Affiliates may be engaged in a broad range of transactions that involve interests that differ from
those of the Borrower, the other Loan Parties and their respective Affiliates, and neither the
Administrative Agent nor the Arranger has any obligation to disclose any of such interests to the
Borrower, the other Loan Parties or any of their respective Affiliates.



     11.17. Electronic Execution of Assignments and Certain Other Documents. The words “execution,”
“signed,” “signature,” and words of like import in any Assignment and Assumption or in any
amendment or other modification hereof (including waivers and consents) shall be deemed to include
electronic signatures or the keeping of records in electronic form, each of which shall be of the
same legal effect, validity or enforceability as a manually executed signature or the use of a
paper-based recordkeeping system, as the case may be, to the extent and as provided for in any
applicable law, including the Federal Electronic Signatures in Global and



101









 







National Commerce Act, the New York State Electronic Signatures and Records Act, or any other
similar state laws based on the Uniform Electronic Transactions Act.



     11.18. USA PATRIOT ACT. EACH LENDER THAT IS SUBJECT TO THE ACT (AS HEREINAFTER DEFINED) AND
THE ADMINISTRATIVE AGENT (FOR ITSELF AND NOT ON BEHALF OF ANY LENDER) HEREBY NOTIFIES THE BORROWER
THAT PURSUANT TO THE REQUIREMENTS OF THE USA PATRIOT ACT (TITLE III OF PUB. L. 107-56 (SIGNED INTO
LAW OCTOBER 26, 2001)) (THE “ACT”), IT IS REQUIRED TO OBTAIN, VERIFY AND RECORD INFORMATION THAT
IDENTIFIES EACH LOAN PARTY, WHICH INFORMATION INCLUDES THE NAME AND ADDRESS OF EACH LOAN PARTY AND
OTHER INFORMATION THAT WILL ALLOW SUCH LENDER OR THE ADMINISTRATIVE AGENT, AS APPLICABLE, TO
IDENTIFY EACH LOAN PARTY IN ACCORDANCE WITH THE ACT. THE BORROWER SHALL, PROMPTLY FOLLOWING A
REQUEST BY THE ADMINISTRATIVE AGENT OR ANY LENDER, PROVIDE ALL DOCUMENTATION AND OTHER INFORMATION
THAT THE ADMINISTRATIVE AGENT OR SUCH LENDER REQUESTS IN ORDER TO COMPLY WITH ITS ONGOING
OBLIGATIONS UNDER APPLICABLE “KNOW YOUR CUSTOMER” AN ANTI-MONEY LAUNDERING RULES AND REGULATIONS,
INCLUDING THE ACT.



     11.19. Entire Agreement. THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT
AMONG THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT
ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES.



Remainder of Page Intentionally Blank

Signature(s) to Follow




102









 





     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of
the date first above written.



	 	 	 	 	 
	 	BORROWER:



MEADOWBROOK INSURANCE GROUP, INC.

 	 
	 	By:   	/s/ Robert S. Cubbin	 
	 	 	Name:  	Robert S. Cubbin	 
	 	 	Title:  	President & CEO	 
	 



	 	 	 	 	 
	 	GUARANTORS:



MEADOWBROOK, INC.

 	 
	 	By:  	/s/
Robert S. Cubbin	 
	 	 	Name:  	Robert S. Cubbin	 
	 	 	Title: 	President & CEO	 
	 



	 	 	 	 	 
	 	CREST FINANCIAL CORPORATION

 	 
	 	By:  	/s/
Michael G. Costello	 
	 	 	Name:  	Michael G. Costello	 
	 	 	Title:  	Sr. Vice President & General Counsel	 



 









 






	 	 	 	 	 



	 	 	 	 	 
	 	BANK OF AMERICA, N.A., as

Administrative Agent

 	 
	 	By:  	/s/
Aamir Saleem	 
	 	 	Name:  	Aamir Saleem	 
	 	 	Title:  	Vice President	 
	 



Signature Page to

Credit Agreements




	 	 	 	 	 



 









 






	 	 	 	 	 
	 	 	 
	 	 	 
	 	 	 
	 	 	 
	 



	 	 	 	 	 
	 	BANK OF AMERICA, N.A., as a Lender, L/C Issuer

 	 
	 	By:  	/s/
Leslie Nannen	 
	 	 	Name:  	Leslie Nannen	 
	 	 	Title:  	Senior Vice President	 
	 



Signature Page to

Credit Agreements




	 	 	 	 	 



 









 





     IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of
the date first above written.



	 	 	 	 	 
	 	KEYBANK NATIONAL ASSOCIATION, as a Lender

 	 
	 	By:  	/s/
Mary K. Young	 
	 	 	Name:  	Mary K. Young	 
	 	 	Title:  	Senior Vice President	 
	 



Signature Page to

Credit Agreements




	 	 	 	 	 



 









 






     IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of
the date first above written.



	 	 	 	 	 
	 	JPMORGAN CHASE BANK, N.A., as a Lender

 	 
	 	By:  	/s/
Karmyn Bradley	 
	 	 	Name:  	Karmyn Bradley	 
	 	 	Title:  	Assistant Vice President	 
	 



Signature Page to

Credit Agreement




	 	 	 	 	 



 









 






     IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of
the date first above written.



	 	 	 	 	 
	 	RBS CITIZENS, NATIONAL
ASSOCIATION, 

D/B/A CHARTER ONE as a Lender

 	 
	 	By:  	/s/
Daniel T. Ruzylo	 
	 	 	Name:  	Daniel T. Ruzylo	 
	 	 	Title:  	Vice President	 
	 



Signature Page to

Credit Agreement



	 	 	 	 	 



 









 






     IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of
the date first above written.



	 	 	 	 	 
	 	U.S. BANK NATIONAL ASSOCIATION, as a Lender

 	 
	 	By:  	/s/
Jeffrey E. Hastings	 
	 	 	Name:  	Jeffrey E. Hastings	 
	 	 	Title:  	Senior Vice President	 
	 



Signature Page to

Credit Agreement




	 	 	 	 	 



 









 





     IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of
the date first above written.



	 	 	 	 	 
	 	THE PRIVATE BANK AND TRUST COMPANY, as a Lender

 	 
	 	By:  	/s/
Laura M. Kalil	 
	 	 	Name:  	Laura M. Kalil	 
	 	 	Title:  	Associate Managing Director	 
	 



Signature Page to

Credit Agreement