exv10w29



 





Exhibit 10.29














CREDIT AGREEMENT




among




AMERUS GROUP CO.,




VARIOUS LENDING INSTITUTIONS,




THE BANK OF NEW YORK,




BANK ONE, NA,




FLEET NATIONAL BANK




and




MELLON BANK, N.A.,




as CO-SYNDICATION AGENTS,




and




JPMORGAN CHASE BANK,

as ADMINISTRATIVE AGENT










Dated as of December 8, 2003










$200,000,000




















J.P. MORGAN SECURITIES INC,

as SOLE LEAD ARRANGER AND SOLE BOOKRUNNER




 









 





TABLE OF CONTENTS




	 	 	 	 	 	 	 
	 	 	 	 	Page

	SECTION 1.
	 	Amount and Terms of Credit	 	 	1	 
	1.01
	 	Commitments	 	 	1	 
	1.02
	 	Minimum Amount of Each Borrowing; Maximum Number of Borrowings	 	 	1	 
	1.03
	 	Notice of Borrowing	 	 	1	 
	1.04
	 	Disbursement of Funds	 	 	2	 
	1.05
	 	Notes	 	 	3	 
	1.06
	 	Conversions	 	 	3	 
	1.07
	 	Pro Rata Borrowings	 	 	4	 
	1.08
	 	Interest	 	 	4	 
	1.09
	 	Interest Periods	 	 	5	 
	1.10
	 	Increased Costs, Illegality, etc.	 	 	5	 
	1.11
	 	Compensation	 	 	7	 
	1.12
	 	Change of Lending Office	 	 	8	 
	 
	 	1A.01 Letters of Credit	 	 	8	 
	 
	 	1A.02 Letter of Credit Requests	 	 	9	 
	 
	 	1A.03 Agreement to Repay Letter of Credit Drawings	 	 	10	 
	 
	 	1A.05 Increased Costs	 	 	12	 
	 
	 	1A.06 Letter of Credit Expiration Extensions	 	 	13	 
	 
	 	1A.07 Changes to Stated Amount	 	 	13	 
	SECTION 2.
	 	Fees; Commitments	 	 	14	 
	2.01
	 	Fees	 	 	14	 
	2.02
	 	Voluntary Reduction of Commitments	 	 	14	 
	2.03
	 	Mandatory Reduction of Commitments	 	 	15	 
	SECTION 3.
	 	Payments	 	 	15	 
	3.01
	 	Voluntary Prepayments	 	 	15	 
	3.02
	 	Mandatory Repayments	 	 	15	 
	3.03
	 	Method and Place of Payment	 	 	16	 
	3.04
	 	Net Payments	 	 	16	 
	SECTION 4.
	 	Conditions Precedent	 	 	18	 
	4.01
	 	Conditions Precedent to the Effective Date	 	 	18	 
	4.02
	 	Conditions Precedent to All Loans	 	 	20	 
	SECTION 5.
	 	Representations, Warranties and Agreements	 	 	21	 
	5.01
	 	Corporate Status	 	 	21	 
	5.02
	 	Corporate Power and Authority	 	 	21	 
	5.03
	 	No Contravention of Laws, Agreements or Organizational Documents	 	 	21	 
	5.04
	 	Litigation and Contingent Liabilities	 	 	22	 
	5.05
	 	Use of Proceeds; Margin Regulations	 	 	22	 
	5.06
	 	Approvals	 	 	22	 
	5.07
	 	Investment Company Act	 	 	22	 







(i)









 






	 	 	 	 	 	 	 
	 	 	 	 	Page

	5.08
	 	Public Utility Holding Company Act	 	 	23	 
	5.09
	 	True and Complete Disclosure; Projections and Assumptions	 	 	23	 
	5.10
	 	Financial Condition; Financial Statements	 	 	23	 
	5.11
	 	Tax Returns and Payments	 	 	23	 
	5.12
	 	Compliance with ERISA	 	 	24	 
	5.13
	 	Material Subsidiaries	 	 	25	 
	5.14
	 	Intellectual Property, etc.	 	 	25	 
	5.15
	 	Capitalization	 	 	25	 
	5.16
	 	Indebtedness	 	 	25	 
	5.17
	 	Compliance with Statutes, etc.	 	 	25	 
	5.18
	 	Insurance Licenses	 	 	26	 
	5.19
	 	Insurance Business	 	 	26	 
	5.20
	 	Reinsurance	 	 	1	 
	SECTION 6.
	 	Affirmative Covenants	 	 	26	 
	6.01
	 	Information Covenants	 	 	26	 
	6.02
	 	Books, Records and Inspections	 	 	29	 
	6.03
	 	Insurance	 	 	30	 
	6.04
	 	Payment of Taxes	 	 	30	 
	6.05
	 	Corporate Franchises	 	 	30	 
	6.06
	 	Compliance with Statutes, etc.	 	 	30	 
	6.07
	 	ERISA	 	 	30	 
	6.08
	 	Performance of Obligations	 	 	31	 
	6.09
	 	Good Repair	 	 	31	 
	6.10
	 	End of Fiscal Years; Fiscal Quarters	 	 	32	 
	6.11
	 	Maintenance of Licenses and Permits	 	 	32	 
	SECTION 7.
	 	Negative Covenants	 	 	32	 
	7.01
	 	Changes in Business	 	 	32	 
	7.02
	 	Consolidation, Merger, Sale or Purchase of Assets, etc.	 	 	32	 
	7.03
	 	Liens	 	 	34	 
	7.04
	 	Indebtedness	 	 	36	 
	7.05
	 	Issuance of Stock	 	 	38	 
	7.06
	 	Prepayments of Indebtedness, Modifications of Agreements, etc.	 	 	38	 
	7.07
	 	Dividends, etc.	 	 	39	 
	7.08
	 	Limitation on Certain Restrictions	 	 	40	 
	7.09
	 	Transactions with Affiliates	 	 	40	 
	7.10
	 	Leverage Ratio	 	 	41	 
	7.11
	 	Interest Coverage Ratio	 	 	41	 
	7.12
	 	Minimum Consolidated Net Worth	 	 	41	 
	7.13
	 	Minimum Risk-Based Capital	 	 	41	 
	7.14
	 	Foreign Pension Plans	 	 	41	 
	SECTION 8.
	 	Events of Default	 	 	41	 
	8.01
	 	Payments	 	 	41	 
	8.02
	 	Representations, etc.	 	 	41	 
	8.03
	 	Covenants	 	 	41	 
	8.04
	 	Default Under Other Agreements	 	 	41	 
	8.05
	 	Bankruptcy, etc.	 	 	42	 
	8.06
	 	ERISA	 	 	43	 
	8.07
	 	Judgments	 	 	43	 







(ii)









 






	 	 	 	 	 	 	 
	 	 	 	 	Page

	8.08
	 	Revocation of Insurance License	 	 	43	 
	8.09
	 	Ownership	 	 	43	 
	SECTION 9.
	 	Definitions	 	 	44	 
	SECTION 10.
	 	The Administrative Agent	 	 	59	 
	10.01
	 	Appointment	 	 	59	 
	10.02
	 	Delegation of Duties	 	 	60	 
	10.03
	 	Exculpatory Provisions	 	 	60	 
	10.04
	 	Reliance by Administrative Agent	 	 	60	 
	10.05
	 	Notice of Default	 	 	61	 
	10.06
	 	Non-Reliance	 	 	61	 
	10.07
	 	Indemnification	 	 	61	 
	10.08
	 	The Administrative Agent in its Individual Capacity	 	 	62	 
	10.09
	 	Successor Administrative Agent	 	 	62	 
	10.10
	 	Co-Syndication Agents	 	 	62	 
	SECTION 11.
	 	Miscellaneous.	 	 	63	 
	11.01
	 	Payment of Expenses, etc.	 	 	63	 
	11.02
	 	Right of Setoff	 	 	63	 
	11.03
	 	Notices	 	 	64	 
	11.04
	 	Benefit of Agreement	 	 	64	 
	11.05
	 	No Waiver; Remedies Cumulative	 	 	66	 
	11.06
	 	Payments Pro Rata	 	 	66	 
	11.07
	 	Calculations; Computations	 	 	66	 
	11.08
	 	GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE	 	 	67	 
	11.09
	 	Counterparts	 	 	68	 
	11.10
	 	Effectiveness	 	 	68	 
	11.11
	 	Headings Descriptive	 	 	68	 
	11.12
	 	Amendment or Waiver	 	 	68	 
	11.13
	 	Survival	 	 	69	 
	11.14
	 	Domicile of Loans	 	 	69	 
	11.15
	 	Confidentiality	 	 	70	 
	11.16
	 	WAIVER OF JURY TRIAL	 	 	70	 
	11.17
	 	Register	 	 	71	 
	11.18
	 	Executive Stock Purchase Program	 	 	71	 
	11.19
	 	Unrestricted Subsidiaries	 	 	71	 







(iii)









 





	 	 	 
	ANNEX I

	 	List of Banks and Commitments
	ANNEX II

	 	Plans
	ANNEX III

	 	Material Subsidiaries
	ANNEX IV

	 	Capitalization
	ANNEX V

	 	Indebtedness
	ANNEX VI

	 	Insurance Licenses
	ANNEX VII

	 	Reinsurance
	ANNEX VIII

	 	Liens
	 
	 	 
	EXHIBIT A

	 	Form of Notice of Borrowing
	EXHIBIT B

	 	Form of Note
	EXHIBIT C

	 	Form of Letter of Credit Request
	EXHIBIT D

	 	Form of Section 3.04(b)(ii) Certificate
	EXHIBIT E

	 	Form of Opinion of Joseph Haggerty, Esq.
	EXHIBIT F-1

	 	Form of Officer’s Certificate
	EXHIBIT F-2

	 	Form of Secretary’s Certificate
	EXHIBIT G

	 	Form of Assignment and Assumption Agreement







(iv)









 





          CREDIT AGREEMENT, dated as of December 8, 2003, among AMERUS GROUP CO., an
Iowa corporation (the “Borrower”), the lending institutions listed from time to
time on Annex I hereto (each a “Bank” and, collectively, the “Banks”), THE BANK
OF NEW YORK, BANK ONE, NA, FLEET NATIONAL BANK and MELLON BANK, N.A., as
Co-Syndication Agents, and JPMORGAN CHASE BANK, as Administrative Agent (the
“Administrative Agent”). Unless otherwise defined herein, all capitalized
terms used herein and defined in Section 9 are used herein as so defined.



W I T N E S S E T H :



          WHEREAS, subject to and upon the terms and conditions set forth herein,
the Banks are willing to make available to the Borrower the credit facility
provided for herein.



          NOW, THEREFORE, IT IS AGREED:



          SECTION 1. Amount and Terms of Credit.



          1.01 Commitments. Subject to and upon the terms and conditions set forth
herein, each Bank severally agrees, at any time and from time to time on and
after the Effective Date and prior to the Maturity Date, to make a loan or
loans (each, a “Loan” and, collectively, the “Loans”) to the Borrower, which
Loans (i) shall, at the option of the Borrower, be Base Rate Loans or
Eurodollar Loans, provided that except as otherwise specifically provided in
Section 1.10(b), all Loans comprising the same Borrowing shall at all times be
of the same Type, (ii) may be repaid and reborrowed at any time in accordance
with the provisions hereof, (iii) shall have an aggregate principal amount at
any time outstanding which, when added to such Bank’s Percentage of the
aggregate amount of all Letter of Credit Outstandings (exclusive of Unpaid
Drawings which are repaid with the proceeds of, and simultaneously with the
incurrence of, the respective incurrence of Loans at such time), does not
exceed for any Bank that amount which equals the Commitment of such Bank at
such time, and (iv) shall have an aggregate principal amount at any time
outstanding which, when added to all Letter of Credit Outstandings at such
time, does not exceed for all Banks that amount which equals the Total
Commitment at such time.



          1.02 Minimum Amount of Each Borrowing; Maximum Number of Borrowings. The
aggregate principal amount of each Borrowing hereunder shall not be less than
$5,000,000 and, if in excess thereof, shall be in an integral multiple of
$1,000,000. More than one Borrowing may be incurred on any day; provided that
at no time shall there be outstanding more than six Borrowings of Eurodollar
Loans.



          1.03 Notice of Borrowing. (a) In connection with its incurrence of Loans
on any Business Day, including the Effective Date, the Borrower shall give the
Administrative Agent at its Notice Office, prior to 11:00 A.M. (New York time),
at least three Business Days’ prior written notice (or telephonic notice
promptly confirmed in writing) of each Eurodollar Loan or at least one Business
Day’s prior written notice (or telephonic notice promptly confirmed in writing)
of each Base Rate Loan. Such notice (the “Notice of Borrowing”), except as otherwise
expressly provided in Section 1.10, shall be irrevocable, and, in the case of a
written notice and a confirmation of telephonic notice, shall be in the form of
Exhibit A hereto, appropriately



 









 




completed to specify (i) the aggregate principal amount of the Loans to be made pursuant to such Borrowing, (ii) the
date of such Borrowing (which shall be a Business Day) and (iii) whether the
respective Borrowings shall consist of Base Rate Loans or Eurodollar Loans and,
if Eurodollar Loans, the Interest Period to be initially applicable thereto.
The Administrative Agent shall promptly give each Bank written notice (or
telephonic notice promptly confirmed in writing) of each proposed Borrowing, of
such Bank’s proportionate share thereof and of the other matters covered by the
Notice of Borrowing.




          (b) Without in any way limiting the obligation of the Borrower to confirm
in writing any notice it may give hereunder by telephone, the Administrative
Agent may act prior to receipt of written confirmation without liability upon
the basis of such telephonic notice, believed by the Administrative Agent in
good faith to be from an Authorized Officer of the Borrower. In each such case
the Administrative Agent’s record of the terms of any such telephonic notice
shall be conclusive absent manifest error.



          1.04 Disbursement of Funds. (a) Subject to the terms and conditions
herein set forth, no later than 11:00 A.M. (New York time) on the date of each
incurrence of Loans, each Bank will make available to the Administrative Agent
its pro rata share of each Borrowing requested to be made on such date in the
manner provided below.



          (b) Each Bank shall make available all amounts it is to fund under any
Borrowing in U.S. dollars and immediately available funds to the Administrative
Agent at the Administrative Agent’s Payment Office and the Administrative Agent
will make available to the Borrower as promptly as practicable by depositing to
its account at the Administrative Agent’s Payment Office the aggregate of the
amounts so made available in the type of funds received. Unless the
Administrative Agent shall have been notified by any Bank prior to the date of
any such Borrowing that such Bank does not intend to make available to the
Administrative Agent its portion of the Borrowing or Borrowings to be made on
such date, the Administrative Agent may assume that such Bank has made such
amount available to the Administrative Agent on the date of such Borrowing, and
the Administrative Agent, in reliance upon such assumption, may (in its sole
discretion and without any obligation to do so) make available to the Borrower
a corresponding amount. If such corresponding amount is not in fact made
available to the Administrative Agent by such Bank and the Administrative Agent
has made available same to the Borrower, the Administrative Agent shall be
entitled to recover such corresponding amount from such Bank. If such Bank
does not pay such corresponding amount forthwith upon the Administrative
Agent’s demand therefor, the Administrative Agent shall promptly notify the
Borrower, and the Borrower shall pay such corresponding amount to the
Administrative Agent within two Business Days. The Administrative Agent shall
also be entitled to recover from the Bank or the Borrower, as the case may be,
interest on such corresponding amount in respect of each day from the date such
corresponding amount was made available by the Administrative Agent to the
Borrower to the date such corresponding amount is recovered by the
Administrative Agent, at a rate per annum equal to (x) if paid by such Bank,
the overnight Federal Funds Effective Rate or (y) if paid by the Borrower, the then applicable rate of
interest, calculated in accordance with Section 1.08(a) or (b), as the case may
be, for the respective Loans.



 









 





          (c) Nothing in this Section 1.04 shall be deemed to relieve any Bank from
its obligation to fulfill its commitments hereunder or to prejudice any rights
which the Borrower may have against any Bank as a result of any default by such
Bank hereunder.



          1.05 Notes. (a) The Borrower’s obligation to pay the principal of, and
interest on, all the Loans made to it by each Bank shall be evidenced by a
promissory note substantially in the form of Exhibit B with blanks
appropriately completed in conformity herewith (each a “Note” and collectively,
the “Notes”).



          (b) The Note issued to each Bank shall (i) be executed by the Borrower,
(ii) be payable to the order of such Bank and be dated the Effective Date (or
if issued after the Effective Date, be dated the date of the issuance thereof),
(iii) be in a stated principal amount equal to the Commitment of such Bank and
be payable in a principal amount equal to the amount of the Loans made by such
Bank and which are outstanding from time to time, (iv) mature on the Maturity
Date, (v) bear interest as provided in the appropriate clause of Section 1.08
in respect of the Base Rate Loans and Eurodollar Loans, as the case may be,
evidenced thereby, (vi) be subject to voluntary prepayment as provided in
Section 3.01 and mandatory repayment as provided in Section 3.02 and (vii) be
entitled to the benefits of this Agreement and the other Credit Documents.
Upon receipt of an affidavit of an officer of the Bank (together with a
customary indemnity from such Bank in form and substance satisfactory to the
Borrower) that a Note has been lost, stolen, destroyed or mutilated, the
Borrower will issue a replacement Note in the same principal amount thereof and
otherwise of like tender.



          (c) Each Bank will record on its internal records the amount of each Loan
made by it and each payment in respect thereof and will prior to any transfer
of its Note endorse on the reverse side thereof the outstanding principal
amount of Loans evidenced thereby. Failure to make any such notation or any
error in any such notation shall not affect the Borrower’s obligations in
respect of such Loans.



          1.06 Conversions. The Borrower shall have the option to convert on any
Business Day all or a portion at least equal to $5,000,000 (and, if in excess
thereof, an integral multiple of $1,000,000) of the outstanding principal
amount of the Loans of one Type into a Borrowing or Borrowings of the other
Type of Loan; provided that (i) no partial conversion of a Borrowing of
Eurodollar Loans shall reduce the outstanding principal amount of the
Eurodollar Loans pursuant to such Borrowing to less than $5,000,000, (ii) Base
Rate Loans may only be converted into Eurodollar Loans if no Default or Event
of Default is in existence on the date of the conversion, (iii) Borrowings of
Eurodollar Loans resulting from this Section 1.06 shall be limited in number as
provided in Section 1.02, (iv) Eurodollar Loans may only be converted into Base
Rate Loans on the last day of the Interest Period applicable thereto, and (v)
each such conversion shall be made pro rata among the Loans of each Bank of the
Type being converted. Each such conversion shall be effected by the Borrower by giving the Administrative Agent
at its Notice Office, prior to 11:00 A.M. (New York time), at least three
Business Days’ (or one Business Day’s in the case of a conversion into Base
Rate Loans) prior written notice (or telephonic notice promptly confirmed in
writing) (each a “Notice of Conversion”) specifying the Loans to be so
converted, the Type of Loans to be converted into and, if to be converted into
a Borrowing of Eurodollar Loans, the Interest Period to be initially applicable
thereto. The Administrative Agent shall give each Bank prompt notice of any
such proposed conversion affecting any of its Loans.



 









 





          1.07 Pro Rata Borrowings. All Borrowings of Loans under this Agreement
shall be incurred by the Borrower from the Banks pro rata on the basis of such
Banks’ Commitments. It is understood that no Bank shall be responsible for any
default by any other Bank in its obligation to make Loans hereunder and that
each Bank shall be obligated to make the Loans provided to be made by it
hereunder, regardless of the failure of any other Bank to fulfill its
commitments hereunder.



          1.08 Interest. (a) The unpaid principal amount of each Base Rate Loan
shall bear interest from the date of the Borrowing thereof until the earlier of
(i) the maturity (whether by acceleration or otherwise) of such Base Rate Loan
and (ii) the conversion of such Base Rate Loan to a Eurodollar Loan pursuant to
Section 1.06, at a rate per annum which shall at all times be the Applicable
Margin then in effect for Base Rate Loans plus the Base Rate in effect from
time to time.



          (b) The unpaid principal amount of each Eurodollar Loan shall bear
interest from the date of the Borrowing thereof until the earlier of (i) the
maturity (whether by acceleration or otherwise) of such Eurodollar Loan or (ii)
the conversion of such Eurodollar Loan to a Base Rate Loan pursuant to Sections
1.06, 1.09 or 1.10(b), as applicable, at a rate per annum which shall at all
times be the Applicable Margin then in effect for Eurodollar Loans plus the
relevant Eurodollar Rate for the Interest Period applicable to such Eurodollar
Loan.



          (c) Overdue principal and, to the extent permitted by law, overdue
interest in respect of each Loan and any other overdue amount payable hereunder
shall bear interest at a rate per annum equal to the Applicable Margin then in
effect for Base Rate Loans plus the Base Rate in effect from time to time plus
2%, provided that overdue principal in respect of Eurodollar Loans shall bear
interest until the end of the Interest Period applicable to such Eurodollar
Loans at a rate per annum equal to 2% in excess of the rate otherwise
applicable to such Eurodollar Loans.



          (d) Interest shall accrue from and including the date of any Borrowing to
but excluding the date of any repayment thereof and shall be payable (i) in
respect of each Base Rate Loan, quarterly in arrears on the last Business Day
of each calendar quarter, (ii) in respect of each Eurodollar Loan, on the last
day of each Interest Period applicable thereto and, in the case of an Interest
Period of six months, on the date occurring three months after the first day of
such Interest Period and (iii) in respect of each Loan, on any conversion or
prepayment (on the amount so converted or prepaid), at maturity (whether by acceleration or
otherwise) and, after such maturity, on demand.



          (e) All computations of interest hereunder shall be made in accordance
with Section 11.07(b).



          (f) The Administrative Agent, upon determining the interest rate for any
Borrowing of Eurodollar Loans for any Interest Period, shall promptly notify
the Borrower and the Banks thereof.



 









 





          1.09 Interest Periods. At the time the Borrower gives a Notice of
Borrowing or Notice of Conversion in respect of the making of, or conversion
into, a Borrowing of Eurodollar Loans (in the case of the initial Interest
Period applicable thereto) or prior to 11:00 A.M. (New York time) on the third
Business Day prior to the expiration of an Interest Period applicable to a
Borrowing of Eurodollar Loans, it shall have the right to elect by giving the
Administrative Agent written notice (or telephonic notice promptly confirmed in
writing) of the Interest Period to be applicable to such Borrowing, which
Interest Period shall, at the option of the Borrower, be a one week period or a
one, two, three or six month period. Notwithstanding anything to the contrary
contained above:




     (i) the initial Interest Period for any Borrowing of
Eurodollar Loans shall commence on the date of such Borrowing
(including the date of any conversion from a Borrowing of Base Rate
Loans) and each Interest Period occurring thereafter in respect of
such Borrowing shall commence on the day on which the next
preceding Interest Period expires;




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




     (iii) if any Interest Period would otherwise expire on a day
which is not a Business Day, such Interest Period shall expire on
the next succeeding Business Day, provided that if any Interest
Period would otherwise expire on a day which is not a Business Day
but is a day of the month after which no further Business Day
occurs in such month, such Interest Period shall expire on the next
preceding Business Day;




     (iv) no Interest Period may be elected if it would extend
beyond the Maturity Date; and




     (v) no Interest Period may be elected at any time when a
Default or Event of Default is then in existence.


If upon the expiration of any Interest Period, the Borrower has failed, or is
not permitted, to elect a new Interest Period to be applicable to the
respective Borrowing of Eurodollar Loans as
provided above, the Borrower shall be deemed to have elected to convert such
Borrowing into a Borrowing of Base Rate Loans effective as of the expiration
date of such current Interest Period.




          1.10 Increased Costs, Illegality, etc. (a) In the event that (x) in the
case of clause (i) below, the Administrative Agent or (y) in the case of
clauses (ii) and (iii) below, any Bank shall have determined in good faith
(which determination shall, absent manifest error, be final and conclusive and
binding upon all parties hereto):




     (i) on any date for determining the Eurodollar Rate for any
Interest Period, that, by reason of any changes arising after the
Effective Date affecting the interbank Eurodollar market, adequate
and fair means do not exist for ascertaining the applicable
interest rate on the basis provided for in the definition of
Eurodollar Rate; or



 









 






     (ii) at any time, that such Bank shall incur increased costs
or reductions in the amounts received or receivable hereunder with
respect to any Eurodollar Loans (other than any increased cost or
reduction in the amount received or receivable resulting from the
imposition of or a change in the rate of taxes or similar charges)
because of (x) any change since the Effective Date in any
applicable law, governmental rule, regulation, guideline, order or
request (whether or not having the force of law), or in the
interpretation or administration thereof and including the
introduction of any new law or governmental rule, regulation,
guideline, order or request (such as, for example, but not limited
to, a change in official reserve requirements, but, in all events,
excluding reserves required under Regulation D to the extent
included in the computation of the Eurodollar Rate) and/or (y)
other circumstances affecting the interbank Eurodollar market or
the position of such Bank in such market; or




     (iii) at any time, that the making or continuance of any
Eurodollar Loan has become unlawful by compliance by such Bank in
good faith with any change since the Effective Date in any law,
governmental rule, regulation, guideline or order, or the
interpretation or application thereof, or would conflict with any
thereof not having the force of law but with which such Bank
customarily complies, or has become impracticable as a result of a
contingency occurring after the Effective Date which materially
adversely affects the interbank Eurodollar market;


then, and in any such event, such Bank (or the Administrative Agent in the case
of clause (i) above) shall (x) on such date and (y) within 10 Business Days of
the date on which such event no longer exists give notice (by telephone
confirmed in writing) to the Borrower and to the Administrative Agent of such
determination and the reason therefor (which notice the Administrative Agent
shall promptly transmit to each of the other Banks). Thereafter (x) in the
case of clause (i) above, Eurodollar Loans shall no longer be available until
such time as the Administrative Agent notifies the Borrower and the Banks that
the circumstances giving rise to such notice by the Administrative Agent no
longer exist, and any Notice of Borrowing or Notice of Conversion given by the
Borrower with respect to Eurodollar Loans which have not yet
been incurred shall be deemed rescinded by the Borrower or, in the case of a
Notice of Borrowing, shall, at the option of the Borrower, be deemed converted
into a Notice of Borrowing for Base Rate Loans to be made on the date of
Borrowing contained in such Notice of Borrowing, (y) in the case of clause (ii)
above, the Borrower shall pay to such Bank, upon written demand therefor, such
additional amounts (in the form of an increased rate of, or a different method
of calculating, interest or otherwise as such Bank shall determine in good
faith) as shall be required to compensate such Bank for such increased costs or
reductions in amounts receivable hereunder (a written notice as to the
additional amounts owed to such Bank, showing the basis for the calculation
thereof, which basis shall be reasonable and consistently applied, submitted to
the Borrower by such Bank shall, absent manifest error, be final and conclusive
and binding upon all parties hereto) and (z) in the case of clause (iii) above,
the Borrower shall take one of the actions specified in Section 1.10(b) as
promptly as possible and, in any event, within the time period required by law.




 









 





          (b) At any time that any Eurodollar Loan is affected by the circumstances
described in Section 1.10(a)(ii) or (iii), the Borrower may (and in the case of
a Eurodollar Loan affected pursuant to Section 1.10(a)(iii) the Borrower shall)
either (i) if the affected Eurodollar Loan is then being made pursuant to a
Borrowing, by giving the Administrative Agent telephonic notice (confirmed
promptly in writing) thereof on the same date that the Borrower was notified by
a Bank (or on the next Business Day if the Borrower received such notice after
3:00 p.m. (New York time)) pursuant to Section 1.10(a)(ii) or (iii), cancel
said Borrowing, convert the related Notice of Borrowing into one requesting a
Borrowing of Base Rate Loans or require the affected Bank to make its requested
Loan as a Base Rate Loan, or (ii) if the affected Eurodollar Loan is then
outstanding, upon at least one Business Day’s notice to the Administrative
Agent, require the affected Bank to convert each such affected Eurodollar Loan
into a Base Rate Loan, provided that if more than one Bank is affected at any
time, then all affected Banks must be treated the same pursuant to this Section
1.10(b).



          (c) If any Bank shall have determined in good faith that after the
Effective Date the adoption or effectiveness of any applicable law, rule or
regulation regarding capital adequacy, or any change therein, or any change in
the interpretation or administration thereof by any governmental authority,
central bank or comparable agency charged by law with the interpretation or
administration thereof, or compliance by such Bank or its parent corporation
with any request or directive regarding capital adequacy (whether or not having
the force of law) of any such authority, central bank or comparable agency, in
each case made subsequent to the Effective Date, has or would have the effect
of reducing the rate of return on such Bank’s or its parent corporation’s
capital or assets as a consequence of such Bank’s commitments or obligations
hereunder to a level below that which such Bank or its parent corporation could
have achieved but for such adoption, effectiveness, change or compliance
(taking into consideration such Bank’s or its parent corporation’s policies
with respect to capital adequacy), then from time to time, upon demand by such
Bank (with a copy to the Administrative Agent), the Borrower shall pay to such
Bank such additional amount or amounts as will compensate such Bank or its
parent corporation for such reduction. Each Bank, upon determining in good
faith that any additional amounts will be payable pursuant to this Section
1.10(c), will give prompt written notice thereof to the Borrower, which notice
shall set forth the basis of the calculation of such additional amounts, which
basis must be reasonable and consistently applied, although the failure to
give any such notice shall not release or diminish any of the Borrower’s
obligations to pay additional amounts pursuant to this Section 1.10(c) upon the
subsequent receipt of such notice.



          1.11 Compensation. The Borrower shall compensate each Bank, upon its
written request (which request shall set forth the basis for requesting such
compensation), for all reasonable losses, expenses and liabilities (including,
without limitation, any loss, expense or liability incurred by reason of the
liquidation or reemployment of deposits or other funds required by such Bank to
fund its Eurodollar Loans but excluding any loss of anticipated profit with
respect to such Loans) which such Bank may sustain: (i) if for any reason
(other than a default by such Bank or the Administrative Agent) a Borrowing of
Eurodollar Loans does not occur on a date specified therefor in a Notice of
Borrowing or Notice of Conversion (whether or not withdrawn by the Borrower or
deemed withdrawn pursuant to Section 1.10(a)); (ii) if any repayment,
prepayment or conversion of any of its Eurodollar Loans occurs on a date which
is not the last day of an Interest Period applicable thereto; (iii) if any
prepayment of any of its Eurodollar Loans is not made on any date specified in
a notice of prepayment given by the Borrower; or (iv)



 









 




as a consequence of (x)
any other failure by the Borrower to repay its Loans when required by the terms
of this Agreement or (y) an election made pursuant to Section 1.10(b).




          1.12 Change of Lending Office. Each Bank agrees that, upon the occurrence
of any event giving rise to the operation of Section 1.10(a)(ii) or (iii) or
3.04 with respect to such Bank, it will, if requested by the Borrower, use
reasonable efforts (subject to overall policy considerations of such Bank) to
designate another lending office for any Loans affected by such event; provided
that such designation is made on such terms that, in the opinion of such Bank,
such Bank and its lending office suffer no economic, legal or regulatory
disadvantage, with the object of avoiding the consequence of the event giving
rise to the operation of any such Section. Nothing in this Section 1.12 shall
affect or postpone any of the obligations of the Borrower or the right of any
Bank provided in Section 1.10 or 3.04.



          SECTION 1A. Letters of Credit.



          1A.01 Letters of Credit. (a) Subject to and upon the terms and
conditions set forth herein, the Borrower may request the Issuing Bank, at any
time and from time to time after the Effective Date and prior to the date which
is 30 days prior to the Maturity Date, to issue on behalf of the Banks, for the
account of the Borrower and in support of, on a standby basis, Letter of Credit
Supportable Obligations and, subject to and upon the terms and conditions set
forth herein, the Issuing Bank agrees to issue at any time and from time to
time after the Effective Date and prior to the date which is 30 days prior to
the Maturity Date, one or more irrevocable standby letters of credit in such
form as may be approved by the Issuing Bank (each such letter of credit, a
“Letter of Credit” and, collectively, the “Letters of Credit”).
Notwithstanding the foregoing, the Issuing Bank shall be under no obligation to
issue any Letter of Credit if at the time of such issuance:




     (i) any order, judgment or decree of any Governmental
Authority or arbitrator shall purport by its terms to enjoin or
restrain the Issuing Bank from issuing such Letter of Credit or any
requirement of law applicable to such Issuing Bank or any Bank or
any request or directive (whether or not having the force of law)
from any Governmental Authority with jurisdiction over the Issuing
Bank or any Bank shall prohibit, or request that the Issuing Bank
or any Bank refrain from, the issuance of letters of credit
generally or such Letter of Credit in particular or shall impose
upon the Issuing Bank or any Bank with respect to such Letter of
Credit any restriction or reserve or capital requirement (for which
the Issuing Bank or any Bank is not otherwise compensated) not in
effect on the Effective Date, or any unreimbursed loss, cost or
expense which was not applicable, in effect or known to the Issuing
Bank or any Bank as of the Effective Date;




     (ii) the conditions precedent set forth in Section 4.02 are
not satisfied at that time; or




     (iii) the Issuing Bank shall have received notice from the
Borrower or the Required Banks prior to the issuance of such Letter
of Credit of the type described in clause (v) of Section 1A.01(b).



 









 




In the case of clauses (i), (ii) or (iii), the Issuing Bank shall use
commercially reasonable efforts to provide notice of any such event to the
Borrower and to the Administrative Agent; provided that the failure to provide
any such notice shall not affect the obligation of the Issuing Bank to issue
any Letter of Credit.




          (b) Notwithstanding anything to the contrary contained in this Section
1A.01 or elsewhere in this Agreement (i) no Letter of Credit shall be issued
the Stated Amount of which, when added to (x) the Letter of Credit Outstandings
(exclusive of Unpaid Drawings which are repaid on the date of, and prior to the
issuance of, the respective Letter of Credit) at such time and (y) the
aggregate principal amount of all Loans then outstanding, would exceed an
amount equal to the Total Commitment at such time; (ii) no Letter of Credit
shall be issued the Stated Amount of which, when added to the Letter of Credit
Outstandings (exclusive of Unpaid Drawings which are repaid on the date of, and
prior to the issuance of, the respective Letter of Credit) at such time,
exceeds $20,000,000, (iii) each Letter of Credit shall have an expiry date
occurring not later than one year after such Letter of Credit’s date of
issuance (but in no event later than five Business Days prior to the Maturity
Date); provided that each such Letter of Credit may by its terms automatically
renew annually for one additional year unless the Issuing Bank notifies the
beneficiary thereof, in accordance with the terms of such Letter of Credit,
that such Letter of Credit will not be renewed; (iv) each Letter of Credit
shall be denominated in Dollars; and (v) the Issuing Bank will not issue any
Letter of Credit after it has received written notice from the Borrower or the
Required Banks stating that a Default or an Event of Default exists until such
time as the Issuing Bank shall have received a written notice of (x) rescission
of such notice from the party or parties originally delivering the same or (y)
a waiver of such Default or Event of Default by the Required Banks (or, to the
extent provided by Section 11.12, each of the Banks).



          (c) Each Letter of Credit will be issued by the Issuing Bank and each Bank
will participate in each Letter of Credit in accordance with Section 1A.04.



          (d) Notwithstanding the foregoing, in the event a Bank Default exists, the
Issuing Bank shall not be required to issue any Letter of Credit unless the
Issuing Bank has entered into arrangements satisfactory to it and the Borrower
(“Section 1A.01(d) Arrangements”) to eliminate the Issuing Bank’s risk with
respect to the participation in Letters of Credit of the Defaulting Bank or
Banks, which may include requiring that the Borrower cash collateralize such
Defaulting Bank’s or Banks’ Percentage of the Letter of Credit Outstandings.



          1A.02 Letter of Credit Requests. (a) Whenever the Borrower desires that
a Letter of Credit be issued, the Borrower shall give the Administrative Agent
and the Issuing Bank written notice (including by way of facsimile
transmission, immediately confirmed in writing by submission of the original of
such request by mail to the Issuing Bank) thereof prior to 11:00 A.M. (New York
time) at least five Business Days (or such shorter period as may be acceptable
to the Issuing Bank) prior to the proposed date of issuance (which shall be a
Business Day), which written notice shall be in the form of Exhibit C (each, a
“Letter of Credit Request”). Each Letter of Credit Request shall include any
other documents as the Issuing Bank customarily requires in connection
therewith.



 









 





          (b) The making of each Letter of Credit Request shall be deemed to be a
representation and warranty by the Borrower that such Letter of Credit may be
issued in accordance with, and it will not violate the requirements of, Section
1A.01(a) or (b).



          (c) Upon its issuance of, or amendment to, any Letter of Credit, the
Issuing Bank shall promptly notify the Borrower and the Banks of such issuance
or amendment, which notice shall include a summary description of the Letter of
Credit actually issued and any amendments thereto.



          1A.03 Agreement to Repay Letter of Credit Drawings. (a) The Borrower
agrees to reimburse the Issuing Bank, by making payment to the Administrative
Agent in immediately available funds at the Payment Office, for any payment or
disbursement made by the Issuing Bank under any Letter of Credit which has been
issued for Borrower’s account (each such amount so paid or disbursed until
reimbursed, an “Unpaid Drawing”) no later than one Business Day following the
date of such payment or disbursement, with interest on the amount so paid or
disbursed by the Issuing Bank, to the extent not reimbursed prior to 1:00 P.M.
(New York time) on the date of such payment or disbursement, from and including
the date paid or disbursed to but not including the date the Issuing Bank is
reimbursed therefor at a rate per annum which shall be the Base Rate plus the
Applicable Margin for Loans maintained as Base Rate Loans as in effect from
time to time (or, if the Total Commitment has been terminated and all Loans
have been repaid, the Applicable Margin that would have been in effect for
Loans maintained as Base Rate Loans) (plus an additional 2% per annum, payable
on demand, if not reimbursed by the third Business Day after the date of such
payment or disbursement).



          (b) The Borrower’s obligations under this Section 1A.03 to reimburse the
Issuing Bank with respect to Unpaid Drawings (including, in each case, interest
thereon) shall be absolute and unconditional under any and all circumstances
and irrespective of any setoff, counterclaim or defense to payment which the
Borrower may have or have had against the Issuing Bank or any Bank, including,
without limitation, any defense based upon the failure of any drawing under a
Letter of Credit to conform to the terms of the Letter of Credit or any
non-application or misapplication by the beneficiary of the proceeds of such
drawing; provided, however, that the Borrower shall not be obligated to
reimburse the Issuing Bank for any wrongful payment made by the Issuing Bank
under a Letter of Credit as a result of acts or omissions constituting willful
misconduct or gross negligence on the part of the Issuing Bank (as determined
by a court of competent jurisdiction in a final and non-appealable decision).



          1A.04 Letter of Credit Participations. (a) Immediately upon the issuance
by the Issuing Bank of any Letter of Credit, the Issuing Bank shall be deemed
to have sold and transferred to each other Bank, and each such Bank (each, a
“Participant”) shall be deemed irrevocably and unconditionally to have
purchased and received from such Issuing Bank, without recourse, representation
or warranty, an undivided interest and participation, to the extent of such
Participant’s Percentage, in such Letter of Credit, each substitute letter of
credit, each drawing made thereunder and the obligations of the Borrower under
this Agreement with respect thereto (although the Letter of Credit Fee shall be
payable directly to the Administrative Agent for the account of the Banks as
provided in Section 2.01(b) and the Participants shall have no right to receive
any portion of any Fronting Fees) and any security therefor or guaranty
pertaining thereto. Upon any change in the Commitments pursuant to Section
11.04(b), it is hereby agreed



 









 




that, with respect to all outstanding Letters of
Credit and Unpaid Drawings, there shall be an automatic adjustment to the
participations pursuant to this Section 1A.04 to reflect the new Percentages of
the Banks.




          (b) In determining whether to pay under any Letter of Credit, the Issuing
Bank shall not have any obligation relative to the Participants other than to
determine that any documents required to be delivered under such Letter of
Credit have been delivered and that they substantially comply on their face
with the requirements of such Letter of Credit. Any action taken or omitted to
be taken by the Issuing Bank under or in connection with any Letter of Credit
if taken or omitted in the absence of gross negligence or willful misconduct as
determined by a final judgment issued by a court of competent jurisdiction
shall not create for the Issuing Bank any resulting liability.



          (c) In the event that the Issuing Bank makes any payment under any Letter
of Credit and the Borrower shall not have reimbursed such amount in full to the
Issuing Bank pursuant to Section 1A.03(a), the Issuing Bank shall promptly
notify the Administrative Agent, and the Administrative Agent shall promptly
notify each Participant of such failure, and each Participant shall promptly
and unconditionally pay to the Administrative Agent for the account of the
Issuing Bank, the amount of such Participant’s Percentage of such payment in
Dollars and in same day funds; provided, however, that no Participant shall be
obligated to pay to the Administrative Agent its Percentage of such
unreimbursed amount for any wrongful payment made by the Issuing Bank under a
Letter of Credit as a result of acts or omissions constituting willful
misconduct or gross negligence on the part of the Issuing Bank as determined by
a final judgment issued by a court of competent jurisdiction. If the
Administrative Agent so notifies any Participant required to fund an Unpaid Drawing under a Letter of Credit
prior to 1:00 P.M. (New York time) on any Business Day, such Participant shall
make available to the Administrative Agent for the account of the Issuing Bank
such Participant’s Percentage of the amount of such payment on such Business
Day in same day funds. If and to the extent such Participant shall not have so
made its Percentage of the amount of such Unpaid Drawing available to the
Administrative Agent for the account of the Issuing Bank, such Participant
agrees to pay to the Administrative Agent for the account of the Issuing Bank,
forthwith on demand such amount, together with interest thereon, for each day
from such date until the date such amount is paid to the Administrative Agent
for the account of the Issuing Bank at the overnight Federal Funds Effective
Rate. The failure of any Participant to make available to the Administrative
Agent for the account of the Issuing Bank its Percentage of any Unpaid Drawing
under any Letter of Credit shall not relieve any other Participant of its
obligation hereunder to make available to the Administrative Agent for the
account of the Issuing Bank its Percentage of any payment under any Letter of
Credit on the date required, as specified above, but no Participant shall be
responsible for the failure of any other Participant to make available to the
Administrative Agent for the account of the Issuing Bank such other
Participant’s Percentage of any such payment.



          (d) Whenever the Issuing Bank receives a payment of a reimbursement
obligation (including interest on Unpaid Drawings) as to which the
Administrative Agent has received for the account of the Issuing Bank any
payments from any Participant pursuant to clause (c) above, the Issuing Bank
shall pay to the Administrative Agent and the Administrative Agent shall
promptly pay to each Participant which has paid its Percentage thereof, in
Dollars



 









 




and in same day funds, an amount equal to such Participant’s Percentage
of the amount of the payment of such reimbursement obligation, including
interest paid thereon to the extent accruing after the purchase of the
respective participations.




          (e) The obligations of the Participants to make payments to the
Administrative Agent for the account of the Issuing Bank with respect to
Letters of Credit shall be irrevocable and not subject to counterclaim, set-off
or other defense or any other qualification or exception whatsoever (provided
that no Participant shall be required to make payments resulting from the
Administrative Agent’s gross negligence or willful misconduct as determined by
a final judgment issued by a court of competent jurisdiction) and shall be made
in accordance with the terms and conditions of this Agreement under all
circumstances, including, without limitation, any of the following
circumstances:




     (i) any lack of validity or enforceability of this Agreement
or any of the other Credit Documents;




     (ii) the existence of any claim, set-off, defense or other
right which the Borrower or any of its Subsidiaries may have at any
time against a beneficiary named in a Letter of Credit, any
transferee of any Letter of Credit (or any Person for whom any such
transferee may be acting), the Administrative Agent, the Issuing
Bank, any Bank or other Person, whether in connection with this
Agreement, any Letter of Credit, the transactions contemplated
herein or any unrelated transactions (including any underlying
transaction between the Borrower and the beneficiary named in any
such Letter of Credit);




     (iii) any draft, certificate or other document presented under
the 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;




     (iv) the surrender or impairment of any security for the
performance or observance of any of the terms of any of the Credit
Documents; or




     (v) the occurrence of any Default or Event of Default.



          (f) To the extent the Issuing Bank is not indemnified by the Borrower, the
Participants will reimburse and indemnify the Issuing Bank, in proportion to
their respective Percentages, for and against any and all liabilities,
obligations, losses, damages, penalties, claims, actions, judgments, costs,
expenses or disbursements of whatsoever kind or nature which may be imposed on,
asserted against or incurred by the Issuing Bank in performing its respective
duties in any way relating to or arising out of its issuance of Letters of
Credit; provided that no Participants shall be liable for any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements resulting from the Issuing Bank’s gross
negligence or willful misconduct as determined by a final judgment issued by a
court of competent jurisdiction.



          1A.05 Increased Costs. If after the Effective Date, the adoption or
effectiveness of any applicable law, rule or regulation, order, guideline or
request or any change



 









 




therein after the Effective Date, or any change adopted or effective after the Effective Date in the interpretation or administration
thereof by any Governmental Authority, central bank or comparable agency
charged with the interpretation or administration thereof, or compliance by the
Issuing Bank or any Bank with any request or directive (whether or not having
the force of law) by any such authority, central bank or comparable agency
shall either (i) impose, modify or make applicable any reserve, deposit,
capital adequacy or similar requirement against letters of credit issued by or
participated in by the Issuing Bank or such Bank, or (ii) impose on the Issuing
Bank or such Bank any other conditions directly or indirectly affecting this
Agreement or any Letter of Credit; and the result of any of the foregoing is to
increase the cost to the Issuing Bank or such Bank of issuing, maintaining or
participating in any Letter of Credit, or to reduce the amount of any sum
received or receivable by the Issuing Bank or such Bank hereunder or reduce the
rate of return on its capital with respect to Letters of Credit, then, upon
written demand to the Borrower by the Issuing Bank or such Bank (with a copy to
the Administrative Agent), the Borrower agrees to pay to the Issuing Bank or
such Bank additional amount or amounts as will compensate the Issuing Bank or
such for Bank such increased cost or reduction. A certificate submitted to the
Borrower by the Issuing Bank or such Bank (with a copy to the Administrative
Agent), setting forth the basis for the determination of such additional amount
or amounts necessary to compensate the Issuing Bank or as aforesaid shall be
final and conclusive and binding on the Borrower absent manifest error,
although the failure to deliver any such certificate shall not release or
diminish the Borrower’s obligations to pay additional amounts pursuant to this
Section 1A.04 upon subsequent receipt of such certificate.




          1A.06 Letter of Credit Expiration Extensions. Each Bank acknowledges that to the extent provided under the terms of
any Letter of Credit, the expiration date of such Letter of Credit will be
automatically extended for an additional year, without written amendment,
unless at least 30 days prior to the expiration date of such Letter of Credit,
notice is given by the Issuing Bank to the beneficiary of such Letter of Credit
in accordance with the terms of the respective Letter of Credit (a “Notice of
Non-Extension”) that the expiration date of such Letter of Credit will not be
extended beyond its current expiration date. The Issuing Bank will give
Notices of Non-Extension as to any or all outstanding Letters of Credit if
requested to do so by the Required Banks pursuant to Section 8. The Issuing
Bank will give Notices of Non-Extension as to all outstanding Letters of Credit
if the Maturity Date has occurred or would occur prior to the expiration date
of such Letter of Credit if so extended. The Issuing Bank will send a copy of
each Notice of Non-Extension to the Borrower concurrently with delivery thereof
to the respective beneficiary, unless prohibited by law from doing so.



          1A.07 Changes to Stated Amount. At any time when any Letter of Credit is
outstanding, at the request of the Borrower, the Issuing Bank will enter into
an amendment increasing or reducing the Stated Amount of such Letter of Credit,
provided that (i) in no event shall the Stated Amount of such Letter of Credit
be increased to an amount which, when added to (x) the Letter of Credit
Outstandings at such time and (y) the aggregate principal amount of all Loans
then outstanding, would exceed an amount equal to the Total Commitment, (ii) in
no event shall the Stated Amount of such Letter of Credit be increased to an
amount which, when added to the Letter of Credit Outstandings at such time,
equals $20,000,000, (iii) the Stated Amount of a Letter of Credit may not be
increased at any time if the conditions precedent set forth in Section 4.02 are
not satisfied at such time, and (iv) the Stated Amount of a Letter of Credit
may not be increased at any time after the date which is 30 days prior to the
Maturity Date.



 









 





          SECTION 2. Fees; Commitments.



          2.01 Fees. (a) The Borrower agrees to pay the Administrative Agent a
commitment fee (the “Commitment Fee”) for the account of each Bank for the
period from and including the Effective Date to but excluding the earlier of
the Maturity Date and the date the Total Commitment has been terminated (the
“Termination Date”), computed at a per annum rate equal to the Applicable
Commitment Fee Percentage from time to time on the daily average Unutilized
Commitment of such Bank. Accrued Commitment Fees shall be due and payable in
arrears on the last Business Day of each March, June, September and December
and on the Termination Date.



          (b) The Borrower agrees to pay to the Administrative Agent for pro rata
distribution to each Non-Defaulting Bank (based on their respective
Percentages), a fee in respect of each Letter of Credit issued for the account
of the Borrower (the “Letter of Credit Fee”) computed at a rate per annum equal
to the Applicable Margin then in effect for Loans maintained as Eurodollar
Loans (or, if the Total Commitment has been terminated and all Loans have been
repaid, the Applicable Margin that would have been in effect for Loans
maintained as Eurodollar Loans), on the daily Stated Amount of such Letter of Credit.
Accrued Letter of Credit Fees shall be due and payable quarterly in arrears on
the last Business Day of each March, June, September and December, the
Termination Date and upon the first day on or after the Termination Date upon
which no Letters of Credit remain outstanding.



          (c) The Borrower agrees to pay directly to the Issuing Bank upon each
issuance of and/or amendment of, a Letter of Credit issued for the account of
the Borrower such amount as shall at the time of such issuance or amendment be
the administrative charge which the Issuing Bank is customarily charging for
issuances of, or amendments of, letters of credit issued by it.



          (d) The Borrower shall pay directly to each Issuing Bank, for its own
account, such fronting fees as have been, or are from time to time, separately
agreed upon with each such Issuing Bank.



          (e) The Borrower shall pay to the Administrative Agent, for the account of
the Administrative Agent, when and as due, such fees as have been, or are from
time to time, separately agreed upon with the Administrative Agent.



          (f) All computations of Fees shall be made in accordance with Section
11.07(b).



          2.02 Voluntary Reduction of Commitments. Upon at least three Business
Days’ prior written notice (or telephonic notice promptly confirmed in writing)
given by the Borrower to the Administrative Agent at its Notice Office (which
notice the Administrative Agent shall promptly transmit to each of the Banks),
the Borrower shall have the right, without premium or penalty, to terminate or
partially reduce the Total Unutilized Commitment, provided that (x) any such
partial reduction shall apply to proportionately and permanently reduce the
Total Unutilized Commitment, and (y) any partial reduction pursuant to this
Section 2.02 shall be in integral multiples of $5,000,000.



 









 





          2.03 Mandatory Reduction of Commitments. (a) The Total Commitment (and
the Commitment of each Bank) shall be terminated at 5:00 p.m. (New York time)
on the Expiration Date unless the Effective Date has occurred on or before such
date.



          (b) Unless previously terminated pursuant to Section 2.03(a) above, the
Total Commitment shall terminate on the Maturity Date.



          SECTION 3. Payments.



          3.01 Voluntary Prepayments. The Borrower shall have the right to prepay
Loans, without premium or penalty (except for amounts payable pursuant to
Section 1.11), in whole or in part, from time to time on the following terms
and conditions: (i) the Borrower shall give the Administrative Agent at its
Notice Office written notice (or telephonic notice promptly confirmed in
writing) of its intent to prepay the Loans, the amount of such prepayment and
(in the case of Eurodollar Loans) the specific Borrowing(s) pursuant to which
made, which notice shall be received by the Administrative Agent (x) in the
case of Base Rate Loans, no later than 11:00 A.M. (New York time) one Business
Day prior to the date of such prepayment, or (y) in the case of Eurodollar
Loans, three Business Days prior to the date of such prepayment, which notice
shall promptly be transmitted by the Administrative Agent to each of the Banks;
(ii) each partial prepayment of any Borrowing shall be in an aggregate
principal amount of at least $5,000,000, provided that no partial prepayment of
Eurodollar Loans made pursuant to a Borrowing shall reduce the aggregate
principal amount of the Loans outstanding pursuant to such Borrowing to an
amount less than $5,000,000; and (iii) each prepayment in respect of any Loans
made pursuant to a Borrowing shall be applied pro rata among such Loans.



          3.02 Mandatory Repayments. (a) On any day on which the sum of the
aggregate outstanding principal amount of the Loans plus the aggregate Letter
of Credit Outstandings exceeds the Total Commitment as then in effect, the
Borrower shall prepay principal of Loans in an amount equal to such excess.
If, after giving effect to the prepayment of all outstanding Loans, as set
forth above, the Letter of Credit Outstandings exceeds the Total Commitment,
the Borrower shall pay to the Administrative Agent at the Payment Office on
such date an amount of cash and/or cash equivalents equal to the amount of such
excess, such cash and/or cash equivalents to be held as security for all
obligations of the Borrower to the Banks hereunder in a cash collateral account
to be established by the Administrative Agent on terms reasonably satisfactory
to the Administrative Agent.



          (b) With respect to each repayment of Loans required by this Section 3.02,
the Borrower may designate the Types of Loans which are to be repaid and, in
the case of Eurodollar Loans, the specific Borrowing or Borrowings pursuant to
which made, provided that: (i) if any repayment of Eurodollar Loans made
pursuant to a single Borrowing shall reduce the outstanding Eurodollar Loans
made pursuant to such Borrowing to an amount less than $5,000,000 such
Borrowing shall be converted immediately into a Borrowing of Base Rate Loans
and (ii) each repayment of Loans made pursuant to the same Borrowing shall be
applied pro rata among the Banks which made such Loans. In the absence of a
designation by the Borrower as described in the preceding sentence, the
Administrative Agent shall, subject to the above, make such designation in its
sole discretion.



 









 





          3.03 Method and Place of Payment. Except as otherwise specifically
provided herein, all payments under this Agreement and the Notes shall be made
to the Administrative Agent for the ratable account of the Banks entitled
thereto, not later than 11:00 A.M. (New York time) on the date when due and
shall be made in immediately available funds and in lawful money of the United
States of America at the Payment Office, it being understood that written,
telex or facsimile notice by the Borrower to the Administrative Agent to make a
payment from the funds in the Borrower’s account at the Payment Office shall
constitute the making of such payment to the extent of such funds held in such
account. Any payments under this Agreement which are made later than
11:00 A.M. (New York time) shall be deemed to have been made on the next
succeeding Business Day. Whenever any payment to be made hereunder shall be
stated to be due on a day which is not a Business Day, the due date thereof
shall be extended to the next succeeding Business Day and, with respect to
payments of principal, interest shall be payable during such extension at the
applicable rate in effect immediately prior to such extension.



          3.04 Net Payments. (a) All payments made by the Borrower hereunder or
under any Note will be made without setoff, counterclaim or other defense.
Except as provided in Section 3.04(b), all such payments will be made free and
clear of, and without deduction or withholding for, any present or future
taxes, levies, imposts, duties, fees, assessments or other charges of whatever
nature now or hereafter imposed by any jurisdiction or by any political
subdivision or taxing authority thereof or therein with respect to such
payments (but excluding, except as provided in the second succeeding sentence,
any tax imposed on or measured by the net income or net profits of a Bank, or
franchise taxes imposed in lieu of taxes imposed on or measured by net income
or net profits of a Bank, pursuant to the laws of the jurisdiction in which it
is organized or the jurisdiction in which the principal office or applicable
lending office of such Bank is located or any subdivision thereof or therein)
and all interest, penalties or similar liabilities with respect to such
non-excluded taxes, levies, imposts, duties, fees, assessments or other charges
(all such non-excluded taxes, levies, imposts, duties, fees, assessments or
other charges being referred to collectively, as “Taxes”). If any Taxes are so
levied or imposed, the Borrower agrees to pay the full amount of such Taxes,
and such additional amounts as may be necessary so that every payment of all
amounts due under this Agreement or under any Note, after withholding or
deduction for or on account of any Taxes, will not be less than the amount
provided for herein or in such Note. If any amounts are payable in respect of
Taxes pursuant to the preceding sentence, the Borrower agrees to reimburse each
Bank, upon the written request of such Bank, for taxes imposed on or measured
by the net income or net profits of such Bank, and franchise taxes imposed in
lieu of taxes imposed on or measured by net income or net profits of a Bank,
pursuant to the laws of the jurisdiction in which such Bank is organized or in
which the principal office or applicable lending office of such Bank is located
or under the laws of any political subdivision or taxing authority of any such
jurisdiction in which such Bank is organized or in which the principal office
or applicable lending office of such Bank is located and for any withholding of
taxes as such Bank shall determine are payable by, or withheld from, such Bank,
in respect of such amounts so paid to or on behalf of such Bank pursuant to the
preceding sentence and in respect of any amounts paid to or on behalf of such
Bank pursuant to this sentence. The Borrower will furnish to the
Administrative Agent within 45 days after the date the payment of any Taxes is
due pursuant to applicable law certified copies of tax receipts



 









 




evidencing such payment by the Borrower. The Borrower agrees to indemnify and hold harmless
each Bank, and reimburse such Bank upon its written request, for the amount of
any Taxes so levied or imposed and paid by such Bank.




          (b) Each Bank that is not a United States person (as such term is defined
in Section 7701(a)(30) of the Code) for U.S. Federal income tax purposes agrees
to deliver to the Borrower and the Administrative Agent on or prior to the
Effective Date, or in the case of a Bank that is an assignee or transferee of
an interest under this Agreement pursuant to Section 11.04(b) (unless the
respective Bank was already a Bank hereunder immediately prior to such
assignment or transfer), on the date of such assignment or transfer to such Bank, (i)
two accurate and complete original signed copies of Internal Revenue Service
Form W-8ECI or Form W-8BEN (with respect to a complete exemption under an
income tax treaty) (or successor forms) certifying to such Bank’s entitlement
as of such date to a complete exemption from United States withholding tax with
respect to payments to be made under this Agreement and under any Note, or (ii)
if the Bank is not a “bank” within the meaning of Section 881(c)(3)(A) of the
Code and cannot deliver either Internal Revenue Service Form W-8ECI or Form
W-8BEN (with respect to a complete exemption under an income tax treaty)
pursuant to clause (i) above, (x) a certificate substantially in the form of
Exhibit D (any such certificate, a “Section 3.04(b)(ii) Certificate”) and (y)
two accurate and complete original signed copies of Internal Revenue Service
Form W-8BEN (with respect to the portfolio interest exemption) (or successor
form) certifying to such Bank’s entitlement as of such date to a complete
exemption from United States withholding tax with respect to payments of
interest to be made under this Agreement and under any Note. In addition, each
Bank agrees that from time to time after the Effective Date, when a lapse in
time or change in circumstances renders the previous certification obsolete or
inaccurate in any material respect, it will deliver to the Borrower and the
Administrative Agent two new accurate and complete original signed copies of
Internal Revenue Service Form W-8ECI, W-8BEN (with respect to the benefits of
any income tax treaty), or Form W-8BEN (with respect to the portfolio interest
exemption) and a Section 3.04(b)(ii) Certificate, as the case may be, and such
other forms as may be required in order to confirm or establish the entitlement
of such Bank to a continued exemption from or reduction in United States
withholding tax with respect to payments under this Agreement and any Note, or
it shall immediately notify the Borrower and the Administrative Agent of its
inability to deliver any such Form or Certificate, in which case such Bank
shall not be required to deliver any such Form or Certificate pursuant to this
Section 3.04(b). Notwithstanding anything to the contrary contained in Section
3.04(a), but subject to Section 11.04(b) and the immediately succeeding
sentence, (x) the Borrower shall be entitled, to the extent it is required to
do so by law, to deduct or withhold income or similar taxes imposed by the
United States (or any political subdivision or taxing authority thereof or
therein) from interest, Fees or other amounts payable hereunder for the account
of any Bank which is not a United States person (as such term is defined in
Section 7701(a)(30) of the Code) for U.S. Federal income tax purposes to the
extent that such Bank has not provided to the Borrower U.S. Internal Revenue
Service Forms that establish a complete exemption from such deduction or
withholding and (y) the Borrower shall not be obligated pursuant to Section
3.04(a) hereof to gross-up payments to be made to a Bank in respect of income
or similar taxes imposed by the United States if (I) such Bank has not provided
to the Borrower the Internal Revenue Service Forms required to be provided to
the Borrower pursuant to this Section 3.04(b) or (II) in the case of a payment,
other than interest, to a Bank described in clause (ii) above, to the extent
that such Forms do not establish a complete exemption from withholding of such
taxes. Notwithstanding anything to the con-



 









 




trary contained in the preceding sentence or elsewhere in this Section 3.04 and except as set forth in Section
11.04(b), the Borrower agrees to pay any additional amounts and to indemnify
each Bank in the manner set forth in Section 3.04(a) (without regard to the
identity of the jurisdiction requiring the deduction or withholding) in respect
of any amounts deducted or withheld by it as described in the immediately
preceding sentence as a result of any changes after the Effective Date in any
applicable law, treaty, governmental rule, regulation, guideline or order, or
in the interpretation thereof, relating to the deducting or withholding of such
income or similar taxes.




          SECTION 4. Conditions Precedent.



          4.01 Conditions Precedent to the Effective Date. The occurrence of the
Effective Date and the obligation of the Banks to make Loans to the Borrower
and the obligation of the Issuing Bank to issue Letters of Credit hereunder on
the Effective Date is subject to the satisfaction of each of the following
conditions at such time:



          (a) Effectiveness; Notes. On or prior to the Effective Date (i) this
Agreement shall have been executed and delivered as provided in Section 11.10
and (ii) there shall have been delivered to the Administrative Agent for the
account of each Bank the appropriate Note or Notes executed by the Borrower in
the amount, maturity and as otherwise provided herein.



          (b) Opinions of Counsel. On the Effective Date, the Administrative Agent
shall have received an opinion, or opinions, in form and substance reasonably
satisfactory to the Administrative Agent, addressed to each of the Banks and
dated the Effective Date, from Joseph Haggerty, Esq., counsel to the Borrower,
which opinion shall cover the matters contained in Exhibit E hereto.



          (c) Officer’s Certificate; Corporate Proceedings. (i) On the Effective
Date, the Banks shall have received from the Borrower (A) an Officer’s
Certificate, dated the Effective Date and signed by the President or any Vice
President of the Borrower, in the form of Exhibit F-1 hereto with appropriate
insertions and (B) a Secretary’s Certificate, dated the Effective Date and
signed by the Secretary or any Assistant Secretary of the Borrower, in the form
of Exhibit F-2 hereto with appropriate insertions, together with (x) copies of
the Certificate of Incorporation and By-Laws or other organizational documents
of the Borrower and (y) the resolutions of the Borrower and the other documents
referred to in such certificate, and the foregoing shall be reasonably
satisfactory to the Administrative Agent.



          (ii) All corporate and legal proceedings and all instruments and
agreements in connection with the transactions contemplated by this Agreement
and the other Credit Documents shall be reasonably satisfactory in form and
substance to the Administrative Agent, and the Administrative Agent shall have
received all information and copies of all certificates, documents and papers,
including certificates of existence or good standing certificates, as
applicable, and any other records of corporate proceedings and governmental
approvals, if any, which the Administrative Agent reasonably may have requested
in connection therewith, such documents and papers where appropriate to be
certified by proper corporate or governmental authorities.



 









 





          (d) Existing Credit Agreement. On the Effective Date and concurrently
with the making of the initial Loans hereunder, all commitments under the
Existing Credit Agreement shall have been terminated, and all principal,
interest, fees and other amounts thereunder shall have been paid in full in
each case to the satisfaction of the Administrative Agent.



          (e) Adverse Change, etc. On the Effective Date, nothing shall have
occurred (and the Banks shall have become aware of no facts or conditions not
previously known or disclosed on any Annex hereto), which, when taken as a
whole, the Administrative Agent shall reasonably determine (A) has, or is
reasonably likely to have, a material adverse effect on the rights or remedies
of the Banks or the Administrative Agent under this Agreement or any other
Credit Document, or on the ability of the Borrower to perform its obligations
to them, or (B) has or is reasonably likely to have a Material Adverse Effect.



          (f) Litigation. No actions, suits or proceedings shall be pending or, to
the knowledge of the Borrower, threatened against the Borrower (i) with respect
to this Agreement or any other Credit Document or the transactions contemplated
hereby or thereby or (ii) which either the Administrative Agent or the Required
Banks shall in good faith determine has, or is reasonably likely to have, (x) a
Material Adverse Effect or (y) a material adverse effect on the rights or
remedies of the Banks or the Administrative Agent hereunder or under any other
Credit Document or on the ability of the Borrower to perform its obligations to
them hereunder or under any other Credit Documents.



          (g) Approvals, etc. On the Effective Date the following approvals shall
have been obtained to the satisfaction of the Banks:




     (i) all necessary and material governmental and third party
approvals, permits and licenses in connection with this Agreement
and the transactions contemplated by the Credit Documents and
otherwise referred to herein or therein, to the extent such
approvals, consents, permits and licenses are required to be
obtained or made prior to the Effective Date, shall have been
obtained and remain in full force and effect, and all applicable
waiting periods shall have expired, in each case without any action
being taken by any competent authority (including any court having
jurisdiction) which imposes, in the reasonable judgment of the
Required Banks or the Administrative Agent, materially adverse
conditions upon the consummation of any such agreement or
transaction; and




     (ii) any necessary shareholder approvals in connection with
the Indebtedness to be incurred pursuant to this Agreement shall
have been obtained and remain in full force and effect.



          (h) Financial Statements; Projections. Prior to the Effective Date, the
Borrower shall have delivered or caused to be delivered to the Administrative
Agent with copies for each Bank:




     (i) the audited consolidated and consolidating balance sheets
of the Borrower as of December 31, 2002, the related consolidated
and consolidating statements of income, and the related
consolidated statements of stockholder’s equity and of cash flows
for the fiscal year then ended, in each case prepared in accordance
with GAAP;



 









 






     (ii) the audited Annual Statement of each Regulated Insurance
Company (other than American Vanguard Life Insurance Company) for
the fiscal year ended December 31, 2002, prepared in accordance with SAP
and as filed with the Applicable Insurance Regulatory Authority;




     (iii) the unaudited consolidated and consolidating balance
sheets of the Borrower as of September 30, 2003, the related
consolidated and consolidating statements of income, and the
related consolidated statements of stockholder’s equity and of cash
flows for the fiscal quarter then ended, in each case prepared in
accordance with GAAP; and




     (iv) the Quarterly Statement of each Regulated Insurance
Company for the fiscal quarter ended September 30, 2003.



          (i) Payment of Fees. On the Effective Date, all costs, fees and expenses
(including, without limitation, legal fees and expenses), and all other
compensation contemplated by this Agreement or the other Credit Documents, due
to the Administrative Agent or any Banks shall have been paid to the extent
due.



          4.02 Conditions Precedent to All Loans. The obligation of each Bank to
make each Loan and of the Issuing Bank to issue each Letter of Credit
(including, without limitation, Loans made and Letters of Credit issued on the
Effective Date) is subject, at the time of the making of each such Loan and
issuance of each such Letter of Credit, to the satisfaction of the following
conditions:



          (a) No Default; Representations and Warranties. At the time of the making
of each such Loan and the issuance of each such Letter of Credit and also after
giving effect thereto (i) there shall exist no Default or Event of Default and
(ii) all representations and warranties contained herein or in the other Credit
Documents shall be true and correct in all material respects with the same
effect as though such representations and warranties had been made on the date
of the making of such Loan and the issuance of such Letter of Credit (it being
understood and agreed that any representation or warranty which by its terms is
made as of a specified date shall be required to be true and correct in all
material respects only as of such specified date).



          (b) Notice of Borrowing. Prior to the making of each Loan, the
Administrative Agent shall have received a Notice of Borrowing meeting the
requirements of Section 1.03(a).



          The occurrence of the Effective Date shall constitute a respresentation
and warranty by the Borrower to the Administrative Agent and each of the Banks
that all the conditions specified in this Section 4 and applicable to the
Effective Date exist as of that time (except to the extent that any of the
conditions specified in this Section 4 are required to be satisfactory to, or
determined by, any Bank, the Required Banks and/or the Administrative Agent or
otherwise expressly calls for a subjective determination to be made by any
Bank, the Required



 









 




Banks and/or the Administrative Agent). Thereafter, the
incurrence of each Loan and/or the issuance of such Letter of Credit and
acceptance of the proceeds of each such Loan shall constitute a representation
and warranty by the Borrower to the Administrative Agent and each of the Banks
that the conditions specified in Section 4.02(a) exist as of the making of each
such Loan and/or the issuance of each such Letter of Credit (except to the
extent that any of the conditions specified in this Section 4 are required to
be satisfactory to, or determined by any Bank, the Required Banks and/or the
Administrative Agent or otherwise expressly calls for a subjective
determination to be made by any Bank, the Required Banks and/or the
Administrative Agent). All of the Notes, certificates, legal opinions and
other documents and papers referred to in this Section 4, unless otherwise
specified, shall be delivered to the Administrative Agent at the Notice Office
for the account of each of the Banks and, except for the Notes, in sufficient
counterparts or copies for each of the Banks and shall be in form and substance
reasonably satisfactory to the Administrative Agent.




          SECTION 5. Representations, Warranties and Agreements. In order to induce
the Banks to enter into this Agreement and to make the Loans provided for
herein, the Borrower makes the following representations and warranties to, and
agreements with, the Banks, all of which shall survive the execution and
delivery of this Agreement and the making of the Loans (with the making of each
Loan being deemed to constitute a representation and warranty that the matters
specified in this Section 5 are true and correct in all material respects on
and as of the date of the making of such Loan unless such representation and
warranty expressly indicates that it is being made as of any specific date in
which case such representation and warranty shall be true and correct in all
material respects only as of such specified date):



          5.01 Corporate Status. The Borrower and each of its Material Subsidiaries
(i) is a duly organized and validly existing corporation or business trust or
other entity in good standing under the laws of the jurisdiction of its
organization and has the corporate or other organizational power and authority
to own its property and assets and to transact the business in which it is
engaged and presently proposes to engage, and (ii) has been duly qualified and
is authorized to do business and is in good standing in all jurisdictions where
it is required to be so qualified, and, in each case, where the failure to be
so organized, existing, qualified, authorized or in good standing would have a
Material Adverse Effect.



          5.02 Corporate Power and Authority. The Borrower has the corporate power
and authority to execute, deliver and carry out the terms and provisions of the
Credit Documents to which it is a party and has taken all necessary corporate
action to authorize the execution, delivery and performance of the Credit
Documents to which it is a party. The Borrower has duly executed and delivered
each Credit Document to which it is a party and each such Credit Document
constitutes the legal, valid and binding obligation of the Borrower enforceable
against the Borrower in accordance with its terms, except to the extent that
enforceability thereof may be limited by applicable bankruptcy, insolvency,
moratorium or similar laws affecting creditors’ rights generally and general
principles of equity regardless of whether enforcement is sought in a
proceeding in equity or at law.



          5.03 No Contravention of Laws, Agreements or Organizational Documents. Neither the execution, delivery and performance by the Borrower of the
Credit Documents to which it is a party nor compliance with the terms and
provisions thereof, nor the consummation



 









 




of the transactions contemplated
therein, (i) will contravene any applicable provision of any law, statute,
rule, regulation, order, writ, injunction or decree of any court or
governmental instrumentality, (ii) will conflict or be inconsistent with or
result in any breach of any of the terms, covenants, conditions or provisions
of, or constitute a default under, or result in the creation or imposition of
(or the obligation to create or impose) any Lien upon any of the property or
assets of the Borrower or any of its Subsidiaries pursuant to the terms of, any
indenture, mortgage, deed of trust, loan agreement, credit agreement or any
other material instrument to which the Borrower or any of its Subsidiaries is a
party or by which it or any of its property or assets are bound or to which it
may be subject or (iii) will violate any provision of the Certificate of
Incorporation or By-Laws of the Borrower or any of its Subsidiaries.




          5.04 Litigation and Contingent Liabilities. There are no actions, suits
or proceedings pending or threatened in writing involving the Borrower or any
of its Subsidiaries (including, without limitation, with respect to this
Agreement or any documentation executed in connection herewith) (i) that have
or would reasonably be expected to have a Material Adverse Effect or (ii) that
could reasonably be expected to have a material adverse effect on the rights or
remedies of the Banks or the Administrative Agent or on the ability of the
Borrower to perform its respective obligations to the Banks or the
Administrative Agent hereunder and under the other Credit Documents to which it
is, or will be, a party.



          5.05 Use of Proceeds; Margin Regulations. (a) The proceeds of the Loans
incurred on the Effective Date shall be utilized to repay all obligations
existing under the Existing Credit Agreement and all fees, interest and other
amounts payable thereunder in their entirety.



          (b) After compliance with clause (a) above, the proceeds of the Loans
incurred on the Effective Date and thereafter shall be utilized for general
corporate purposes.



          (c) Neither the making of any Loan hereunder or other Indebtedness or
financing of the Borrower, nor the use of the proceeds thereof, will violate or
be inconsistent with the provisions of Regulation T, U or X of the Board of
Governors of the Federal Reserve System and no part of the proceeds of any Loan
or other Indebtedness or financing of the Borrower will be used to purchase or
carry any Margin Stock or to extend credit for the purpose of purchasing or
carrying any Margin Stock.



          5.06 Approvals. Any order, consent, approval, license, authorization, or
validation of, or filing, recording or registration with, or exemption by, any
foreign or domestic governmental or public body or authority, or any
subdivision thereof, which is required to authorize or is required in
connection with (i) the execution, delivery and performance of any Credit
Document or (ii) the legality, validity, binding effect or enforceability of
any Credit Document, has been obtained.



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



 









 





          5.08 Public Utility Holding Company Act. Neither the Borrower nor any of
its Subsidiaries is a “holding company,” or a “subsidiary company” of a
“holding company,” or an “affiliate” of a “holding company” or of a “subsidiary
company” of a “holding company,” within the meaning of the Public Utility
Holding Company Act of 1935, as amended.



          5.09 True and Complete Disclosure; Projections and Assumptions. All
factual information (taken as a whole) heretofore or contemporaneously
furnished by the Borrower or any of its Subsidiaries to the Administrative
Agent or any Bank (including, without limitation, all information contained in
the Credit Documents) for purposes of or in connection with this Agreement or
any transaction contemplated herein is, and all other factual information
(taken as a whole with all other such information theretofore or
contemporaneously furnished) hereafter furnished by any such Persons in writing
to the Administrative Agent will be, true and accurate in all material respects
on the date as of which such information is dated and not incomplete by
omitting to state any material fact necessary to make such information (taken
as a whole with all other such information theretofore or contemporaneously
furnished) not misleading at such time in light of the circumstances under
which such information was provided. The projections contained in such
materials are based on good faith estimates and assumptions believed by the
Borrower to be reasonable and attainable at the time made, it being recognized
by the Banks that such projections as to future events are not to be viewed as
facts and that actual results during the period or periods covered by any such
projections may differ from the projected results.



          5.10 Financial Condition; Financial Statements. (a) The financial
statements delivered to the Administrative Agent pursuant to Section 4.01(h)
present fairly in all material respects the financial position of the
respective Persons referred to in such Sections at the dates of said statements
and the results of operations for the periods covered thereby. All such
financial statements have been prepared in accordance with SAP or GAAP, as
indicated in Section 4.01(h), consistently applied except to the extent
provided in the notes to said financial statements.



          (b) Since December 31, 2002, nothing has occurred which, when taken as a
whole, has or is reasonably likely to have a Material Adverse Effect.



          (c) As of the Effective Date, American Vanguard Life Insurance Company is
not required by the Applicable Insurance Regulatory Authority in the State of
Iowa and under relevant Iowa statutes and regulations to file audited Annual
Statements with the Applicable Insurance Regulatory Authority.



          5.11 Tax Returns and Payments. The Borrower and its Subsidiaries have
filed or have obtained valid extensions with respect to all material income and
other material tax returns which are required to be filed and have paid, on or
before the due dates thereof, all taxes shown to be due and payable on said
returns or on any assessments made against them or their property and all other
material taxes, assessments, fees or other charges imposed on them or any of
their property by any Governmental Authority (other than (x) those not yet due
and payable and (y) those contested in good faith and for which adequate
reserves have been established), and there are no waivers or agreements for the
extension of time for the assessment of any tax other than those not reasonably
likely to have a Material Adverse Effect. No tax Liens have been filed and no
claims are pending or, to the best knowledge of the Borrower, proposed or
threatened with respect to any such taxes, fees or other charges for any fiscal
period, which are reasonably likely to have a Material Adverse Effect.



 









 





          5.12 Compliance with ERISA. (a) Annex II sets forth each Plan in effect
on the Effective Date which is intended to be qualified under Section 401(a) of
the Code; each Plan (and each related trust, insurance contract or fund) is in
compliance with its terms and with all applicable laws, including without
limitation ERISA and the Code; each Plan (and each related trust, if any) which
is intended to be qualified under Section 401(a) of the Code has received a
determination letter from the Internal Revenue Service to the effect that it
meets the requirements of Sections 401(a) and 501(a) of the Code and/or, in the
case of a Plan amendment, has timely filed or will timely file a request for
such a determination letter; no Reportable Event has occurred; no Plan which is
a multiemployer plan (as defined in Section 4001(a)(3) of ERISA) is, to the
knowledge of the Borrower, insolvent or in reorganization; no defined benefit
Plan which is subject to Section 412 of the Code or Section 302 of ERISA has an
Unfunded Current Liability; no Plan which is subject to Section 412 of the Code
or Section 302 of ERISA has an accumulated funding deficiency, within the
meaning of such sections of the Code or ERISA, or has applied for or received a
waiver of an accumulated funding deficiency or an extension of any amortization
period, within the meaning of Section 412 of the Code or Section 303 or 304 of
ERISA; all contributions required to be made with respect to a Plan have been
timely made except to the extent of any such contribution which, if not timely
made, would not result in a material liability to the Borrower, any Subsidiary
of the Borrower or any ERISA Affiliate; neither the Borrower nor any Subsidiary
of the Borrower nor any ERISA Affiliate has incurred any liability (including
any indirect, contingent or secondary liability) to or on account of a Plan
pursuant to Section 409, 502(i), 502(1), 515, 4062, 4063, 4064, 4069, 4201,
4204, or 4212 of ERISA or Section 401(a)(29), 4971 or 4975 of the Code or
expects to incur any such liability under any of the foregoing sections with
respect to any Plan; no condition exists which presents a risk to the Borrower
or any Subsidiary of the Borrower or any ERISA Affiliate of incurring a
liability to or on account of a Plan pursuant to the foregoing provisions of
ERISA and the Code; no proceedings have been instituted by the PBGC to
terminate or appoint a trustee to administer any Plan which is subject to Title
IV of ERISA in a distress termination; no action, suit, proceeding, hearing,
audit or investigation with respect to the administration, operation or the
investment of assets of any Plan (other than routine claims for benefits or
relating to qualified domestic relations orders) is pending, expected or, to
the knowledge of the Borrower, threatened; neither the Borrower nor
any Subsidiary of the Borrower nor any ERISA Affiliate has incurred any
liability as a result of any group health plan (as defined in Section 607(1) of
ERISA or Section 4980B(g)(2) of the Code) other than a multiemployer plan
described in Section 3(37) of ERISA which covers or has covered employees or
former employees of the Borrower, any Subsidiary of the Borrower, or any ERISA
Affiliate having not been operated in compliance with the provisions of Part 6
of subtitle B of Title I of ERISA and Section 4980B of the Code; no lien
imposed under the Code or ERISA on the assets of the Borrower or any Subsidiary
of the Borrower or any ERISA Affiliate exists or is likely to arise on account
of any Plan; the Borrower and its Subsidiaries may cease contributions to or
terminate any employee benefit plan maintained by any of them without incurring
any liability; and neither the Borrower nor any Subsidiary of the Borrower nor
any ERISA Affiliate has ever maintained or contributed to (or had an obligation
to contribute to) any Foreign Pension Plans; provided that the provisions of
this Section 5.12 shall not be deemed to be untrue based on circumstances which
would not, individually or in the aggregate, have or reasonably be expected to
have, a Material Adverse Effect.



 









 





          5.13 Material Subsidiaries. (a) Annex III hereto lists each Material
Subsidiary of the Borrower as of the Effective Date (and the direct and
indirect ownership interest of the Borrower therein) and also identifies the
owner or owners thereof as of such date.



          (b) There are no restrictions on the Borrower or any of its Subsidiaries
which prohibit or otherwise restrict the transfer of cash or other assets from
any Subsidiary of the Borrower to the Borrower, other than (i) prohibitions or
restrictions existing under or by reason of this Agreement or the other Credit
Documents, (ii) prohibitions or restrictions existing under or by reason of
Legal Requirements, and (iii) other prohibitions or restrictions which, either
individually or in the aggregate, would not reasonably be expected to have a
material adverse effect on the Borrower’s ability to perform its obligations
under the Credit Documents.



          5.14 Intellectual Property, etc. The Borrower and each of its Material
Subsidiaries have obtained all material patents, trademarks, service marks,
trade names, copyrights, licenses and other rights, free from unduly burdensome
restrictions, that are necessary for the operation of their respective
businesses as presently conducted and as proposed to be conducted.



          5.15 Capitalization. As of the Effective Date, the authorized capital
stock of the Borrower consists of (i) 230,000,000 shares of common stock, no
par value per share, 39,194,602 of which are issued and outstanding, and (ii)
20,000,000 shares of preferred stock, no par value per share, none of which is
issued and outstanding. As of the Effective Date, all such outstanding shares
of the Borrower have been duly and validly issued and are fully paid and
nonassessable. As of the Effective Date, neither the Borrower nor any of its
Material Subsidiaries has outstanding any securities convertible into or
exchangeable for its capital stock or outstanding any rights to subscribe for
or to purchase, or any options for the purchase of, or any agreements providing
for the issuance (contingent or otherwise) of, or any calls, commitments or
claims of any character relating to, its capital stock except for options, warrants and grants
outstanding in the aggregate amounts set forth on Annex IV.



          5.16 Indebtedness. Annex V sets forth a true and complete list of all
items of Indebtedness for borrowed money of the Borrower and its Material
Subsidiaries as of the Effective Date the aggregate principal amount of which
equals or exceeds $5,000,000, in each case showing the aggregate principal
amount thereof, the name of the lender in respect thereof and the name of the
respective borrower and any other entity which has directly or indirectly
guaranteed such Indebtedness.



          5.17 Compliance with Statutes, etc. The Borrower and each of its
Subsidiaries is in compliance with all applicable statutes, regulations and
orders of, and all applicable restrictions imposed by, and has filed or
otherwise provided all material reports, data, registrations, filings,
applications and other information required to be filed with or otherwise
provided to, all governmental bodies, domestic or foreign, in respect of the
conduct of its business and the ownership of its property (including compliance
with all applicable environmental laws), except such failure(s) to comply or
file as would not, in the aggregate, have



 









 




a Material Adverse Effect. All required regulatory approvals are in full force and effect on the date hereof,
except where the failure of such approvals to be in full force and effect would
not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect.




          5.18 Insurance Licenses. Each Regulated Insurance Company has obtained
and maintains in full force and effect all licenses and permits from all
regulatory authorities necessary to operate in the jurisdictions in which such
Regulated Insurance Company operates, in each case other than such licenses and
permits the failure to obtain or maintain which, individually or in the
aggregate, is not reasonably likely to have a Material Adverse Effect. Annex
VI sets forth a true, correct and complete list, as of the Effective Date, of
each of the jurisdictions in which each Material Regulated Insurance Company is
duly licensed and in good standing to write insurance, that each Material
Regulated Insurance Company is authorized to write in such jurisdictions.



          5.19 Insurance Business. All insurance policies issued by any Regulated
Insurance Company are, to the extent required under Applicable Law, on forms
approved by the insurance regulatory authorities of the jurisdiction where
issued or have been filed with and not objected to by such authorities within
the period provided for objection, except for those forms with respect to which
a failure to obtain such approval or make such a filing without it being
objected to, would not, singly or in the aggregate, reasonably be expected to
have a Material Adverse Effect.



          5.20 Reinsurance. As of the Effective Date, the reinsurance agreements described in Annex
VII are the only material contracts regarding reinsurance, coinsurance, excess
insurance, ceding of insurance (other than insurance ceded on an assumption
reinsurance basis), assumption of insurance or indemnification with respect to
insurance (“Reinsurance”) to which any Regulated Insurance Company is a party
and which was entered into after December 31, 2002.



          SECTION 6. Affirmative Covenants. The Borrower hereby covenants and
agrees that on the Effective Date and thereafter, for so long as this Agreement
is in effect and until the Loans, together with interest, Fees and all other
Obligations incurred hereunder, are paid in full:



          6.01 Information Covenants. The Borrower will furnish to each Bank:



          (a) Annual Financial Statements. (i) As soon as available and in any
event within 95 days after the close of each fiscal year of the Borrower, (x)
the consolidated balance sheet of the Borrower, in each case, as at the end of
such fiscal year and the related consolidated statements of income, of
stockholders’ equity and of cash flows for such fiscal year and (y) the
consolidating balance sheet of the Borrower as at the end of the fiscal year
and the related consolidating statement of income for such fiscal year; in each
case prepared in accordance with GAAP and, in the case of such consolidated
statements setting forth comparative figures for the preceding fiscal year, and
examined by independent certified public accountants of recognized national
standing whose report shall not be qualified as to the scope of audit or as to
the status of the Borrower and its Material Subsidiaries as a going concern.



 









 





          (ii) As soon as available and in any event within 120 days after the close
of each fiscal year of each Material Regulated Insurance Company, the Annual
Statement (prepared in accordance with SAP) for such fiscal year of such
Material Regulated Insurance Company, as filed with the Applicable Insurance
Regulatory Authority in compliance with the requirements thereof (or a report
containing equivalent information for any Material Regulated Insurance Company
not so required to file the foregoing with the Applicable Insurance Regulatory
Authority) together with the opinion thereon of the Chief Financial Officer or
other Authorized Officer of such Material Regulated Insurance Company stating
that such Annual Statement presents fairly in all material respects the
financial condition and results of operations of such Material Regulated
Insurance Company in accordance with SAP.



          (iii) As soon as available and in any event within 120 days after the close
of each fiscal year of the Borrower, a copy of the “Statement of Actuarial
Opinion” and “Management Discussion and Analysis” for each Material Regulated
Insurance Company (prepared in accordance with SAP) for such fiscal year and as
filed with the Applicable Regulatory Insurance Authority in compliance with the
requirements thereof (or a report containing equivalent information for any
Material Regulated Insurance Company not so required to file the foregoing with
the Applicable Regulatory Insurance Authority).



          (b) Quarterly Financial Statements. (i) As soon as available and in any
event within 50 days after the close of each of the first three quarterly
accounting periods in each fiscal year of the Borrower, (x) the consolidated balance sheet of the Borrower,
each as at the end of such fiscal quarter and the related consolidated
statements of income, of stockholder’s equity and of cash flows for such
quarterly period and for the elapsed portion of the fiscal year ended with the
last day of such quarterly period and (y) the consolidating balance sheet of
the Borrower as at the end of such fiscal quarter and the related consolidating
statement of income for such quarterly period and for the elapsed portion of
the fiscal year ended with the last day of such quarterly period; and, in the
case of such consolidated statements setting forth comparative figures for the
related periods in the prior fiscal year, and all of which shall be prepared in
accordance with GAAP and certified by the Chief Financial Officer or other
Authorized Officer of the Borrower, as the case may be, subject to changes
resulting from normal year-end audit adjustments.



          (ii) As soon as available and in any event within 50 days after the close
of each of the first three quarterly accounting periods in each fiscal year of
each Material Regulated Insurance Company, the Quarterly Statement (prepared in
accordance with SAP) for such fiscal period of such Material Regulated
Insurance Company, as filed with the Applicable Insurance Regulatory Authority
together with the opinion thereon of the Chief Financial Officer or other
Authorized Officer of such Material Regulated Insurance Company stating that
such financial statements present fairly in all material respects the financial
condition and results of operations of such Material Regulated Insurance
Company in accordance with SAP.



          (c) Officer’s Certificates. At the time of the delivery of the financial
statements provided for in Sections 6.01(a)(i) and (ii) and 6.01(b)(i) and
(ii), a certificate of the Chief Financial Officer or other Authorized Officer
of the Borrower to the effect that no Default or Event of Default exists or, if
any Default or Event of Default does exist, specifying the nature and extent
thereof, which certificate shall set forth the calculations required to
establish whether



 









 




the Borrower and its Subsidiaries were in compliance with the
provisions of Sections 7.10 through 7.13, inclusive, as at the end of such
fiscal year or quarter, as the case may be.




          (d) Notice of Default or Litigation. (x) Promptly, and in any event
within three Business Days after the Borrower or any of its Subsidiaries
obtains knowledge thereof, notice of the occurrence of any event which
constitutes a Default or Event of Default, which notice shall specify the
nature thereof, the period of existence thereof and what action the Borrower
proposes to take with respect thereto and (y) promptly after the Borrower or
any of its Subsidiaries obtains knowledge thereof, notice of any outstanding
litigation or governmental or regulatory proceeding pending against the
Borrower or any of its Subsidiaries which could have a Material Adverse Effect,
or a material adverse effect on the ability of the Borrower to perform its
obligations hereunder or under any other Credit Document.



          (e) Auditors’ Reports. Promptly upon receipt thereof, a copy of (x) each
other report or “management letter” submitted to the Borrower or any of its
Subsidiaries by their independent accountants in connection with any annual,
interim or special audit made by them of the books of the Borrower or any of
its Subsidiaries and (y) each report submitted to the Borrower or any of its
Subsidiaries by any independent actuary to the extent that such report, in the
good faith opinion of the Borrower, identifies a condition, situation or event
that has or is reasonably likely to have a Material Adverse Effect.



          (f) Other Regulatory Statements and Reports. Promptly (A) after their
becoming available, copies of any statutory financial statements (including all
exhibits and schedules thereto) that the Borrower or any Regulated Insurance
Company periodically files with the Applicable Insurance Regulatory Authority
of the state in which it is domiciled and, to the extent materially different
from the financial statements filed in such state of domicile, any other state
in which it is deemed to be commercially domiciled or any governmental agency
or agencies substituted therefor, (B) after receipt of a written request by the
Administrative Agent or any Bank and after receipt thereof, copies of all
regular and periodic reports of reviews or examinations (including, without
limitation, triennial examinations and risk adjusted capital reports) of any
Regulated Insurance Company, delivered to such Person by any Applicable
Insurance Regulatory Authority, insurance commission or similar regulatory
authority, (C) after receipt thereof, written notice of any assertion by any
Applicable Insurance Regulatory Authority or any governmental agency or
agencies substituted therefor, as to a violation of any Legal Requirement by
any Regulated Insurance Company which is likely to have a Material Adverse
Effect, (D) after receipt of a written request by the Administrative Agent or
any Bank and after receipt thereof, a copy of the final report to each
Regulated Insurance Company from the NAIC for each fiscal year, as to such
Regulated Insurance Company’s compliance or noncompliance with each of the NAIC
Tests, (E) after receipt thereof, a copy of any final rating analysis by any
rating agency (including, without limitation, A.M. Best) for each Regulated
Insurance Company for each fiscal year, (F) after receipt thereof, a copy of
any notice of termination, cancellation or recapture of any Reinsurance
Agreement or Retrocession Agreement to which a Regulated Insurance Company is a
party to the extent such termination or cancellation is likely to have a
Material Adverse Effect, (G) and after receipt of a written request by the
Administrative Agent or any Bank and within 60 days after the end of the next
succeeding quarter after the making of any such filing, copies of all insurance
holding company system act filings with governmental authorities by a Regulated
Insurance Company, including, without limitation, filings which seek



 









 




approval of governmental authorities with respect to transactions between any of the
Regulated Insurance Companies and any of their respective Affiliates, (H) and
in any event within three Business Days after receipt thereof, copies of any
notice of actual suspension, termination or revocation of any license of any
Material Regulated Insurance Company by any Applicable Insurance Regulatory
Authority, including any request by an Applicable Insurance Regulatory
Authority which commits a Material Regulated Insurance Company to take or
refrain from taking any action or which otherwise affects the authority of such
Material Regulated Insurance Company to conduct its business, and (I) and in
any event within 20 Business Days after the Borrower or any of its Subsidiaries
obtains knowledge thereof, notice of any actual changes in the insurance laws
enacted in any state in which any Regulated Insurance Company is domiciled
which could have a Material Adverse Effect.




          (g) SEC Filings. (i) Promptly upon transmission thereof, copies of (or,
to the extent same is publicly available via the SEC’s “EDGAR” filing system,
written notification of the filing of) any material filings and registrations
with, and reports to, the SEC by the Borrower or any of its Subsidiaries (other
than any registration statement on Form S-8) and copies of all material
financial statements, proxy statements, notices and reports as the Borrower or
any of its Subsidiaries shall send to analysts generally or the holders of
their capital stock or of any public subordinated debt issued by the Borrower
in their capacity as such holders (in each case to the extent not theretofore
delivered to the Banks pursuant to this Agreement); provided that the Borrower
shall be deemed to have complied with this clause (g)(i) by furnishing to the
Administrative Agent for distribution to the Banks via the “Intralinks”
system any such copies or notices.



          (ii) Within 60 days following the end of the quarter in which any of the
following occurs, copies of (or, to the extent same is publicly available via
the SEC’s “EDGAR” filing system, written notification of the filing of) any
other filings and registrations with, and reports to, the SEC by the Borrower
or any of its Subsidiaries (other than any registration statement on Form S-8)
and copies of all other financial statements, proxy statements, notices and
reports as the Borrower or any of its Subsidiaries shall send to analysts
generally or the holders of their capital stock or of any public subordinated
debt issued by the Borrower in their capacity as such holders (in each case to
the extent not theretofore delivered to the Banks pursuant to this Agreement);
provided that the Borrower shall be deemed to have complied with this clause
(g)(ii) by furnishing to the Administrative Agent for distribution to the Banks
via the “Intralinks” system any such copies or notices..



          (h) Other Information. With reasonable promptness, such other information
or existing documents (financial or otherwise) as the Administrative Agent or
any Bank may reasonably request from time to time.



          6.02 Books, Records and Inspections. The Borrower will, and will cause
each of its Material Subsidiaries to, permit officers and designated
representatives of the Administrative Agent or any Bank to visit and inspect
any of the properties or assets of the Borrower and any of its Material
Subsidiaries in whomsoever’s possession (but only to the extent the Borrower or
such Material Subsidiary has the right to do so to the extent in the possession
of another Person), and to examine the books of account of the Borrower and any
of its Material Subsidiaries and discuss the affairs, finances and accounts of
the Borrower and of any of its Material Subsidiaries



 









 




with, and be advised as to the same by, its and their officers and independent accountants and independent
actuaries, if any, all at such reasonable times and intervals, upon reasonable
prior notice and to such reasonable extent as the Administrative Agent or any
Bank may request.




          6.03 Insurance. The Borrower will, and will cause each of its Material
Subsidiaries to, at all times maintain in full force and effect insurance in
such amounts, covering such risks and liabilities and with such deductibles or
self-insured retentions as are in accordance with normal industry practice.



          6.04 Payment of Taxes. The Borrower will pay and discharge, and will
cause each of its Subsidiaries to pay and discharge, all taxes, assessments and
governmental charges or levies imposed upon it or upon its income or profits,
or upon any properties belonging to it, prior to the date on which penalties
attach thereto, and all lawful claims (other than claims relating to the
adjustment or settling, in the ordinary course of business, of claims in
respect of insurance policies or reinsurance contracts) which, if unpaid, might
become a Lien or charge upon any properties of the Borrower or any of its
Material Subsidiaries; provided, that neither the Borrower nor any
Subsidiary shall be required to pay any such tax, assessment, charge, levy
or claim which (i) is being contested in good faith and by proper proceedings
if it has maintained adequate reserves (in the good faith judgment of the
management of the Borrower) with respect thereto in accordance with GAAP, or
(ii) if not paid, would not, individually or in the aggregate, be reasonably
expected to have a Material Adverse Effect.



          6.05 Corporate Franchises. The Borrower will do, and will cause each
Material Subsidiary to do, or cause to be done, all things reasonably necessary
to preserve and keep in full force and effect its corporate existence, rights
and authority; provided that any transaction permitted by Section 7.02 will not
constitute a breach of this Section 6.05.



          6.06 Compliance with Statutes, etc. The Borrower will, and will cause
each Material Subsidiary to, comply with all applicable statutes, regulations
and orders of, and all applicable restrictions imposed by, all governmental
bodies, domestic or foreign, in respect of the conduct of its business and the
ownership of its property (including applicable statutes, regulations, orders
and restrictions relating to environmental standards and controls) other than
those the non-compliance with which would not have a Material Adverse Effect.



          6.07 ERISA. As soon as possible and, in any event, within 10 Business
Days after the Borrower, any Subsidiary of the Borrower or any ERISA Affiliate
knows or has reason to know of the occurrence of any of the following, the
Borrower will deliver to each of the Banks a certificate of the Chief Financial
Officer of the Borrower setting forth the full details as to such occurrence
and the action, if any, that the Borrower, such Subsidiary or such ERISA
Affiliate is required or proposes to take, together with any notices required
or proposed to be given to or filed with or by the Borrower, the Subsidiary,
the ERISA Affiliate, the PBGC, a Plan participant or the Plan administrator
with respect thereto: that a Reportable Event has occurred; that a
contributing sponsor (as defined in Section 4001(a)(13) of ERISA) of a Plan
subject to Title IV of ERISA is subject to the advance reporting requirement of
PBGC Regulation Section 4043.61 (without regard to subparagraph (b)(1)
thereof), and an event described in subsection .62, .63, .64, .65, .66, .67 or
..68 of PBGC Regulation Section 4043 is reasonably expected to occur with
respect to such plan within the following 30 days; that an accumulated funding
deficiency,



 









 




within the meaning of Section 412 of the Code or Section 302 of
ERISA, in excess of $250,000 has been incurred or an application may be or has
been made for a waiver or modification of the minimum funding standard
(including any required installment payments) or an extension of any
amortization period under Section 412 of the Code or Section 303 or 304 of
ERISA with respect to a Plan; that any contribution required to be made with
respect to a Plan has not been timely made; that a Plan has been or may be
terminated, reorganized, partitioned or declared insolvent under Title IV of
ERISA; that a defined benefit Plan which is subject to Section 412 of the Code
or Section 302 of ERISA has an Unfunded Current Liability in excess of
$250,000; that proceedings may be or have been instituted to terminate or
appoint a trustee to administer a Plan which is subject to Title IV of ERISA;
that a proceeding has been instituted pursuant to Section 515 of ERISA to collect a delinquent contribution to a Plan; that the
Borrower, any Subsidiary of the Borrower or any ERISA Affiliate will or may
incur any liability (including any indirect, contingent, or secondary
liability) to or on account of the termination of or withdrawal from a Plan
under Section 4062, 4063, 4064, 4069, 4201, 4204 or 4212 of ERISA or with
respect to a Plan under Section 401(a)(29), 4971, 4975 or 4980 of the Code or
Section 409 or 502(i) or 502(l) of ERISA or with respect to a group health plan
(as defined in Section 607(1) of ERISA or Section 4980B(g)(2) of the Code)
under Section 4980B of the Code; or that the Borrower or any Subsidiary of the
Borrower may incur any liability pursuant to any employee welfare benefit plan
(as defined in Section 3(1) of ERISA) that provides death, health or severance
benefits to retired employees or other former employees (other than as required
by Section 601 of ERISA or applicable state law) or any Plan (other than (x)
severance benefits paid pursuant to or in connection with a merger or
acquisition permitted under Section 7.02(a) and (y) death, health and severance
benefits accrued on the books of the Borrower and its Subsidiaries); provided
that in each of the foregoing cases delivery is only required in the event that
the occurrence of any of the foregoing would or would reasonably be expected to
result in a Material Adverse Effect. At the request of any Bank, the Borrower
will promptly deliver to such Bank a complete copy of the annual report (on
Internal Revenue Service Form 5500 series) of each Plan (including, to the
extent required, the related financial and actuarial statements and opinions
and other supporting statements, certifications, schedules and information)
required to be filed with the Internal Revenue Service. In addition to any
certificates or notices delivered to the Banks pursuant to the first sentence
hereof, if requested by the Banks, copies of any material notices received by
the Borrower, any Subsidiary of the Borrower or any ERISA Affiliate with
respect to any Plan shall be delivered to the Banks no later than 10 Business
Days after the date such notice has been received by the Borrower, the
Subsidiary or the ERISA Affiliate, as applicable.




          6.08 Performance of Obligations. The Borrower will, and will cause each
of its Material Subsidiaries to, perform in all respects all of its obligations
under the terms of each mortgage, indenture, security agreement, other debt
instrument and contract by which it is bound or to which it is a party except
where the failure to do so would not reasonably be expected to have a Material
Adverse Effect.



          6.09 Good Repair. The Borrower will, and will cause each of its
Subsidiaries to, ensure that its properties and equipment used or useful in its
business in whomsoever’s possession they may be, are kept in good repair,
working order and condition, normal wear and tear excepted, and that from time
to time there are made in such properties and equipment all needful and proper
repairs, renewals, replacements, extensions, additions, betterments and
improvements thereto, to the extent and in the manner customary for companies
in similar businesses, in each case except where the failure to do so would not
reasonably be expected to have a Material Adverse Effect.



 









 





          6.10 End of Fiscal Years; Fiscal Quarters. The Borrower will, for
financial reporting purposes, cause (i) each of its, and each of its Material
Subsidiaries’, fiscal years to end on December 31 of each year and (ii) each of
its, and each of its Material Subsidiaries’, fiscal quarters to end on March
31, June 30, September 30 and December 31 of each year; provided, that in the event
that the Borrower or any of its Material Subsidiaries acquires a Material
Subsidiary after the Effective Date which does not comply with the requirements
of this Section 6.10, there shall not be deemed to be a breach of this Section
6.10 as to such Material Subsidiary so long as the fiscal year and fiscal
quarter ends of such Material Subsidiary are changed to comply with the terms
of this Section 6.10 within one year following the date of acquisition of such
Material Subsidiary.



          6.11 Maintenance of Licenses and Permits. The Borrower will, and will
cause each of its Subsidiaries to, maintain all permits, licenses and consents
as may be required for the conduct of its business by any state, federal or
local government agency or instrumentality except where failure to maintain the
same could not reasonably be expected to have a Material Adverse Effect.



          SECTION 7. Negative Covenants. The Borrower hereby covenants and agrees
that on the Effective Date and thereafter, for so long as this Agreement is in
effect and until the Loans together with interest, Fees and all other
Obligations incurred hereunder, are paid in full:



          7.01 Changes in Business. The Borrower will not, and will not permit any
of its Subsidiaries to, engage in any material business other than the life
insurance and the other types of business currently conducted by the Borrower
and/or its Subsidiaries and businesses reasonably related to the foregoing;
provided, that the foregoing covenant shall not be deemed to limit portfolio
investments by the Borrower and its Subsidiaries and shall not be deemed
violated based on any ancillary business conducted by a Person (or a Subsidiary
of such Person) who might become a Subsidiary of the Borrower after the
Effective Date.



          7.02 Consolidation, Merger, Sale or Purchase of Assets, etc. The Borrower
will not, and will not permit any of its Material Subsidiaries to, wind up,
liquidate or dissolve its affairs, or enter into any transaction of merger or
consolidation, or sell or otherwise dispose of any of its property or assets
(including the sale of capital stock of any of its Material Subsidiaries, but
excluding any sale or disposition of property or assets in the Ordinary Course
of Business), or purchase, lease or otherwise acquire (in one transaction or a
series of related transactions) all or any part of the property or assets of
any Person (excluding any purchases, leases or other acquisitions of property
or assets in, and for use in, the Ordinary Course of Business) or agree to do
any of the foregoing at any future time (unless expressly made subject to the
consent of the Required Banks), except that the following shall be permitted:



          (a) so long as no Default or Event of Default is then in existence or
would result therefrom, the Borrower and its Material Subsidiaries may enter
into mergers and acquisitions (including, without limitation, stock and asset
sales and acquisitions), and transactions reasonably incidental thereto,
provided that (x) in the case of any merger involving the Borrower,



 









 




the Borrower shall be the surviving corporation and (y) in the case of any merger
involving a Material Subsidiary of the Borrower, the surviving corporation of such
merger shall be an existing or resulting Wholly-Owned Material Subsidiary of
the Borrower;




          (b) the Borrower and its Material Subsidiaries may acquire, hold, and
dispose of portfolio investments in accordance with investment guidelines
approved in a written resolution by the board of directors of the Borrower and
its Material Subsidiaries from time to time;



          (c) any Regulated Insurance Company may enter into any Insurance Contract
(including funding agreements), Reinsurance Agreement or Retrocession Agreement
in accordance with its underwriting, indemnity and retention policies as in
effect from time to time;



          (d) the Borrower or any of its Material Subsidiaries may enter into leases
of property or assets not otherwise in violation of this Agreement;



          (e) Wholly-Owned Subsidiaries of the Borrower may be merged or
consolidated with and into Wholly-Owned Subsidiaries of the Borrower;



          (f) the Borrower and its Wholly-Owned Subsidiaries may transfer property
or assets (including, without limitation, the capital stock of Subsidiaries) to
or among one another;



          (g) each of the Borrower and its Material Subsidiaries may sell assets,
provided that:




     (i) the fair market value of any asset the subject of such
asset sale, taken together with the fair market value of all other
assets the subject of such asset sales pursuant to this Section
7.02(g)(i) in the same fiscal year, does not exceed $10,000,000; or




     (ii) such asset sale is with respect to the assets of the
Borrower or any of its Material Subsidiaries and the net proceeds
of such sale are either (x) employed in the business of the
Borrower and its Subsidiaries or reinvested within 180 days after
receipt of such net proceeds in assets used in the business of the
Borrower or any of its Subsidiaries (including, without limitation,
in the investment portfolio of the Borrower and its Subsidiaries)
or (y) used within 180 days after receipt of such net proceeds to
repay Indebtedness of the Borrower or any of its Subsidiaries; and



          (h) issuances of stock permitted under Section 7.05(ii), (iii) or (iv),
purchases by the Borrower of its capital stock and options thereon (including
in the form of convertible equity units) to the extent permitted under Section
7.07(vi) and purchases by the Borrower of its Permitted Subordinated Debt
Securities or Trust Preferred Related Debt Securities under Section 7.06.


Notwithstanding the foregoing provisions of this Section 7.02, neither the
Borrower nor any of its Subsidiaries may make a sale of or with respect to any
capital stock of a Material Regulated Insurance Company, but nothing in this
sentence shall prohibit (x) any such Material Regulated




 









 




Insurance Company from merging with another Material Regulated Insurance Company in a
transaction permitted under clause (e) above or (y) any transfer of the capital
stock of a Subsidiary to the Borrower or a Wholly-Owned Subsidiary of the
Borrower under clause (f) above.




          7.03 Liens. The Borrower will not, and will not permit any of its
Subsidiaries to, create, incur, assume or suffer to exist (collectively,
“Incur”) any Lien upon or with respect to any property or assets of any kind
(real or personal, tangible or intangible) of the Borrower or any such
Subsidiary whether now owned or hereafter acquired, except:



          (a) Liens for taxes not yet due or Liens for taxes being contested in good
faith and by appropriate proceedings for which adequate reserves (in the good
faith judgment of the management of the Borrower) have been established;



          (b) Liens in respect of property or assets of the Borrower or any of its
Subsidiaries imposed by law which were Incurred in the Ordinary Course of
Business, such as carriers’, warehousemen’s and mechanics’ Liens and other
similar Liens arising in the Ordinary Course of Business, and (x) which do not
in the aggregate materially detract from the value of such property or assets
or materially impair the use thereof in the operation of the business of the
Borrower or any Subsidiary or (y) which are being contested in good faith by
appropriate proceedings, which proceedings have the effect of preventing the
forfeiture or sale of any material property or asset subject to such Lien;



          (c) Liens in existence on the Effective Date which are listed, and the
property subject thereto on the Effective Date described, in Annex VIII, and
any extensions or renewals thereof (provided that (i) the securities subject to
any such Lien may be replaced by other securities of no greater principal
amount and (ii) no such extension or renewal will increase the obligations
secured thereby or result in any such Lien attaching to any additional
property);



          (d) Liens arising from judgments, decrees or attachments in circumstances
not constituting an Event of Default under Section 8.07;



          (e) Liens (other than any Lien imposed by ERISA) Incurred or deposits made
in the Ordinary Course of Business in connection with workers’ compensation,
unemployment insurance and other types of social security, or to secure the
performance of tenders, statutory obligations, surety and appeal bonds, bids,
leases, government contracts, performance and return-of-money bonds,
Reinsurance Agreements, Retrocession Agreements and other similar obligations
Incurred in the Ordinary Course of Business (exclusive of obligations in
respect of the payment for borrowed money);



          (f) Leases or subleases granted to others not interfering in any material
respect with the business of the Borrower or any of its Subsidiaries and any
interest or title of a lessor under any lease or sublease not in violation of
this Agreement;



          (g) Easements, rights-of-way, restrictions, minor defects or
irregularities in title and other similar charges or encumbrances not
interfering in any material respect with the ordinary conduct of the business
of the Borrower or any of its Subsidiaries;



 









 





          (h) Liens arising from UCC financing statements regarding leases not in
violation of this Agreement;



          (i) Liens on pledges or deposits of cash or securities made by any
Regulated Insurance Company as a condition to obtaining or maintaining any
licenses issued to it by any Applicable Insurance Regulatory Authority;



          (j) Purchase money mortgages or security interests, conditional sale
arrangements and other similar security interests, on any tangible assets
acquired by the Borrower or such Subsidiary (hereinafter referred to
individually as a “Purchase Money Security Interest”); provided, however, that:




     (i) the transaction in which any Purchase Money Security
Interest is proposed to be created is not then prohibited by any
other Section of this Agreement;




     (ii) any Purchase Money Security Interest shall attach only to
the property or asset acquired in such transaction and shall not
extend to or cover any other assets or properties of the Borrower;




     (iii) the Indebtedness secured or covered by any Purchase
Money Security Interest shall not exceed (at the time such Purchase
Money Security Interest is created) the lesser of the cost or fair
market value of the property or asset acquired; and




     (iv) the aggregate outstanding amount of all Indebtedness of
the Borrower and all of its Subsidiaries secured by Purchase Money
Security Interests shall not at any time exceed an amount equal to
$45,000,000;



          (k) Liens on the property or assets of a Person which becomes a Subsidiary
after the date hereof securing Indebtedness permitted by subsection 7.04(i),
provided that (i) such Liens existed at the time such Person became a
Subsidiary and were not created in anticipation thereof, (ii) any such Lien
shall not extend to or cover any additional property or assets of such Person,
or any property of the Borrower or any other Subsidiary, after the time such
Person becomes a Subsidiary, and (iii) the amount of Indebtedness secured
thereby is not increased;



          (l) Liens securing Indebtedness permitted under Section 7.04(b);



          (m) Liens on marketable securities securing the Indebtedness permitted
under Section 7.04(e); provided that the principal amount of such Indebtedness
so secured shall not exceed $10,000,000;



          (n) Liens on marketable securities and on FHLB stock, in each case
securing the Indebtedness permitted under Section 7.04(j);



          (o) Liens on marketable securities securing the Indebtedness permitted
under Section 7.04(d), (f) or (m); provided that the principal amount of such
Indebtedness so secured shall not exceed $30,000,000;



 









 





          (p) Liens Incurred in the Ordinary Course of Business of acquiring,
holding, managing and disposing of invested assets, including without
limitation investment accounts, futures accounts and deposit accounts, in
accordance with investment guidelines adopted by the Borrower and its
Subsidiaries from time to time;



          (q) Liens on property acquired pursuant to Permitted Transactions;



          (r) Liens Incurred on assets of any Regulated Insurance Company in
connection with the establishment, sale, issuance or maintenance of Policies
issued by such Regulated Insurance Company or the holding or investment of
assets for such Policies, including but not limited to those incident to
separate accounts or funding agreements;



          (s) Liens securing the Obligations;



          (t) Liens Incurred on assets of any trust created for the benefit of
holders and/or for the benefit of the Trustee of any preferred securities
issued by such trust, in each case pursuant to the terms of any Trust Preferred
Offering; and



          (u) Liens (of a type and/or to an extent not otherwise permitted
hereunder) which relate to assets having a fair market value not in excess of
$35,000,000.



          7.04 Indebtedness. The Borrower will not, and will not permit any of its
Subsidiaries to, Incur any Indebtedness for borrowed money, except:



          (a) Indebtedness Incurred pursuant to this Agreement and the other Credit
Documents;



          (b) Capitalized Lease Obligations of the Borrower and its Subsidiaries,
provided that the aggregate Capitalized Lease Obligations under all Capital
Leases, other than any Capital Leases listed in Annex V, shall not exceed
$50,000,000 at any time;



          (c) Indebtedness in existence on the Effective Date and listed in Part A
of Annex V, together with any subsequent extension, renewal or refinancing
thereof; provided that the aggregate principal amount of the Indebtedness to be
extended, renewed or refinanced does not increase from that amount outstanding
at the time of any such extension renewal or refinancing;



          (d) Indebtedness of any Regulated Insurance Company with respect to (i)
letters of credit securing obligations under Reinsurance Agreements entered
into in the Ordinary Course of Business of any such Regulated Insurance
Company, (ii) letters of credit issued in lieu of deposits to satisfy Legal
Requirements or (iii) letters of credit or surety bonds issued in lieu of
depositing securities with any Applicable Insurance Regulatory Authority to
satisfy regulatory requirements in connection with worker’s compensation
insurance; in any case to the extent (x) such letters of credit are not drawn
upon or, if and to the extent drawn upon, such drawing is reimbursed no later
than 10 days following receipt by the Borrower or such Subsidiary of notice
of payment on such letter of credit and (y) the aggregate outstanding
amount of such obligations does not exceed $5,000,000 at any time;



 









 





          (e) Indebtedness of the Borrower and its Subsidiaries under Interest Rate
Protection Agreements;



          (f) Indebtedness under reimbursement obligations in respect of letters of
credit issued to guaranty or support the payment of performance bonds, workers’
compensation claims, insurance claims and contested appeals and compliance with
operational and regulatory obligations incurred in the ordinary course of
business, in an aggregate principal amount not to exceed $20,000,000;



          (g) Indebtedness secured by Liens permitted under Section 7.03(j) and any
extensions, renewals or refinancing thereof;



          (h) Indebtedness (i) of any Wholly-Owned Subsidiary of the Borrower to the
Borrower, (ii) of the Borrower to any Wholly-Owned Subsidiary of the Borrower
or (iii) of any Wholly-Owned Subsidiary of the Borrower to any other
Wholly-Owned Subsidiary of the Borrower;



          (i) Indebtedness of a Person which becomes a Subsidiary after the date
hereof; provided that (i) such Indebtedness existed at the time such Person
became a Subsidiary and was not created in anticipation thereof, (ii)
immediately after giving effect to the acquisition of such Person by the
Borrower no Default or Event of Default shall have occurred and be continuing,
and (iii) the Borrower shall not become liable therefor;



          (j) Indebtedness of any Regulated Insurance Company owing to the Federal
Home Loan Bank (the “FHLB”) under a liquidity facility provided by the FHLB,
and Indebtedness of any Regulated Insurance Company consisting of Federal Home
Loan Bank Community Investment Long Term Advances, so long as the aggregate
outstanding principal amount of Indebtedness under this clause (j) does not
exceed $150,000,000 at any time;



          (k) Indebtedness in respect of the AVLIC Guaranties;



          (l) Indebtedness of the Borrower consisting of Contingent Obligations in
respect of other Indebtedness (x) outstanding as of the Effective Date and
having an aggregate principal amount not in excess of $20,000,000 and (y)
Incurred after the Effective Date and having an aggregate principal amount not
in excess of $30,000,000;



          (m) Indebtedness of the Borrower and its Subsidiaries under letters of
credit (other than Letters of Credit) issued in the Ordinary Course of
Business so long as the aggregate stated amount of all such letters of credit
at no time exceeds $75,000,000;



          (n) Indebtedness of the Borrower and the trust formed in connection with
any Trust Preferred Offering under the Trust Preferred Related Debt Securities,
the Trust Preferred Offering and the guaranty provided in connection therewith,
when and if issued;



          (o) Indebtedness of any Subsidiary of the Borrower including, without
limitation, (i) Indebtedness consisting of Contingent Obligations and, (ii)
Indebtedness in connection with any Trust Preferred Offering under the Trust
Preferred Related Debt Securities (including the related Indebtedness of the
trust formed in connection therewith), the Trust



 









 




Preferred Offering and the guaranty provided in connection therewith, when and if issued; provided that
the aggregate amount of all Indebtedness under this clause (o) at no time
exceeds $75,000,000;




          (p) Indebtedness of the Borrower under any Permitted Subordinated Debt
Securities; and



          (q) other Indebtedness for borrowed money of the Borrower not to exceed
$350,000,000 in aggregate outstanding principal amount at any time; provided,
that the amount of Indebtedness permitted by this clause (q) shall be reduced
dollar for dollar by the amount of any Indebtedness which is incurred under
clauses (o) and (p) above after the Effective Date, but the amount of
Indebtedness permitted under this clause (q) shall not be reduced to less than
$75,000,000 at any time.



          7.05 Issuance of Stock. The Borrower will not permit any of its Material
Subsidiaries directly or indirectly to issue, sell, assign, pledge, or
otherwise encumber or dispose of any shares of the capital stock or other
equity securities (or warrants, rights or options to acquire shares or other
equity securities) of such Material Subsidiary, except (i) to the Borrower or
another Wholly-Owned Subsidiary of the Borrower, (ii) to qualify directors if
required by applicable law, (iii) issuances of securities by special purpose
Material Subsidiaries pursuant to structured asset-backed securities
transactions, (iv) issuances of preferred stock by any Material Subsidiary
constituting a business trust pursuant to any Trust Preferred Offering, (v)
issuances by special purpose Material Subsidiaries to employees or officers of
the Borrower or its Material Subsidiaries pursuant to an employee benefit plan
approved in writing by the board of directors (or similar governing body) of
any such special purpose Material Subsidiary or (vi) issuances by special
purpose Subsidiaries of the Borrower operated in the Ordinary Course of
Business in connection with transactions otherwise permitted pursuant to
Section 7.02(b).



          7.06 Prepayments of Indebtedness, Modifications of Agreements, etc. The
Borrower will not, and will not permit any of its Subsidiaries to:



          (a) make (or give any notice in respect thereof) any voluntary or optional
payment or prepayment or redemption or acquisition for value of (including,
without limitation, by way of depositing with the trustee with respect thereto
money or securities before due for the purpose of paying when due) or exchange
of, any Permitted Subordinated Debt Securities or Trust Preferred Related Debt
Securities after the issuance thereof, provided, that, the Borrower may make
voluntary or optional payments or prepayments or redemptions or acquisitions
for value of or exchanges of any Permitted Subordinated Debt Securities or
Trust Preferred Related Debt Securities after the issuance thereof, so long as
immediately after giving effect to any such voluntary or optional payment or prepayment, redemption or acquisition for
value or exchange the Leverage Ratio shall not be greater than 0.30:1.0; or



          (b) amend, modify or change in any manner adverse to the interests of the
Banks the Certificate of Incorporation (including, without limitation, by the
filing of any certificate of designation) or By-Laws or other organizational
documents of the Borrower or any of its Subsidiaries.



 









 





          7.07 Dividends, etc. The Borrower will not, and will not permit any of
its Subsidiaries to, declare or pay any dividends (other than dividends payable
solely in common stock of such Person) or return any capital to, its
stockholders or authorize or make any other distribution, payment or delivery
of property or cash to its stockholders as such, or redeem, retire, purchase or
otherwise acquire, directly or indirectly, for a consideration, any shares of
any class of its capital stock now or hereafter outstanding (or any warrants
for or options or stock appreciation rights in respect of any of such shares),
or set aside any funds for any of the foregoing purposes, or purchase or
otherwise acquire or permit any of its Subsidiaries to purchase or otherwise
acquire for consideration any shares of any class of the capital stock of the
Borrower or any other Subsidiary, as the case may be, now or hereafter
outstanding (or any options or warrants or stock appreciation rights issued by
such Person with respect to its capital stock) (all of the foregoing
“Dividends”), except that:




     (i) any Subsidiary of the Borrower may pay Dividends to its
parent if such parent is the Borrower or a Wholly-Owned Subsidiary
of the Borrower, any non-Wholly-Owned Subsidiary may pay Dividends
so long as such Dividends are paid pro rata to its equity owners,
and the Borrower and its Subsidiaries which are equity holders
thereof may receive any of the foregoing Dividends;




     (ii) so long as no Default or Event of Default exists or would
exist immediately after giving effect thereto, the Borrower may pay
cash Dividends on its common stock in an amount not to exceed for
any fiscal year 3% of the Borrower’s Consolidated Net Worth as of
the last day of the previous fiscal year;




     (iii) the payment of cash Dividends on any preferred stock
issued pursuant to a Trust Preferred Offering in accordance with
the terms thereof shall be permitted;




     (iv) upon and in connection with the exercise of (or receipt
of stock pursuant to) any options, warrants, awards, grants, or
stock appreciation rights under or pursuant to any stock plan or
employee benefit plan of the Borrower, which has been approved in
writing by the Human Resources and Compensation Committee of the
Board of Directors of the Borrower, in respect of the Borrower’s
common stock by any holder thereof (1) pursuant to which the
Borrower is required to deliver shares of its common stock to such
holder, and/or (2) for tax withholding or pursuant to the cashless
exercise of stock options, warrants, awards, grants, or stock
appreciation rights in connection with any such
plan, the Borrower may purchase a number of shares of its
common stock sufficient to enable the Borrower to satisfy such
requirement or, in the case of preceding clause (2) to satisfy such
withholding obligation or such exercise; provided that with respect
to preceding clause (2), such purchases do not exceed $5,000,000 in
the aggregate any fiscal year of the Borrower;




     (v) transactions permitted under Section 7.02 shall be
permitted hereunder; and



 









 






     (vi) the Borrower may make purchases of its capital stock and
options thereon (including in the form of convertible equity
units), so long as immediately after giving effect to any such
purchase the Leverage Ratio shall not be greater than 0.30:1.00.



          7.08 Limitation on Certain Restrictions. The Borrower will not, and will
not permit any of its Subsidiaries to, directly or indirectly, create or
otherwise cause or suffer to exist any encumbrance or restriction which
prohibits or otherwise restricts (i) the ability of any Subsidiary to pay
dividends or make other distributions or pay any Indebtedness owed to the
Borrower or any of its Subsidiaries, to make loans or advances to the Borrower
or any Subsidiary, to transfer any of its properties or assets to the Borrower
or any Subsidiary or to guarantee the Obligations or (ii) the ability of the
Borrower or any Subsidiary of the Borrower to create, incur, assume or suffer
to exist any Lien upon its property or assets to secure the Obligations, other
than (x) prohibitions or restrictions existing under or by reason of this
Agreement and the other Credit Documents, (y) prohibitions or restrictions
existing under or by reason of Legal Requirements, and (z) other prohibitions
or restrictions which, either individually or in the aggregate, would not
reasonably be expected to have a material adverse effect on the Borrower’s
ability to perform its obligations under the Credit Documents.



          7.09 Transactions with Affiliates. The Borrower will not, and will not
permit any Subsidiary to, enter into any transaction or series of transactions
with any Affiliate other than on terms and conditions substantially as
favorable to the Borrower or such Subsidiary as would be obtainable by the
Borrower or such Subsidiary at the time in a comparable arm’s-length
transaction with a Person other than an Affiliate; provided, however, that:




     (i) AmerUs Life may make investments, advances and/or loans in
or to AMAL Corporation, in an aggregate amount not to exceed
$75,000,000 so long as AmerUs Life retains the ability to elect at
least 50% of the board of directors of AMAL Corporation;




     (ii) the Borrower may make payments or loans pursuant to the
guaranty provided in connection with any Trust Preferred Offering,
and the Borrower and its Subsidiaries may lend or borrow such
amounts as are contemplated in connection with any Trust Preferred
Offering and any Trust Preferred Related Debt Securities;




     (iii) the Borrower may enter into any transactions with any of
its Wholly-Owned Subsidiaries (including without limitation,
investments in such Wholly-Owned Subsidiaries), and any such
Wholly-Owned Subsidiary may enter into any transactions with the
Borrower or any other such Wholly-Owned Subsidiary including
investments therein;




     (iv) the Subsidiaries of any Regulated Insurance Company may
pay dividends and make investments in, and advances and loans to,
such Regulated Insurance Company;



 









 






     (v) Regulated Insurance Companies may enter into reinsurance
transactions with one another; and




     (vi) the Borrower may make contributions to its charitable
foundation in an aggregate amount of up to $1,000,000 per fiscal
year.



          7.10 Leverage Ratio. The Borrower will not permit the Leverage Ratio at
any time to be greater than 0.35:1.0.



          7.11 Interest Coverage Ratio. The Borrower will not permit the Interest
Coverage Ratio for any Test Period to be less than 2.5:1.0.



          7.12 Minimum Consolidated Net Worth. The Borrower shall not permit its
Consolidated Net Worth at any time to be less than an amount equal to the sum
of (x) $973,190,000 plus (y) 25% of Cumulative Net Income.



          7.13 Minimum Risk-Based Capital. The Borrower will not permit the
Risk-Based Capital for any Material Regulated Insurance Company to be less than
400%.



          7.14 Foreign Pension Plans. The Borrower will not and will not permit any
of its Subsidiaries to maintain or contribute to (or have an obligation to
contribute to) any Foreign Pension Plans.



          SECTION 8. Events of Default. Upon the occurrence of any of the following
specified events (each an “Event of Default”):



          8.01 Payments. The Borrower shall (i) default in the payment when due of any principal
of any Loan or any Note or any Unpaid Drawing, (ii) default, and such default
shall continue for two or more Business Days, in the payment when due of any
interest on any Loan or any Note or any Fees or (iii) default in the prompt
payment following notice or demand in respect of any other amounts owing
hereunder or under any other Credit Document; or



          8.02 Representations, etc. Any representation, warranty or material
statement made or deemed made by the Borrower herein or in any other Credit
Document or in any certificate or material statement delivered or required to
be delivered pursuant hereto or thereto shall prove to be untrue in any
material respect on the date as of which made or deemed made; or



          8.03 Covenants. The Borrower shall (a) default in the due performance or
observance by it of any term, covenant or agreement contained in Section 6.10
or 7, or (b) default in the due performance or observance by it of any term,
covenant or agreement (other than those referred to in Section 8.01 or clause
(a) of this Section 8.03) contained in this Agreement and such default shall
continue unremedied for a period of at least 30 days; or



          8.04 Default Under Other Agreements. The Borrower or any of its Material
Subsidiaries shall (i) default in any payment with respect to Indebtedness
(other than the Obligations) in excess of $25,000,000 individually or in the
aggregate, for the Borrower and its Material Subsidiaries, beyond the period of
grace, if any, provided in the instrument or agreement under which such
Indebtedness was created or (ii) default in the observance or



 









 




performance of any agreement or condition relating to any such Indebtedness or contained in
any instrument or agreement evidencing, securing or relating thereto, or any
other event shall occur or condition exist, the effect of which default or
other event or condition is to cause, or to permit the holder or holders of
such Indebtedness (or a trustee or agent on behalf of such holder or holders)
to cause (determined without regard to whether any notice of acceleration, or
any lapse of time prior to the effectiveness of any notice of acceleration, is
required), any such Indebtedness to become due prior to its stated maturity; or
(b) Indebtedness of the Borrower or its Material Subsidiaries in excess of
$25,000,000 shall be declared to be due and payable other than in accordance
with the terms of such Indebtedness or required to be prepaid, other than by a
regularly scheduled required prepayment or as a mandatory prepayment (unless
such required prepayment or mandatory prepayment results from a default
thereunder or an event of the type that constitutes an Event of Default), prior
to the stated maturity thereof; or




          8.05 Bankruptcy, etc. The Borrower or any of its Material Subsidiaries
shall commence a voluntary case concerning itself under Title 11 of the United
States Code entitled “Bankruptcy,” as now or hereafter in effect, or any
successor thereto (the “Bankruptcy Code”); or an involuntary case is commenced
against the Borrower or any of its Material Subsidiaries and the petition is
not controverted within 10 days, or is not dismissed within 60 days, after
commencement of the case; or a custodian (as defined in the Bankruptcy Code) is appointed for,
or takes charge of, all or substantially all of the property of the Borrower or
any of its Material Subsidiaries; or the Borrower or any of its Material
Subsidiaries commences (including by way of applying for or consenting to the
appointment of, or the taking of possession by, a rehabilitator, receiver,
custodian, trustee, conservator or liquidator (collectively, a “conservator”)
of itself or all or any substantial portion of its property) any other
proceeding under any reorganization, arrangement, adjustment of debt, relief of
debtors, dissolution, insolvency, liquidation, rehabilitation, conservatorship
or similar law of any jurisdiction whether now or hereafter in effect relating
to the Borrower or any of its Material Subsidiaries; or any such proceeding is
commenced against (a) any Material Regulated Insurance Company which is engaged
in the business of underwriting insurance and/or reinsurance in the United
States, or (b) the Borrower or any of its Material Subsidiaries (other than (x)
any Material Regulated Insurance Company described in the immediately preceding
clause (a) or (y) any dissolution or liquidation proceeding commenced against a
non-Regulated Insurance Company (i) the assets of which do not exceed an
aggregate amount of $100,000 and (ii) in connection with the winding-up of such
Material Subsidiary) to the extent such proceeding is consented to by such
Person, and in the case of either clause (a) or (b) remains undismissed for a
period of 60 days; or the Borrower or any of its Material Subsidiaries is
adjudicated insolvent or bankrupt; or any order of relief or other order
approving any such case or proceeding is entered; or (a) any Material Regulated
Insurance Company which is engaged in the business of underwriting insurance
and/or reinsurance in the United States suffers any appointment of any
conservator or the like for it or any substantial part of its property, or (b)
the Borrower or any of its Material Subsidiaries (other than any Regulated
Insurance Company described in the immediately preceding clause (a)) suffers
any appointment of any conservator or the like for it or any substantial part
of its property which continues undischarged or unstayed for a period of 60
days; or the Borrower or any of its Material Subsidiaries makes a general
assignment for the benefit of creditors; or any corporate action is taken by
the Borrower or any of its Material Subsidiaries for the purpose of effecting
any of the foregoing; or



 









 





          8.06 ERISA. (a) Any Plan shall fail to satisfy the minimum funding
standard required for any plan year or part thereof under Section 412 of the
Code or Section 302 of ERISA or a waiver of such standard or extension of any
amortization period is sought or granted under Section 412 of the Code or
Section 303 or 304 of ERISA, a Reportable Event shall have occurred, any Plan
which is subject to Title IV of ERISA shall have had or is likely to have a
trustee appointed by the PBGC to administer such Plan, any Plan which is
subject to Title IV of ERISA is, shall have been or is likely to be terminated
or to be the subject of termination proceedings under ERISA, any defined
benefit Plan which is subject to Section 412 of the Code or Section 302 of
ERISA shall have an Unfunded Current Liability, a contribution required to be
made with respect to a Plan has not been timely made, the Borrower or any
Subsidiary of the Borrower or any ERISA Affiliate has incurred or is likely to
incur any liability to or on account of a Plan under Section 409, 502(i),
502(l), 515, 4062, 4063, 4064, 4069, 4201, 4204 or 4212 of ERISA or Section
401(a)(29), 4971 or 4975 of the Code or on account of a group health plan (as
defined in Section 607(1) of ERISA or Section 4980B(g)(2) of the Code) under
Section 4980B of the Code, or the Borrower or any Subsidiary of the Borrower
has incurred or is likely to incur liabilities pursuant to one or more employee
welfare benefit plans (as defined in Section 3(1) of ERISA) that provide death,
health or severance benefits to retired employees or other former employees
(other than as required by Section 601 of ERISA or applicable state law)
or Plans; and (b) there shall result from any such event or events the
imposition of a lien, the granting of a security interest, or a liability; and
(c) such lien, security interest or liability, individually and/or in the
aggregate, has had, or could reasonably be expected to have, a Material Adverse
Effect; or



          8.07 Judgments. One or more judgments or decrees shall be entered against
the Borrower or any of its Material Subsidiaries involving a liability, net of
undisputed reinsurance, of $25,000,000 or more in the case of any one such
judgment or decree or in the aggregate for all such judgments and decrees for
the Borrower and its Material Subsidiaries and any such judgments or decrees
shall not have been vacated, discharged, satisfied, stayed or bonded pending
appeal within 60 days from the entry thereof; provided, that in the event that
a judgment or decree is entered against the Borrower or any of its Material
Subsidiaries which by its terms provides for its payment and satisfaction
during a period of longer than 60 days, then there shall be no Default or Event
of Default under this Section 8.07 as a result of such a judgment or decree so
long as the Borrower or its Material Subsidiary, as the case may be, is in
compliance with the terms of such judgment or decree; or



          8.08 Revocation of Insurance License. Any Insurance License shall be
suspended or revoked and such suspension or revocation shall continue for 30
days, or any renewal application for any Insurance License shall be disapproved
or ultimately fail to be approved, if such suspension, revocation, disapproval
or ultimate failure to win approval would reasonably be expected to have a
Material Adverse Effect; or



          8.09 Ownership. A Change of Control shall occur;


then, and in any such event, and at any time thereafter, if any Event of
Default shall then be continuing, the Administrative Agent shall, upon the
written request of the Required Banks, by written notice to the Borrower, take
any or all of the following actions, without prejudice to the rights of the
Administrative Agent or any Bank to enforce its claims against the Borrower,
except as otherwise specifically provided for in this Agreement (provided that
if an Event of Default




 









 




specified in Section 8.05 shall occur with respect to
the Borrower, the result which would occur upon the giving of written notice by
the Administrative Agent as specified in clauses (i) and (ii) below shall occur
automatically without the giving of any such notice): (i) declare the Total
Commitment terminated, whereupon the Commitment of each Bank shall forthwith
terminate immediately and any Commitment Fees shall forthwith become due and
payable without any other notice of any kind, (ii) declare the principal of and
any accrued interest in respect of all Loans and all Obligations owing
hereunder and under the other Credit Documents to be, whereupon the same shall
become, forthwith due and payable without presentment, demand, protest or other
notice of any kind, all of which are hereby waived by the Borrower (iii)
terminate any Letter of Credit or give a Notice of Non-Extension in respect
thereof if permitted in accordance with its terms, and/or (iv) direct the
Borrower to pay (and the Borrower hereby
agrees upon receipt of such notice, or upon the occurrence of any Event of
Default specified in Section 8.05, to pay) to the Administrative Agent at the
Payment Office an amount of cash to be held as security for the Borrower’s
reimbursement obligations in respect of all Letters of Credit then outstanding
which were issued for the account of the Borrower, equal to the aggregate
Stated Amount of all such Letters of Credit at such time.




          SECTION 9. Definitions. As used herein, the following terms shall have
the meanings herein specified unless the context otherwise requires. Defined
terms in this Agreement shall include in the singular number the plural and in
the plural the singular:



          “Administrative Agent” shall have the meaning provided in the first
paragraph of this Agreement and shall include any successor to the
Administrative Agent appointed pursuant to Section 10.09.



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



          “Affiliate” shall mean, with respect to any Person, any other Person
directly or indirectly controlling, controlled by, or under direct or indirect
common control with, such Person, provided, that a Person shall not be deemed
to be an Affiliate solely as a result of a title or position held by such
Person. A Person shall be deemed to control a corporation if such Person
possesses, directly or indirectly, the power (i) to vote 10% or more of the
securities having ordinary voting power for the election of directors of such
corporation or (ii) to direct or cause the direction of the management and
policies of such corporation, whether through the ownership of voting
securities, by contract or otherwise.



          “Agreement” shall mean this Credit Agreement, as the same may be from time
to time modified, amended and/or supplemented.



          “AmerUs Annuity” shall mean AmerUs Annuity Group Co., a Kansas
Corporation.



          “AmerUs Life” shall mean AmerUs Life Insurance Company, an Iowa stock life
insurance company.



          “Annual Statement” shall mean the annual financial statement required to
be filed by any Regulated Insurance Company with the Applicable Insurance
Regulatory Authority.



 









 





          “Applicable Commitment Fee Percentage” shall mean, for any day, the
percentage set forth below opposite the Applicable Credit Rating then in
effect:



	 	 	 	 	 
	Applicable	 	Applicable Commitment
	Credit Rating
	 	Fee Percentage

	A-/A3 or higher
	 	 	0.150	%
	BBB+/Baa1
	 	 	0.200	%
	BBB/Baa2
	 	 	0.250	%
	BBB-/Baa3
	 	 	0.300	%
	BB+/Bal or lower
	 	 	0.400	%







          “Applicable Credit Rating” shall mean (i) the Moody’s Credit Rating and
the S&P Credit Rating, if the same; (ii) if the Moody’s Credit Rating and the
S&P Credit Rating differ by one rating level, the Applicable Credit Rating
shall be the higher of such Credit Ratings; (iii) if the Moody’s Credit Rating
and the S&P Credit Rating differ by two or more rating levels, the Applicable
Credit Rating shall be one rating level below the higher of such Credit Ratings
and (iv) if either the Moody’s Credit Rating or the S&P Credit Rating is less
than BBB- or Baa3, respectively, the Applicable Credit Rating shall be the
lower of such Credit Ratings.



          “Applicable Insurance Regulatory Authority” shall mean, when used with
respect to any Regulated Insurance Company, the insurance department or similar
administrative authority or agency located in (x) each state in which such
Regulated Insurance Company is domiciled or (y) to the extent asserting
regulatory jurisdiction over such Regulated Insurance Company, the insurance
department, authority or agency in each state in which such Regulated Insurance
Company is licensed, and shall include any Federal insurance regulatory
department, authority or agency that may be created and that asserts regulatory
jurisdiction over such Regulated Insurance Company.



          “Applicable Laws” shall mean all applicable laws and treaties, judgments,
decrees, injunctions, writs and orders of any court, arbitrator or governmental
agency or authority and rules, regulations, orders, licenses and permits of any
governmental body, instrumentality, agency or authority.



          “Applicable Margin” shall mean, for any day, the rate per annum set forth
below opposite the Applicable Credit Rating then in effect:



	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Applicable Margin for
	Applicable	 	Applicable Margin for Loans	 	Loans maintained as
	Credit Rating
	 	maintained as Eurodollar Loans
	 	Base Rate Loans

	A-/A3 or higher
	 	 	0.875	%	 	 	0.000	%
	BBB+/Baa1
	 	 	1.000	%	 	 	0.000	%
	BBB/Baa2
	 	 	1.250	%	 	 	0.250	%
	BBB-/Baa3
	 	 	1.500	%	 	 	0.500	%
	BB+/Bal or lower
	 	 	2.000	%	 	 	1.000	%







 









 





          “Authorized Control Level” shall mean “Authorized Control 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).



          “Authorized Officer” shall mean any senior officer of the Borrower
designated as such in writing by the Borrower to, and found acceptable by, the
Administrative Agent.



          “AVLIC Guaranties” shall mean and include each of the guaranty agreements
(i) by Ameritas Life Insurance Corp. in favor of Ameritas Variable Life
Insurance Company (“AVLIC”) dated as of July 8, 1991, (ii) by AMAL Corporation
for the benefit of AVLIC dated as of April 1, 1996, (iii) by AmerUs Life (f/k/a
American Mutual Life Insurance Company) in favor of AVLIC dated as of April 1,
1996 and (iv) by the Borrower in favor of AVLIC after the Effective Date on
substantially the same terms as the foregoing.



          “Bank” shall have the meaning provided in the first paragraph of this
Agreement.



          “Bank Default” shall mean (i) the refusal (which has not been retracted)
of a Bank to make available its portion of any Borrowing or to comply with its
obligations under Section 1A.04 or (ii) a Bank having notified the
Administrative Agent and/or the Parent Borrower that it does not intend to
comply with its obligations under Section 1.01 or 1A.



          “Bankruptcy Code” shall have the meaning provided in Section 8.05.



          “Base Rate” at any time shall mean the higher of (x) the rate which is 1/2
of 1% in excess of the Federal Funds Effective Rate and (y) the Prime Lending
Rate as in effect from time to time.



          “Base Rate Loans” shall mean each Loan bearing interest at the rates
provided in Section 1.08(a).



          “Borrower” shall have the meaning provided in the first paragraph of this
Agreement.



          “Borrowing” shall mean the incurrence of one Type of Loan hereunder by the
Borrower from all of the Banks on a pro rata basis on a given date (or
resulting from a conversion or conversions on such date), having in the case of
Eurodollar Loans the same Interest Period, provided that Base Rate Loans
incurred pursuant to Section 1.10(b) shall be considered part of any related
Borrowing of Eurodollar Loans.



          “Business Day” shall mean (i) for all purposes other than as covered by
clause (ii) below, any day, excluding Saturday, Sunday and any day which shall
be in the City of New York a legal holiday or a day on which banking
institutions are authorized by law or other governmental actions to close, and
(ii) with respect to all notices and determinations in connection with, and
payments of principal and interest on, Eurodollar Loans, any day which is a
Business Day described in clause (i) and which is also a day for trading by and
between banks in U.S. dollar deposits in the interbank Eurodollar market.



 









 





          “Capital Lease” as applied to any Person, shall mean any lease of any
property (whether real, personal or mixed) by that Person as lessee which, in
conformity with GAAP, is, or is required to be, accounted for as a capital
lease on the balance sheet of that Person; provided that, notwithstanding the
foregoing, “Capital Lease” shall not include any lease which is entered into
solely to effect a Permitted Transaction.



          “Capitalized Lease Obligations” shall mean all obligations under Capital
Leases of the Borrower or any of its Subsidiaries in each case taken at the
amount thereof accounted for as liabilities in accordance with GAAP.



          “Cash Flow” shall mean, with respect to the Borrower, for any Test Period,
the difference between (a) and (b), where (a) is equal to the sum of: (i) the
sum of the amount of Dividends available to the Borrower allocable to each of
the four quarters comprising such Test Period, where such allocable amount for
each fiscal quarter is calculated as being 25% of the maximum Dividends
available to the Borrower under Applicable Laws from all Regulated Insurance
Companies for the calendar year in which such fiscal quarter occurs (whether or
not any such Dividends are or have been paid), provided that in the event any
Regulated Insurance Company has a net loss from operations (as determined on a
SAP basis) for three consecutive fiscal years, Dividends available from such
Regulated Insurance Company for such third fiscal year shall not be included in
this clause (i), plus (ii) management fees, administrative fees, service fees,
home office charges, consulting fees and technical service charges paid to the
Borrower during such Test Period plus (iii) gross tax sharing payments received
by the Borrower during such Test Period plus (iv) all Surplus Note interest
received by the Borrower during such Test Period plus (v) net investment income
of the Borrower during such Test Period plus (vi) realized net capital gains
from investments of the Borrower during such Test Period to the extent not
included in net investment income; and (b) is equal to the sum of: (i) cash
operating expenses paid by the Borrower during such Test Period and (ii) taxes
paid by the Borrower during such Test Period.



          “Change of Control” shall mean the occurrence of any of the following
events: (i) the Borrower shall cease to own, directly, or indirectly through
Wholly-Owned Subsidiaries, 100% of the issued and outstanding voting stock of
AmerUs Life, AmerUs Annuity and Indianapolis Life ordinarily entitled to vote
for the election of directors, or any other class of stock of AmerUs Life,
AmerUs Annuity or Indianapolis Life of which the Borrower owns 50% or less
shall become entitled to elect a majority of AmerUs Life’s, AmerUs Annuity’s or
Indianapolis Life’s board of directors; (ii) during any period of 25
consecutive calendar months, individuals who at the beginning of such period
constituted the Board of Directors of the Borrower (together with any new
directors whose election by such Board of Directors or whose nomination for
election by the stockholders or members, as the case may be, of the Borrower
was approved by a vote of a majority of the directors then still in office who
were either directors at the beginning of such period or whose election or
nomination for election was previously so approved) cease for any reason to
constitute a majority of such Board of Directors then in office; (iii) any
Person or “group” (within the meaning of Sections 13(d) and 14(d) under the
Securities Exchange Act, as in effect on September 30, 2001), shall have (A)
acquired beneficial ownership of 25% or more on a fully diluted basis of the
voting interest in the Borrower’s capital stock or (B) obtained the power
(whether or not exercised) to elect a majority of the Borrower’s directors or
(iv) the occurrence of any “change of control” or similar event under the terms
of any Trust Preferred Related Debt Securities.



 









 





          “Chase” shall mean JPMorgan Chase Bank.



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



          Code are to the Code, as in effect at the date of this Agreement and any
subsequent provisions of the Code, amendatory thereof, supplemental thereto or
substituted therefor.



          “Commitment” shall mean, with respect to each Bank, the amount set forth
opposite such Bank’s name on Annex I hereto, as the same may be (x) reduced or
terminated pursuant to Sections 2.02, 2.03 and/or 8 or (y) adjusted from time
to time as a result of assignment to or from such Bank pursuant to Section
11.04(b).



          “Commitment Fee” shall have the meaning provided in Section 2.01(a).



          “Consolidated Indebtedness” shall mean, at any time and as to any Person,
all Indebtedness for borrowed money of such Person and its Subsidiaries at such
time determined on a consolidated basis in accordance with GAAP, provided that
as to the Borrower, only 50% of (i) any Trust Preferred Offering, (ii) any
offering of OCEANs(SM) and (iii) any offering of PRIDES(SM) shall constitute
Consolidated Indebtedness.



          “Consolidated Interest Expense” shall mean, for any period and as to any
Person, (i) total interest expense (including that attributable to Capital
Leases in accordance with GAAP) of such Person and its Subsidiaries on a
consolidated basis including, without limitation, all commissions, discounts
and other fees and charges owed with respect to letters of credit and bankers’
acceptance financing and net costs under Interest Rate Protection Agreements,
but excluding however, any amortization of deferred financing costs, plus (ii)
all Dividends paid or accrued during such period in connection with the
preferred stock of the Borrower or any Subsidiary of the Borrower which is a
business trust.



          “Consolidated Net Worth” shall mean, with respect to any Person, the Net
Worth of such Person and its Subsidiaries determined on a consolidated basis in
accordance with GAAP after appropriate deduction for any minority interests in
Subsidiaries; provided, that for the purpose of calculating the maximum amount
of Dividends payable pursuant to Section 7.07(ii), Consolidated Net Worth shall
exclude 100% of (i) any Trust Preferred Offering, (ii) any offering of
OCEANs(SM) and (iii) any offering of PRIDES(SM).



          “Consolidated Total Capital” shall mean, at any time and as to any Person,
the sum of Consolidated Indebtedness of such Person and Consolidated Net Worth
of such Person at such time; provided, that Consolidated Total Capital shall in
any event include 100% of (i) any Trust Preferred Offering, (ii) any offering
of OCEAN’s(SM) and (iii) any offering of PRIDES(SM).



          “Contingent Obligations” shall mean, as to any Person, any obligation of
such Person guaranteeing or intended to guarantee any Indebtedness, leases,
dividends or other obligations (“primary obligations”) of any other Person (the
“primary obligor”) in any manner, whether directly or indirectly, including,
without limitation, any obligation of such Person, whether or not



 









 




contingent, (a) to purchase any such primary obligation or any property constituting direct
or indirect security therefor, (b) to advance or supply funds (i) for the
purchase or payment of any such primary obligation or (ii) to maintain working
capital or equity capital of the primary obligor or otherwise to maintain the
net worth or solvency of the primary obligor, (c) to purchase property,
securities or services primarily for the purpose of assuring the owner of any
such primary obligation of the ability of the primary obligor to make payment
of such primary obligation or (d) otherwise to assure or hold harmless the owner of such
primary obligation against loss in respect thereof; provided, however, that the
term Contingent Obligation shall not include (x) endorsements of instruments
for deposit or collection in the ordinary course of business or (y) obligations
of any Regulated Insurance Company under Insurance Contracts, Reinsurance
Agreements or Retrocession Agreements. The amount of any Contingent Obligation
shall be deemed to be an amount equal to the stated or determinable amount of
the primary obligation in respect of which such Contingent Obligation is made
or, if not stated or determinable, the maximum reasonably anticipated liability
in respect thereof (assuming such Person is required to perform thereunder) as
determined by such Person in good faith.




          “Credit Documents” shall mean this Agreement, the Notes, and all other
documents, instruments and agreements entered into in connection herewith or
therewith.



          “Cumulative Net Income” shall mean, at any time, an amount equal to the
net income of the Borrower and its Subsidiaries (determined on a consolidated
basis in accordance with GAAP) during the period commencing on October 1, 2003
and ending on the last day of the then most recently ended fiscal quarter.



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



          “Defaulting Bank” shall mean any Bank with respect to which a Bank Default
is in effect.



          “Dollars” and the sign “$” shall mean freely transferable lawful money of
the United States.



          “Dividends” shall have the meaning provided in Section 7.07.



          “Effective Date” shall have the meaning provided in Section 11.10.



          “ERISA” shall mean the Employee Retirement Income Security Act of 1974, as
amended from time to time and the regulations promulgated and rulings issued
thereunder. Section references to ERISA are to ERISA, as in effect at the date
of this Agreement and any subsequent provisions of ERISA, amendatory thereof,
supplemental thereto or substituted therefor.



          “ERISA Affiliate” shall mean each person (as defined in Section 3(9) of
ERISA) which together with the Borrower or a Subsidiary of the Borrower would
be deemed to be a “single employer” within the meaning of Section 414(b),(c),
(m) or (o) of the Code.



          “ESG” shall have the meaning provided in the definition of “Subsidiary”.



 









 





          “Eurodollar Loans” shall mean each Loan bearing interest at the rates
provided in Section 1.08(b).



          “Eurodollar Rate” shall mean, with respect to each Interest Period for a
Eurodollar Loan, (i) the arithmetic average (rounded to the nearest 1/100 of
1%) of (a) for Interest Periods of one, two, three or six months, the offered rates for
U.S. dollar deposits having a term comparable to such Interest Period and of
amounts in same day funds comparable to the outstanding principal amount of
such Eurodollar Loan which appear on the Dow Jones Telerate Screen LIBO Page,
or (b) for an Interest Period of one week, the offered quotation to first-class
banks in the interbank Eurodollar market by Chase for U.S. dollar deposits
having a term comparable to such Interest Period and of amounts in same day
funds comparable to the outstanding principal amount of such Eurodollar Loan
for which an interest rate is then being determined by Chase, in the case of
each of clauses (a) and (b) above determined as of 10:00 A.M. (New York time)
on the date which is two Business Days prior to the commencement of such
Interest Period divided (and rounded upward to the next whole multiple of 1/16
of 1%) by (ii) a percentage equal to 100% minus the then stated maximum rate of
all reserve requirements (including, without limitation, any marginal,
emergency, supplemental, special or other reserves) applicable to any member
bank of the Federal Reserve System in respect of Eurocurrency liabilities as
defined in Regulation D (or any successor category of liabilities under
Regulation D).



          “Event of Default” shall have the meaning provided in Section 8.



          “Existing Credit Agreement” shall mean the Credit Agreement, dated as of
December 12, 2001, among the Borrower, various lending institutions, The Bank
of New York, Mellon Bank, N.A. and Fleet National Bank, as Co-Arrangers, and
JPMorgan Chase Bank, as Administrative Agent and Co-Arranger, as amended,
modified or supplemented prior to the Effective Date.



          “Expiration Date” shall mean December 17, 2003.



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



          “Fees” shall mean all amounts payable pursuant to, or referred to in,
Section 2.01.



          “FHLB” shall have the meaning provided in Section 7.04(j).



          “Foreign Pension Plan” shall mean any plan, fund (including, without
limitation, any superannuation fund) or other similar program established or
maintained outside of the United States of America by the Borrower or any one
or more of its Subsidiaries primarily for the benefit of employees of the
Borrower or such Subsidiaries residing outside the United States of America,
which plan, fund or other similar program provides, or results in, retirement
income, a deferral of income in contemplation of retirement or payments to be
made upon termination of employment, and which plan is not subject to ERISA or
the Code.



 









 





          “Fronting Fee” shall mean a fee payable by the Borrower to the Issuing
Bank, pursuant to a fee letter entered into by the Borrower and the Issuing
Bank, to compensate the Issuing Bank for issuing Letters of Credit on behalf of
the Banks hereunder.



          “GAAP” shall mean generally accepted accounting principles in the United
States of America; it being understood and agreed that determinations in
accordance with GAAP for purposes of Section 7, including defined terms as used
therein, are subject (to the extent provided therein) to Section 11.07(a).



          “Governmental Authority” shall mean any nation or government, any state or
other political subdivision thereof and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government.



          “Incur” shall have the meaning provided in Section 7.03.



          “Indebtedness” of any Person shall mean (i) all indebtedness of such
Person for borrowed money, (ii) the deferred purchase price of assets or
services which in accordance with GAAP would be shown on the liability side of
the balance sheet of such Person, (iii) the face amount of all letters of
credit issued for the account of such Person and, without duplication, all
drafts drawn thereunder, (iv) all Indebtedness of a second Person secured by
any Lien on any property owned by such first Person, whether or not such
Indebtedness has been assumed, (v) all Capitalized Lease Obligations of such
Person, (vi) all obligations of such Person under Interest Rate Protection
Agreements and (vii) all Contingent Obligations of such Person with respect to
any of the foregoing; provided, that Indebtedness shall not include (w)
obligations of the Borrower or any of its Subsidiaries described in clauses (x)
or (y) of the definition of “Subsidiary,” (x) trade payables (including
payables under insurance contracts and reinsurance payables) and accrued
expenses, in each case arising in the ordinary course of business and (y)
obligations with respect to Policies.



          “Indianapolis Life” shall mean Indianapolis Life Insurance Company, an
Indiana life insurance company.



          “Initial Offering” shall mean, collectively, a transaction involving the
sale of Trust Preferred Related Debt Securities of the Borrower to a Delaware
statutory business trust which constitutes a Subsidiary of the Borrower and the
concurrent sale by such Subsidiary of preferred equity securities, which
transaction was consummated on February 3, 1997.



          “Insurance Business” shall mean one or more aspects of the business of
selling, issuing or underwriting insurance or reinsurance.



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



 









 





          “Insurance Licenses” shall mean each insurance license necessary for the
conduct of business by any Regulated Insurance Company.



          “Interest Coverage Ratio” shall mean, for any Test Period, the ratio of
Cash Flow for such Test Period to Consolidated Interest Expense of the Borrower
for such Test Period.



          “Interest Period” shall mean, with respect to any Eurodollar Loan, the
interest period applicable thereto, as determined pursuant to Section 1.09.



          “Interest Rate Protection Agreement” shall mean any interest rate swap
agreement, interest rate cap agreement, interest rate collar agreement,
interest rate hedging agreement or other similar agreement or arrangement.



          “Issuing Bank” shall mean (i) Chase and (ii) each other Bank, if any, as
requested by the Borrower to issue Letters of Credit hereunder to the extent
agreed by such other Bank and the Administrative Agent. Any Issuing Bank may,
in its discretion, arrange for one or more Letters of Credit to be issued by
one or more Affiliates of such Issuing Bank, provided, in each case, that the
Borrower does not reasonably object based on such Affiliate’s creditworthiness,
and the term “Issuing Bank” shall include any such Affiliate with respect to
Letters of Credit issued by it.



          “Legal Requirements” shall mean all applicable laws, rules and regulations
made by any governmental body or regulatory authority (including, without
limitation, any Applicable Insurance Regulatory Authority) having jurisdiction
over the Borrower or a Subsidiary of the Borrower.



          “Letter of Credit” shall have the meaning provided in Section 1A.01(a).



          “Letter of Credit Fee” shall have the meaning provided in Section 2.01(b).



          “Letter of Credit Outstandings” shall mean, at any time, the sum of,
without duplication (i) the aggregate Stated Amount of all Letters of Credit
plus (ii) the aggregate amount of all Unpaid Drawings in respect of all Letters
of Credit.



          “Letter of Credit Request” shall have the meaning provided in Section
1A.02(a).



          “Letter of Credit Supportable Obligations” shall mean obligations of the
Borrower or any of its Subsidiaries to any other Person which are permitted to
exist pursuant to the terms of this Agreement.



          “Leverage Ratio” shall mean the ratio of (i) Consolidated Indebtedness of
the Borrower to (ii) Consolidated Total Capital of the Borrower.



          “Lien” shall mean any mortgage, pledge, security interest, encumbrance,
lien or charge of any kind (including any agreement to give any of the
foregoing, any conditional sale or other title retention agreement or any lease
in the nature thereof), or any understanding or agreement to repurchase any
property or assets sold by the Borrower or any of its Subsidiaries (including
sales of accounts receivable or notes with recourse to the Borrower or any of
its Subsid-



 









 




iaries), or the assignment of any right to receive income, or the
filing of any financing statement under the UCC or any other similar notice
under any similar recording or notice statute relating to any property.




          “Loan” shall have the meaning provided in Section 1.01.



          “Margin Stock” shall have the meaning provided in Regulation U.



          “Material Adverse Effect” shall mean a material adverse effect on the
assets, liabilities or financial condition of the Borrower or of the Borrower
and its Subsidiaries taken as a whole.



          “Material Regulated Insurance Company” shall mean each Regulated Insurance
Company which has a statutory surplus equal to or greater than $15,000,000.



          “Material Subsidiary” shall mean any Subsidiary of the Borrower the book
value (determined in accordance with GAAP) of whose assets constitutes 3% or
more of the book value (determined in accordance with GAAP) of the consolidated
assets of the Borrower and its Subsidiaries; provided that, if at any time the
aggregate book value (determined in accordance with GAAP) of the assets of all
Subsidiaries of the Borrower which would otherwise not be Material Subsidiaries
as provided above exceeds 10% of the aggregate book value (determined in
accordance with GAAP) of the assets of the Borrower and its Subsidiaries at
such time, then the 3% referred to above in this definition shall be
automatically reduced to the extent necessary such that, after giving effect to
such reduction, the aggregate book value (determined in accordance with GAAP)
of the assets of all Subsidiaries of the Borrower which are not Material
Subsidiaries does not exceed 10% of the aggregate book value (determined in
accordance with GAAP) of the assets of the Borrower and its Subsidiaries at
such time.



          “Maturity Date” shall mean the fourth anniversary of the Effective Date.



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



          “Moody’s Credit Rating” shall mean the rating level (it being understood
that a rating level shall include numerical modifiers) assigned by Moody’s to
the senior unsecured long-term debt of the Borrower, provided that if at any
time Moody’s does not rate the senior unsecured long-term debt of the Borrower,
the “Moody’s Credit Rating” shall be three rating levels below the claims
paying rating assigned by Moody’s to AmerUs Life. If either of the foregoing
ratings shall be changed by Moody’s, such change shall be effective for
purposes of this definition on the Business Day following the day on which
Moody’s announces such change.



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



          “NAIC Tests” shall mean the ratios and other financial measurements
developed by the NAIC under its Insurance Regulatory Information System, as in
effect from time to time.



 









 





          “Net Worth” shall mean, as to any Person, the sum of its capital stock
(including, without limitation, its preferred stock), capital in excess of par
or stated value of shares of its capital stock (including, without limitation,
its preferred stock), retained earnings and any other account which, in
accordance with GAAP, constitutes stockholders equity, but excluding (i) any
treasury stock and (ii) accumulated other comprehensive income.



          “1998 Offering” shall mean, collectively, a transaction involving the sale
of Trust Preferred Related Debt Securities of the Borrower to a Delaware
statutory business trust which constitutes a Subsidiary of the Borrower and the
concurrent sale by such Subsidiary of preferred equity securities, which
transaction shall be consummated substantially on terms and conditions
reflected in the June 8, 1998 filing with the SEC of the Prospectus Supplement
to Prospectus in connection with the AmerUs Life Holdings, Inc. and AmerUs
Capital II Adjustable Convertible-Rate Equity Security Units.



          “Non-Defaulting Bank” shall mean each Bank other than a Defaulting Bank.



          “Note” shall have the meaning provided in Section 1.05.



          “Notice of Borrowing” shall have the meaning provided in Section 1.03.



          “Notice of Conversion” shall have the meaning provided in Section 1.06.



          “Notice of Non-Extension” shall have the meaning provided in Section
1A.06.



          “Notice Office” shall mean the office of the Administrative Agent at 270
Park Avenue, New York, New York 10017 or such other office as the
Administrative Agent may designate to the Borrower and the Banks from time to
time.



          “Obligations” shall mean all amounts, direct or indirect, contingent or
absolute, of every type or description, and at any time existing, owing to the
Administrative Agent or any Bank pursuant to the terms of this Agreement or any
other Credit Document.



          “OCEANs(SM)” shall mean an offering of optionally convertible
equity-linked securities issued by the Borrower on March 6, 2002 together
with the full exercise of the overallotment option described in the prospectus
dated March 6, 2002.



          “Ordinary Course of Business” shall mean transactions, actions,
activities, occurrences or events occurring in the normal course of business
(i) of the Borrower and/or any of its Subsidiaries, and/or (ii) of other
companies in the life and annuity insurance businesses.



          “Participant” shall have the meaning provided in Section 1A.04(a).



          “Payment Office” shall mean the office of the Administrative Agent at 1111
Fannin Street, 10th Floor, Houston, Texas 77002 or such other office as the
Administrative Agent may designate to the Borrower and the Banks from time to
time.



          “PBGC” shall mean the Pension Benefit Guaranty Corporation established
pursuant to Section 4002 of ERISA, or any successor thereto.



 









 





          “Percentage” shall mean, at any time for each Bank, the percentage
obtained by dividing such Bank’s Commitment at such time by the Total
Commitment then in effect, provided that, if the Total Commitment has been
terminated, the Percentage of each Bank shall be determined by dividing such
Bank’s Commitment as in effect immediately prior to such termination by the
Total Commitment as in effect immediately prior to such termination (but also
giving effect to any assignments made in accordance with Section 11.04(b)
after the date on which the Total Commitment has terminated).



          “Permitted Subordinated Debt Securities” shall mean unsecured subordinated
debt of the Borrower the terms and conditions of which are reasonably
satisfactory to the Administrative Agent and the Required Banks.



          “Permitted Transaction” shall have the meaning provided in the definition
of “Subsidiary”.



          “Person” shall mean any individual, partnership, joint venture, firm,
corporation, association, trust or other enterprise or any government or
political subdivision or any agency, department or instrumentality thereof.



          “Plan” shall mean any pension plan as defined in Section 3(2) of ERISA,
which is maintained or contributed to by (or to which there is an obligation to
contribute of) the Borrower or a Subsidiary of the Borrower or an ERISA
Affiliate, and each such plan for the five year period immediately following
the latest date on which the Borrower, or a Subsidiary of the Borrower or an
ERISA Affiliate maintained, contributed to or had an obligation to contribute
to such plan.



          “Policies” shall mean all insurance policies, annuity contracts,
guaranteed interest contracts and funding agreements (including riders to any
such policies or contracts, certificates issued with respect to group life
insurance or annuity contracts and any contracts issued in connection with
retirement plans or arrangements) and assumption certificates issued or to be
issued (or filed pending current review by applicable Governmental Authorities)
by any Regulated Insurance Company and any Reinsurance Agreements entered into
or to be entered into by any Regulated Insurance Company.



          “PRIDES(SM)” shall mean an offering of mandatorily convertible
equity-linked securities issued by the Borrower on May 21, 2003 together with
the full exercise of the overallotment option described in the prospectus dated
May 21, 2003.



          “Prime Lending Rate” shall mean the rate which Chase announces from time
to time as its prime commercial lending rate, the Prime Lending Rate to change
when and as such prime commercial lending rate changes. The Prime Lending Rate
is a reference rate and does not necessarily represent the lowest or best rate
actually charged to any customer. Chase may make commercial loans or other
loans at rates of interest at, above or below the Prime Lending Rate.



          “Purchase Money Security Interest” shall have the meaning provided in
Section 7.03(j).



 









 





          “Quarterly Statement” shall mean the quarterly financial statements
required to be filed by any Regulated Insurance Company with the Applicable
Regulatory Insurance Authority.



          “Rating Agencies” shall mean S&P and Moody’s.



          “Register” shall have the meaning provided in Section 11.17.



          “Regulated Insurance Company” shall mean any Subsidiary of the Borrower,
whether now owned or hereafter acquired, that is authorized or admitted to
carry on or transact Insurance Business in any jurisdiction and is regulated by
any Applicable Insurance Regulatory Authority.



          “Regulation D” shall mean Regulation D of the Board of Governors of the
Federal Reserve System as from time to time in effect and any successor to all
or a portion thereof establishing reserve requirements.



          “Regulation U” shall mean Regulation U of the Board of Governors of the
Federal Reserve System as from time to time in effect and any successor to all
or a portion thereof establishing margin requirements.



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



          “Reportable Event” shall mean an event described in Section 4043(c) of
ERISA with respect to a Plan other than those events as to which the 30-day
notice period is waived under subsection .22, .23, .25, .27 or .28 of 29 C.F.R.
4043.



          “Required Banks” shall mean Banks whose Commitments (or, after the
Commitments have terminated, outstanding Loans) represent an amount equal to or
greater than 50% of the Total Commitment (or after the termination thereof, the
sum of the then total outstanding Loans at such time).



          “Retrocession Agreement” shall mean any agreement, contract, treaty or
other arrangement whereby one or more insurers or reinsurers, as
retrocessionaires, assume liabilities of reinsurers under a Reinsurance
Agreement or other retrocessionaires under another Retrocession Agreement.



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



          “S&P” shall mean Standard & Poor’s Ratings Group and its successors.



          “S&P Credit Rating” shall mean the rating level (it being understood that
a rating level shall include (+) and (-) modifiers) assigned by S&P to the
senior unsecured long-term debt of the Borrower, provided that if at any time
S&P does not rate the senior unsecured long-term debt of the Borrower, the “S&P
Credit Rating” shall be three rating levels below the claims



 









 




paying rating assigned by S&P to AmerUs Life. If either of the foregoing ratings shall be
changed by S&P, such change shall be effective for purposes of this definition
on the Business Day following the day on which S&P announces such change.




          “SAP” shall mean, with respect to any Regulated Insurance Company, the
accounting procedures and practices prescribed or permitted by the Applicable
Insurance Regulatory Authority of the state in which such Regulated Insurance
Company is domiciled; it being understood and agreed that determinations in
accordance with SAP for purposes of Section 7, including defined terms as used
therein, are subject (to the extent provided therein) to Section 11.07(a).



          “SEC” shall mean the Securities and Exchange Commission or any successor
thereto.



          “SEC Regulation D” shall mean Regulation D as promulgated under the
Securities Act of 1933, as amended, as the same may be in effect from time to
time.



          “Section 3.04(b)(ii) Certificate” shall have the meaning provided in
Section 3.04(b)(ii).



          “Stated Amount” of each Letter of Credit shall mean, at any time, the
maximum amount available to be drawn thereunder (regardless of whether any
conditions for drawing could be met).



          “Statutory Statement” shall mean, as to any Regulated Insurance Company, a
statement of the condition and affairs of such Regulated Insurance Company,
prepared in accordance with SAP and filed with the Applicable Insurance
Regulatory Authority.



          “Subsidiary” of any Person shall mean and include (i) any corporation more
than 50% of whose stock of any class or classes having by the terms thereof
ordinary voting power to elect a majority of the directors of such corporation
(irrespective of whether or not at the time stock of any class or classes of
such corporation shall have or might have voting power by reason of the
happening of any contingency) is at the time owned by such Person directly or
indirectly through Subsidiaries and (ii) any partnership, association, joint
venture or other entity in which such Person directly or indirectly through
Subsidiaries has more than a 50% voting interest at the time for the board of
directors or equivalent body. Unless otherwise expressly provided, all
references to “Subsidiary” shall mean a Subsidiary of the Borrower, provided
that, notwithstanding the foregoing provisions of this definition, any grantor
trust or limited liability company established by the Borrower and/or its
Subsidiaries in order to effectuate the lease/leaseback transaction with Linzer
Elektrizitats-, Fernwarme- und Verkehrsbetriebe Aktiengesellschaft (“ESG”) with
respect to a cogeneration facility in Linz, Austria as described in the summary
of terms and structure delivered to the Administrative Agent and the Banks
prior to December 4, 1998, and any trust or limited liability company formed by
the Borrower and/or its Subsidiaries after December 4, 1998 to effectuate
transactions with ESG or any other Person in which the Indebtedness of the
Borrower and its Subsidiaries incurred in connection therewith is comprised
solely of (x) obligations which are non-recourse to the Borrower or any of its
Subsidiaries and (y) other obligations which are or will be 100% defeased by
U.S. Government obligations (each such transaction, including the
lease/leaseback with ESG, a “Permitted Transaction”), shall not constitute
Subsidiaries for purposes of this Agreement.



 









 





          “Surplus Note” shall mean a surplus note issued by any Regulated Insurance
Company to the Borrower.



          “Taxes” shall have the meaning provided in Section 3.04(a).



          “Termination Date” shall have the meaning provided in Section 2.01(a).



          “Test Period” shall mean the four consecutive fiscal quarters of the
Borrower ended on the last day of the most recently ended fiscal quarter of the
Borrower (taken as one accounting period). The first Test Period shall end on
December 31, 2003.



          “Total Adjusted Capital” shall mean “Total Adjusted Capital” as defined by
the NAIC as of December 31, 2002 and as applied in the context of the Risk
Based Capital Guidelines promulgated by the NAIC.



          “Total Commitment” shall mean the sum of the Commitments of each Bank.



          “Total Unutilized Commitment” shall mean, at any time, an amount equal to
the remainder of (x) the Total Commitment then in effect less (y) the sum of
the aggregate principal amount of Loans then outstanding and the Letter of
Credit Outstandings at such time.



          “Trust Preferred Offering” shall mean (i) the Initial Offering, (ii) the
1998 Offering and (iii) any subsequent issuance of Trust Preferred Related Debt
Securities by the Borrower or a Subsidiary of the Borrower to a business trust,
together with the concurrent issuance by such trust of (i) preferred equity
securities or (ii) securities mandatorily convertible into equity of the
Borrower, so long as such Trust Preferred Related Debt Securities and preferred
equity securities or mandatorily convertible securities contain the following
terms: (x) a term of not less than five (5) years and (y) the ability to defer
principal and interest for a period no longer than the term of such Trust
Preferred Related Debt Securities.



          “Trust Preferred Related Debt Securities” shall mean unsecured, fixed-rate
subordinated debt issued or to be issued by the Borrower or a Subsidiary of the
Borrower in connection with any Trust Preferred Offering, provided that any
such Indebtedness issued after the Effective Date, and the agreements and other
documents entered into by the Borrower and/or any of its Subsidiaries in
connection therewith shall (i) contain terms and conditions reflective of then
prevailing market terms and conditions for public issuances of unsecured,
fixed-rate subordinated trust preferred securities, (ii) not require any
amortization or contain any mandatory put, mandatory redemption, mandatory
prepayment, sinking fund or other similar provision (other than (x) a mandatory
put or mandatory redemption pursuant to a “change of control” under any such
debt or (y) a mandatory redemption or mandatory prepayment arising as a result
of an acceleration of such debt following the occurrence of an event of default
thereunder), (iii) not contain representations and warranties, covenants,
defaults or remedies that are more restrictive to the Borrower or any
Subsidiary in any material respect than those contained in this Agreement and
(iv) contain subordination provisions not materially less favorable to the
Banks than those provided for in the Initial Offering and the 1998 Offering,
except to the extent



 









 




acceptable to the Administrative Agent and the Required
Banks. For the avoidance of doubt, it is agreed that all Trust Preferred
Related Debt Securities shall contain terms and conditions which in the
aggregate are, reflective of then current market conditions for public
issuances of unsecured, fixed rate, subordinated trust preferred securities for issuers
of the Borrower’s size and credit quality.




          “Type” shall mean any type of Loan determined with respect to the interest
option applicable thereto, i.e., a Base Rate Loan or a Eurodollar Loan.



          “UCC” shall mean the Uniform Commercial Code.



          “Unfunded Current Liability” of any Plan shall mean the amount, if any, by
which the actuarial present value of the accumulated plan benefits under the
Plan as of the close of its most recent plan year exceeds the fair market value
of the assets allocable thereto as of the close of its most recent plan year,
each determined in accordance with Statement of Financial Accounting Standards
No. 87, based upon the actuarial assumptions used by the Plan’s actuary in the
most recent annual valuation of the Plan.



          “Unpaid Drawings” shall have the meaning provided in Section 1A.03(a).



          “Unrestricted Subsidiary” shall mean each of ACM Properties, Inc. and each
other Subsidiary of the Borrower designated by the Borrower as an Unrestricted
Subsidiary in accordance with Section 11.19.



          “Unutilized Commitment” with respect to any Bank, at any time, shall mean
such Bank’s Commitment at such time less the sum of (i) the aggregate
outstanding principal amount of Loans made by such Bank and (ii) such Bank’s
Percentage of the Letter of Credit Outstandings at such time.



          “Wholly-Owned Subsidiary” of any Person shall mean any Subsidiary of such
Person to the extent all of the capital stock or other ownership interests in
such Subsidiary, other than directors’ or nominees’ qualifying shares, is owned
directly or indirectly by such Person.



          “Written” or “in writing” shall mean any form of written communication or
a communication by means of telex, facsimile device, telegraph or cable.



          SECTION 10. The Administrative Agent.



          10.01 Appointment. Each Bank hereby irrevocably designates and appoints
Chase as Administrative Agent to act as specified herein and in the other
Credit Documents, and each such Bank hereby irrevocably authorizes Chase as the
Administrative Agent for such Bank, to take such action on its behalf under the
provisions of this Agreement and the other Credit Documents and to exercise
such powers and perform such duties as are expressly delegated to the
Administrative Agent by the terms of this Agreement and the other
Credit Documents, together with such other powers as are reasonably incidental
thereto. The Administrative Agent agrees to act as such upon the express
conditions contained in this Section 10. Notwithstanding any provision to the
contrary elsewhere in this Agreement, the Administrative Agent shall not have
any duties or responsibilities, except those expressly set forth herein or in
the other Credit



 









 




Documents, nor any fiduciary relationship with any Bank, and
no implied covenants, functions, responsibilities, duties,
obligations or liabilities shall be read into this Agreement or otherwise
exist against the Administrative Agent. The provisions of this Section 10 are
solely for the benefit of the Administrative Agent and the Banks, and the
Borrower shall not have any rights as a third party beneficiary of any of the
provisions hereof. In performing its functions and duties under this
Agreement, the Administrative Agent shall act solely as agent of the Banks and
does not assume and shall not be deemed to have assumed any obligation or
relationship of agency or trust with or for the Borrower.




          10.02 Delegation of Duties. The Administrative Agent may execute any of
its duties under this Agreement or any other Credit Document by or through
agents or attorneys-in-fact and shall be entitled to advice of counsel
concerning all matters pertaining to such duties. The Administrative Agent
shall not be responsible for the negligence or misconduct of any agents or
attorneys-in-fact selected by it with reasonable care except to the extent
otherwise required by Section 10.03.



          10.03 Exculpatory Provisions. Neither the Administrative Agent nor any of
its officers, directors, employees, agents, attorneys-in-fact or affiliates
shall be (i) liable for any action lawfully taken or omitted to be taken by it
or such Person under or in connection with this Agreement (except for its or
such Person’s own gross negligence or willful misconduct) or (ii) responsible
in any manner to any of the Banks for any recitals, statements, representations
or warranties made by the Borrower or any Subsidiary or any of their respective
officers contained in this Agreement, any other Credit Document or in any
certificate, report, statement or other document referred to or provided for
in, or received by the Administrative Agent under or in connection with, this
Agreement or any other Credit Document or for any failure of the Borrower or
any of its Subsidiaries or any of their respective officers to perform its
obligations hereunder or thereunder. The Administrative Agent shall not be
under any obligation to any Bank to ascertain or to inquire as to the
observance or performance of any of the agreements contained in, or conditions
of, this Agreement, or to inspect the properties, books or records of the
Borrower or any of its Subsidiaries. The Administrative Agent shall not be
responsible to any Bank for the effectiveness, genuineness, validity,
enforceability, collectibility or sufficiency of this Agreement or any Credit
Document or for any representations, warranties, recitals or statements made
herein or therein or made in any written or oral statement or in any financial
or other statements, instruments, reports, certificates or any other documents
in connection herewith or therewith furnished or made by the Administrative
Agent to the Banks or by or on behalf of the Borrower to the Administrative
Agent or any Bank or be required to ascertain or inquire as to the performance
or observance of any of the terms, conditions, provisions, covenants or
agreements contained herein or therein or as to the use of the proceeds of the
Loans or of the existence or possible existence of any Default or Event of
Default.



          10.04 Reliance by Administrative Agent. The Administrative Agent shall be
entitled to rely, and shall be fully protected in relying, upon any note,
writing, resolution, notice, consent, certificate, affidavit, letter,
cablegram, telegram, facsimile transmission, telex or teletype message,
statement, order or other document or conversation believed by it to be genuine and correct and to have
been signed, sent or made by the proper Person or Persons and upon advice and
statements of legal counsel (including, without limitation, counsel to the
Borrower), independent accountants and other experts selected by the
Administrative Agent.



 









 




The Administrative Agent shall be fully justified in
failing or refusing to take any action under this Agreement or any other Credit
Document unless it shall first receive such advice or concurrence of the
Required Banks as it deems appropriate or it shall first be indemnified to its
satisfaction by the Banks against any and all liability and expense which may
be incurred by it by reason of taking or continuing to take any such action.
The Administrative Agent shall in all cases be fully protected in acting, or in
refraining from acting, under this Agreement and the other Credit Documents in
accordance with a request of the Required Banks, and such request and any
action taken or failure to act pursuant thereto shall be binding upon all the
Banks.




          10.05 Notice of Default. The Administrative Agent shall not be deemed to
have knowledge or notice of the occurrence of any Default or Event of Default
hereunder unless the Administrative Agent has received notice from a Bank or
the Borrower referring to this Agreement, describing such Default or Event of
Default and stating that such notice is a “notice of default”. In the event
that the Administrative Agent receives such a notice, the Administrative Agent
shall give prompt notice thereof to the Banks. The Administrative Agent shall
take such action with respect to such Default or Event of Default as shall be
reasonably directed by the Required Banks, provided that unless and until the
Administrative Agent shall have received such directions, the Administrative
Agent may (but shall not be obligated to) take such action, or refrain from
taking such action, with respect to such Default or Event of Default as it
shall deem advisable in the best interests of the Banks.



          10.06 Non-Reliance. Each Bank expressly acknowledges that neither the
Administrative Agent nor any of its officers, directors, employees, agents,
attorneys-in-fact or affiliates have made any representations or warranties to
it and that no act by the Administrative Agent hereinafter taken, including any
review of the affairs of the Borrower or any of its Subsidiaries, shall be
deemed to constitute any representation or warranty by the Administrative Agent
to any Bank. Each Bank represents to the Administrative Agent that it has,
independently and without reliance upon the Administrative Agent or any other
Bank, and based on such documents and information as it has deemed appropriate,
made its own appraisal of and investigation into the business, assets,
operations, property, financial and other conditions, prospects and
creditworthiness of the Borrower and its Subsidiaries and made its own decision
to make its Loans hereunder and enter into this Agreement. Each Bank also
represents that it will, independently and without reliance upon the
Administrative Agent or any other Bank, and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit analysis, appraisals and decisions in taking or not taking action under
this Agreement, and to make such investigation as it deems necessary to inform
itself as to the business, assets, operations, property, financial and other
conditions, prospects and creditworthiness of the Borrower and its
Subsidiaries. The Administrative Agent shall not have any duty or
responsibility to provide any Bank with any credit or other information
concerning the business, operations, assets, property, financial and
other conditions, prospects or creditworthiness of the Borrower or any
Subsidiary which may come into the possession of the Administrative Agent or
any of its officers, directors, employees, agents, attorneys-in-fact or
affiliates.



          10.07 Indemnification. Each Bank agrees to indemnify the Administrative
Agent in its capacity as such ratably according to their respective
“percentages” as used in determining the Required Banks at such time from and
against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, reasonable expenses or disbursements of any



 









 




kind whatsoever which may at any time (including, without limitation, at any
time following the payment of the Obligations) be imposed on, incurred by or
asserted against the Administrative Agent in its capacity as such in any way
relating to or arising out of this Agreement or any other Credit Document, or
any documents contemplated by or referred to herein or the transactions
contemplated hereby or any action taken or omitted to be taken by the
Administrative Agent under or in connection with any of the foregoing, but only
to the extent that any of the foregoing is not paid by the Borrower or any of
its Subsidiaries, provided that no Bank shall be liable to the Administrative
Agent for the payment of any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
resulting solely from the Administrative Agent’s gross negligence or willful
misconduct. If any indemnity furnished to the Administrative Agent for any
purpose shall, in the opinion of the Administrative Agent, be insufficient or
become impaired, the Administrative Agent may call for additional indemnity and
cease, or not commence, to do the acts indemnified against until such
additional indemnity is furnished. The agreements in this Section 10.07 shall
survive the payment of all Obligations.




          10.08 The Administrative Agent in its Individual Capacity. The
Administrative Agent and its affiliates may make loans to, accept deposits from
and generally engage in any kind of business with the Borrower and its
Subsidiaries as though not acting as Administrative Agent hereunder. With
respect to the Loans made by it and all Obligations owing to it, the
Administrative Agent shall have the same rights and powers under this Agreement
as any Bank and may exercise the same as though it were not the Administrative
Agent, and the terms “Bank” and “Banks” shall include the Administrative Agent
in its individual capacity.



          10.09 Successor Administrative Agent. The Administrative Agent may resign
as the Administrative Agent upon 20 days’ notice to the Banks and the Borrower.
Upon such resignation, the Required Banks shall, with the consent of the
Borrower (such consent not to be unreasonably withheld), appoint from among the
Banks a successor Administrative Agent for the Banks, whereupon such successor
agent shall succeed to the rights, powers and duties of the Administrative
Agent, and the term “Administrative Agent” shall include such successor agent
effective upon its appointment, and the resigning Administrative Agent’s
rights, powers and duties as the Administrative Agent shall be terminated,
without any other or further act or deed on the part of such former
Administrative Agent or any of the parties to this Agreement. After the
retiring Administrative Agent’s resignation hereunder as the Administrative
Agent, the provisions of this Section 10 shall inure to its
benefit as to any actions taken or omitted to be taken by it while it was
Administrative Agent under this Agreement.



          10.10 Co-Syndication Agents. Notwithstanding any other provision of this
Agreement or any provision of any other Credit Document, each of the
Co-Syndication Agents are named as such for recognition purposes only, and in
their respective capacities Co-Syndication Agent, as such shall have no powers,
duties, responsibilities or liabilities with respect to this Agreement or the
other Credit Documents or the transactions contemplated hereby and thereby.
Without limitation of the foregoing, none of the Co-Syndication Agents in their
respective capacities as Co-Syndication Agents shall, solely by reason of this
Agreement or any other Credit Documents, have any fiduciary relationship with
any Bank or any other Person.



 









 





          SECTION 11. Miscellaneous.



          11.01 Payment of Expenses, etc. The Borrower hereby agrees to: (i)
whether or not the transactions herein contemplated are consummated, pay all
reasonable out-of-pocket costs and expenses of the Administrative Agent in
connection with the negotiation, preparation, syndication, execution and
delivery of the Credit Documents and the documents and instruments referred to
therein (including, without limitation, the reasonable fees and disbursements
of White & Case LLP); (ii) whether or not the transactions herein contemplated
are consummated, pay all reasonable out-of-pocket costs and expenses of the
Administrative Agent in connection with any amendment, waiver or consent
relating to this Agreement or any other Credit Document; (iii) whether or not
the transactions herein contemplated are consummated, pay all reasonable
out-of-pocket costs and expenses of the Administrative Agent and each of the
Banks in connection with the enforcement of the Credit Documents and the
documents and instruments referred to therein (including, without limitation,
the reasonable fees and disbursements of counsel for the Administrative Agent
and for each of the Banks); (iv) pay and hold each of the Banks harmless from
and against any and all present and future stamp and other similar taxes with
respect to the foregoing matters and save each of the Banks harmless from and
against any and all liabilities with respect to or resulting from any delay or
omission to pay such taxes; and (v) indemnify the Administrative Agent and each
Bank, and their respective officers, directors, employees, representatives and
agents (each, an “indemnified person”) from and hold each of them harmless
against any and all losses, liabilities, claims, damages or expenses
(collectively, “Claims”) incurred by any of them as a result of, or arising out
of, or in any way related to, or by reason of, any investigation, litigation or
other proceeding (whether or not the Administrative Agent or any Bank is a
party thereto) related to the entering into and/or performance of any Credit
Document or the use of the proceeds of any Loans or Letters of Credit hereunder
or the consummation of any other transactions contemplated in any Credit
Document, including, without limitation, the reasonable fees and disbursements
of counsel incurred in connection with any such investigation, litigation or
other proceeding (but excluding (x) any claims by the Borrower against any Bank
or the Administrative Agent for failure to perform its obligations to the
Borrower hereunder or under any other Credit Document and (y) any such losses,
liabilities, claims, damages or
expenses to the extent incurred by reason of the gross negligence or
willful misconduct of the Person to be indemnified).



          11.02 Right of Setoff. In addition to any rights now or hereafter granted
under applicable law or otherwise, and not by way of limitation of any such
rights, upon the occurrence and continuance of an Event of Default, each Bank
is hereby authorized at any time or from time to time, without presentment,
demand, protest or other notice of any kind to the Borrower or to any other
Person, any such notice being hereby expressly waived, to set off and to
appropriate and apply any and all deposits (general or special) and any other
Indebtedness at any time held or owing by such Bank (including, without
limitation, by branches and agencies of such Bank wherever located) to or for
the credit or the account of the Borrower against and on account of the
Obligations and liabilities of the Borrower to such Bank or any other Bank
under this Agreement or under any of the other Credit Documents, including,
without limitation, all interests in Obligations of the Borrower purchased by
such Bank or any other Bank pursuant to Section 11.06(b), and all other claims
of any nature or description arising out of or connected with this Agreement or
any other Credit Document, irrespective of whether or not such Bank shall have
made any demand hereunder and although said Obligations, liabilities or claims,
or



 









 




any of them, shall be contingent or unmatured. Each Bank is hereby
designated the agent of all other Banks for purposes of effecting set off
pursuant to this Section 11.02 and the Borrower hereby grants to each Bank for
such Bank’s own benefit and as agent for all other Banks a continuing security
interest in any and all deposits, accounts or moneys of the Borrower maintained
from time to time with such Bank.




          11.03 Notices. Except as otherwise expressly provided herein, all notices
and other communications provided for hereunder shall be in writing (including
telegraphic, telex, facsimile or cable communication) and mailed, telegraphed,
telexed, telecopied, cabled or delivered, if to the Borrower, at the address
specified opposite its signature below; if to the Administrative Agent, at 270
Park Avenue, New York, New York 10081, (212) 270-7525 (tel), (212) 270-1511
(fax), Attn: Lawrence Palumbo; if to any other Bank, to its address (or
telecopy number) set forth in its Administrative Questionnaire; or, at such
other address as shall be designated by any party in a written notice to the
other parties hereto. All such notices and communications shall be mailed,
telegraphed, telexed, telecopied, cabled or sent by overnight courier and shall
be effective when received.



          11.04 Benefit of Agreement. (a) This Agreement shall be binding upon and
inure to the benefit of and be enforceable by the respective successors and
assigns of the parties hereto; provided, however, the Borrower may not assign
or transfer any of its rights or obligations hereunder without the prior
written consent of the Banks. Each Bank may at any time grant participations
in any of its rights hereunder or under any of its Notes to any bank or other
financial institution; provided that in the case of any such participation, the
participant shall not have any rights under this Agreement or any of the other
Credit Documents, including rights of consent, approval or waiver (the participant’s
rights against such Bank in respect of such participation to be
those set forth in the agreement executed by such Bank in favor of the
participant relating thereto) and all amounts payable by the Borrower hereunder
shall be determined as if such Bank had not sold such participation, except
that the participant shall be entitled to receive the additional amounts under
Sections 1.10, 1.11 and 3.04 of this Agreement to, and only to, the extent that
such Bank would be entitled to such benefits if the participation had not been
entered into or sold; and provided further, that no Bank shall transfer, grant
or assign any participation under which the participant shall have rights to
approve any amendment to or waiver of this Agreement or any other Credit
Document except to the extent such amendment or waiver would (i) extend the
final scheduled maturity of any Loan or Note in which such participant is
participating or reduce the rate or extend the time of payment of interest
thereon or Fees, or reduce the principal amount thereof, or increase such
participant’s participating interest in any Commitment or Loan over the amount
thereof then in effect (it being understood that a waiver of any Default or
Event of Default or of a mandatory reduction in the Total Commitment shall not
constitute a change in the terms of any Commitment and that an increase in any
Commitment shall be permitted without the consent of any participant if such
participant’s participation is not increased as a result thereof) or (ii)
consent to the assignment or transfer by the Borrower of any of its rights and
obligations under this Agreement or any other Credit Document except in
accordance with the terms hereof and thereof.



          (b) Notwithstanding the foregoing, any Bank may assign all or a portion of
its rights and obligations hereunder to (x) its parent company and/or any
affiliate of such Bank which is at least 50% owned and controlled by such Bank
or its parent company or to one or



 









 




more other Banks with the prior written
consent of each Issuing Bank, which consent shall not be unreasonably withheld
or delayed, or (y) a bank or other financial institution with the prior written
consent of (i) the Administrative Agent, which consent shall not be
unreasonably withheld, (ii) each Issuing Bank, which consent shall not be
unreasonably withheld or delayed and (iii) the Borrower, which consent shall
not be unreasonably withheld and shall not be required if a Default or Event of
Default exists at the time of such assignment. No assignment of less than all
of a Bank’s rights and obligations hereunder pursuant to the immediately
preceding sentence shall, to the extent such transaction represents an
assignment to an institution other than one or more Banks hereunder, be in an
aggregate amount less than the minimum of $5,000,000 unless otherwise agreed to
by the Administrative Agent and the Borrower in writing. If any Bank so sells
or assigns all or a part of its rights hereunder or under the Notes, any
reference in this Agreement or the Notes to such assigning Bank shall
thereafter refer to such Bank and to the respective assignee to the extent of
their respective interests and the respective assignee shall have, to the
extent of such assignment (unless otherwise provided therein), the same rights
and benefits as it would if it were such assigning Bank. Each assignment
pursuant to this Section 11.04(b) shall be effected by the assigning Bank and
the assignee Bank executing an Assignment and Assumption Agreement
substantially in the form of Exhibit G (appropriately completed). At the time
of any such assignment, (i) Annex I shall be deemed to be amended to reflect
the Commitments, if any, and outstanding Loans of the respective assignee
(which shall result in a direct reduction to the Commitments, if any, and
outstanding Loans of the assigning Bank) and of the other Banks, (ii) if any
such assignment occurs after the Effective Date, at the request of the assignor
or the assignee the Borrower will issue new Notes to the respective assignee
and to the assigning Bank in conformity with the requirements of Section 1.05
and (iv) the Administrative Agent shall receive from the assigning Bank and/or
the assignee Bank or financial institution at the time of each assignment the payment of a
nonrefundable assignment fee of $3,500, provided that such transfer or
assignment will not be effective until recorded by the Administrative Agent on
the Register pursuant to Section 11.17 hereof. At the time of each assignment
pursuant to this Section 11.04(b) to a Person which is not already a Bank
hereunder and which is not a United States person (as such term is defined in
Section 7701(a)(30) of the Code) for Federal income tax purposes, the
respective assignee Bank shall provide to the Borrower and the Administrative
Agent the appropriate Internal Revenue Service forms (and, if applicable a
Section 3.04(b)(ii) Certificate) described in Section 3.04(b). Each Bank and
the Borrower agrees to execute such documents (including, without limitation,
amendments to this Agreement and the other Credit Documents) as shall be
necessary to effect the foregoing. Promptly following any assignment pursuant
to this Section 11.04(b), the assigning Bank shall promptly notify the Borrower
and the Administrative Agent thereof. Nothing in this Section 11.04 shall
prevent or prohibit any Bank from pledging its Loans or Notes hereunder to a
Federal Reserve Bank in support of borrowings made by such Bank from such
Federal Reserve Bank.




          (c) Notwithstanding any other provisions of this Section 11.04, no
transfer or assignment of the interests or obligations of any Bank hereunder or
any grant of participations therein shall be permitted if such transfer,
assignment or grant would require the Borrower to file a registration statement
with the SEC or to qualify the Loans under the “Blue Sky” laws of any State.



          (d) Each Bank initially party to this Agreement hereby represents, and
each Person that becomes a Bank pursuant to an assignment permitted by clause
(b) above will upon



 









 




its becoming party to this Agreement represent, that it is
a commercial lender, other financial institution or other “accredited investor”
(as defined in SEC Regulation D) which makes loans in the ordinary course of
its business or is acquiring the Loans without a view to distribution of the
Loans within the meaning of the federal securities laws, and that it will make
or acquire Loans for its own account in the ordinary course of such business,
provided that, subject to the preceding clauses (a) through (c), the
disposition of any promissory notes or other evidences of or interests in
Indebtedness held by such Bank shall at all times be within its exclusive
control.




          11.05 No Waiver; Remedies Cumulative. No failure or delay on the part of
the Administrative Agent or any Bank in exercising any right, power or
privilege hereunder or under any other Credit Document and no course of dealing
between the Borrower and the Administrative Agent or any Bank shall operate as
a waiver thereof; nor shall any single or partial exercise of any right, power
or privilege hereunder or under any other Credit Document preclude any other or
further exercise thereof or the exercise of any other right, power or privilege
hereunder or thereunder. The rights and remedies herein expressly provided are
cumulative and not exclusive of any rights or remedies which the Administrative
Agent or any Bank would otherwise have. No notice to or demand on the Borrower
in any case shall entitle the Borrower to any other or further notice or demand
in similar or other circumstances or constitute a waiver of the rights of the
Administrative Agent or the Banks to any other or further action in any
circumstances without notice or demand.



          11.06 Payments Pro Rata. (a) The Administrative Agent agrees that promptly after its receipt of
each payment from or on behalf of the Borrower in respect of any Obligations of
the Borrower, it shall distribute such payment to the Banks (other than any
Bank that has consented in writing to waive its pro rata share of such payment)
pro rata based upon their respective shares, if any, of the Obligations with
respect to which such payment was received.



          (b) Each of the Banks agrees that, if it should receive any amount
hereunder (whether by voluntary payment, by realization upon security, by the
exercise of the right of setoff or banker’s lien, by counterclaim or cross
action, by the enforcement of any right under the Credit Documents, or
otherwise) which is applicable to the payment of the principal of, or interest
on, the Loans or Fees, of a sum which with respect to the related sum or sums
received by other Banks is in a greater proportion than the total of such
Obligation then owed and due to such Bank bears to the total of such Obligation
then owed and due to all of the Banks immediately prior to such receipt, then
such Bank receiving such excess payment shall purchase for cash without
recourse or warranty from the other Banks an interest in the Obligations of the
Borrower to such Banks in such amount as shall result in a proportional
participation by all of the Banks in such amount, provided that if all or any
portion of such excess amount is thereafter recovered from such Bank, such
purchase shall be rescinded and the purchase price restored to the extent of
such recovery, but without interest.



          11.07 Calculations; Computations. (a) The financial statements to be
furnished to the Banks pursuant hereto shall be made and prepared in accordance
with GAAP or SAP, as the case may be, consistently applied throughout the
periods involved (except as set forth in the notes thereto or as otherwise
disclosed in writing by the Borrower to the Banks). In addition, except as
otherwise specifically provided herein, all computations determining compliance
with Section 7, including definitions used therein, shall utilize accounting
principles and policies in



 









 




effect from time to time; provided that (i) if any
such accounting principle or policy (whether GAAP or SAP or both) shall change
after the Effective Date, the Borrower shall give reasonable notice thereof to
the Administrative Agent and each of the Banks and if within 30 days following
such notice the Borrower, the Administrative Agent or the Required Banks shall
elect by giving written notice of such election to the other parties hereto,
such computations shall not give effect to such change unless and until this
Agreement shall be amended pursuant to Section 11.12 to give effect to such
change, and (ii) if at any time the computations determining compliance with
Section 7 utilize accounting principles different from those utilized in the
financial statements then being furnished to the Banks pursuant to Section
6.01, such financial statements shall be accompanied by reconciliation
work-sheets.




          (b) All computations of interest on Loans and Fees hereunder shall be made
on the actual number of days elapsed over a year of 360 days.



          11.08 GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE. (a) THIS
AGREEMENT AND THE OTHER CREDIT DOCUMENTS AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES HEREUNDER AND THEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE
GOVERNED BY THE LAW OF THE STATE OF NEW YORK. ANY LEGAL ACTION OR
PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OTHER CREDIT DOCUMENT MAY BE
BROUGHT IN THE COURTS OF THE STATE OF NEW YORK OR OF THE UNITED STATES FOR THE
SOUTHERN DISTRICT OF NEW YORK, AND, BY EXECUTION AND DELIVERY OF THIS
AGREEMENT, THE BORROWER AND EACH BANK HEREBY IRREVOCABLY ACCEPTS FOR ITSELF AND
IN RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF
THE AFORESAID COURTS. THE BORROWER AND EACH BANK HEREBY FURTHER IRREVOCABLY
WAIVES ANY CLAIM THAT ANY SUCH COURTS LACK JURISDICTION OVER THE BORROWER OR
SUCH BANK, AND AGREES NOT TO PLEAD OR CLAIM, IN ANY LEGAL ACTION OR PROCEEDING
WITH RESPECT TO THIS AGREEMENT OR ANY OTHER CREDIT DOCUMENT BROUGHT IN ANY OF
THE AFORESAID COURTS, THAT ANY SUCH COURT LACKS JURISDICTION OVER THE BORROWER
OR SUCH BANK. THE BORROWER AND EACH BANK FURTHER IRREVOCABLY CONSENTS TO THE
SERVICE OF PROCESS OUT OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH ACTION
OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL,
POSTAGE PREPAID, TO THE BORROWER OR SUCH BANK, AS THE CASE MAY BE, AT ITS
ADDRESS FOR NOTICES PURSUANT TO SECTION 11.03, SUCH SERVICE TO BECOME EFFECTIVE
30 DAYS AFTER SUCH MAILING. THE BORROWER AND EACH BANK, AS THE CASE MAY BE,
HEREBY IRREVOCABLY WAIVES ANY OBJECTION TO SUCH SERVICE OF PROCESS AND FURTHER
IRREVOCABLY WAIVES AND AGREES NOT TO PLEAD OR CLAIM IN ANY ACTION OR PROCEEDING
HEREUNDER OR UNDER ANY OTHER CREDIT DOCUMENT THAT SERVICE OF PROCESS WAS IN ANY
WAY INVALID OR INEFFECTIVE. NOTHING HEREIN SHALL AFFECT THE RIGHT OF THE
ADMINISTRATIVE AGENT OR ANY BANK TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED
BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST THE
BORROWER IN ANY OTHER JURISDICTION.



 









 





          (b) THE BORROWER AND EACH BANK HEREBY IRREVOCABLY WAIVES ANY OBJECTION
WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY OF THE
AFORESAID ACTIONS OR PROCEEDINGS ARISING OUT OF OR IN CONNECTION WITH THIS
AGREEMENT OR ANY OTHER CREDIT DOCUMENT BROUGHT IN THE COURTS REFERRED TO IN
CLAUSE (A) ABOVE AND HEREBY FURTHER IRREVOCABLY WAIVES AND AGREES NOT TO PLEAD
OR CLAIM IN ANY SUCH COURT THAT ANY SUCH ACTION OR PROCEEDING BROUGHT IN ANY
SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.



          11.09 Counterparts. This Agreement may be executed in any number of
counterparts and by the different parties hereto on separate counterparts, each
of which when so executed and delivered shall be an original, but all of which
shall together constitute one and the same instrument. A set
of counterparts executed by all the parties hereto shall be lodged with
the Borrower and the Administrative Agent.



          11.10 Effectiveness. This Agreement shall become effective on the date
(the “Effective Date”) on which the Borrower, the Administrative Agent and each
of the Banks shall have signed a copy hereof (whether the same or different
copies) and shall have delivered the same to the Administrative Agent at the
Administrative Agent’s Notice Office or, in the case of the Banks, shall have
given to the Administrative Agent telephonic (confirmed in writing), written,
telex or telecopy notice (actually received) at such office that the same has
been signed and mailed to it. The Administrative Agent will give the Borrower
and each Bank prompt written notice of the occurrence of the Effective Date.



          11.11 Headings Descriptive. The headings of the several sections and
subsections of this Agreement are inserted for convenience only and shall not
in any way affect the meaning or construction of any provision of this
Agreement.



          11.12 Amendment or Waiver. Neither this Agreement nor any other Credit
Document nor any terms hereof or thereof may be changed, waived, discharged or
terminated unless such change, waiver, discharge or termination is in writing
signed by the Borrower and the Required Banks, provided that no such change,
waiver, discharge or termination shall, without the consent of each Bank
affected thereby, (i) extend the scheduled final maturity of any Loan or Note,
extend the required payment date any Unpaid Drawing or extend the stated
expiration date of any Letter of Credit beyond the Maturity Date or reduce the
rate or extend the time of payment of interest thereon or Fees or reduce the
principal amount thereof, (ii) increase the Commitment of any Bank over the
amount thereof then in effect (it being understood that a waiver of any Default
or Event of Default or of a mandatory reduction in the Total Commitment shall
not constitute a change in the terms of any Commitment of any Bank), (iii)
amend, modify or waive any provision of this Section 11.12, (iv) reduce any
percentage specified in, or otherwise modify, the definition of Required Banks,
(v) change Section 11.06 in a manner that would alter the pro rata sharing of
payments required thereby or (vi) consent to the assignment or transfer by the
Borrower of any of its rights and obligations under this Agreement. No
provision



 









 




of Section 1A or any other provision relating to the rights and/or
obligations of the Issuing Bank may be amended without the consent of the
Issuing Bank. No provision of Section 10 or any other provision relating to
the rights and/or obligations of the Administrative Agent may be amended
without the consent of the Administrative Agent.




          11.13 Survival. All indemnities set forth herein including, without
limitation, in Section 1.10, 1.11, 1A.04, 3.04, 10.07 or 11.01 shall survive
the execution and delivery of this Agreement, the making of the Loans and the
issuance of the Letters of Credit, the repayment of the Obligations,
the expiration or termination of the Letters of Credit and the termination
of the Total Commitment.



          11.14 Domicile of Loans. (a) Each Bank may transfer and carry its Loans
and/or its obligations in respect of Letters of Credit at, to or, for the
account of any office, Subsidiary or Affiliate of such Bank. In addition, each
Bank (each, a “Designating Bank”) may designate a special purpose corporation
(each, a “Designated Bank”) to make Loans in respect of such Designating Bank’s
Commitment, provided that (i) such Designating Bank shall remain the “Bank” for
all purposes of this Agreement and the other Credit Documents, shall not
otherwise be relieved of any of its obligations under this Agreement or any
such other Credit Document (including, without limitation, its obligations
under Sections 1.01 and 10.07) and shall be liable for any losses, claims,
damages or expenses incurred by the Borrower, the Administrative Agent or any
Bank as a result of such Designating Bank’s designation of any such special
purpose corporation as a Designated Bank, (ii) all payments entitled to be
received by such Designated Bank with respect to the Loans made by it in
respect of such Designating Bank’s Commitment shall be made directly to such
Designating Bank for the distribution to such Designated Bank, (iii) the
Borrower and the Administrative Agent shall continue to deal solely with the
respective Designating Bank and such Designated Bank shall not have any right
to approve any amendment, modification or waiver to this Agreement or any other
Credit Document, and all amendments, waivers, consents and/or modifications to
this Agreement and the other Credit Documents which are binding on such
Designating Bank also shall be binding on such Designated Bank regardless of
whether or not such Designated Bank actually had notice of any such amendment,
waiver, consent and/or other modification and (iv) each Designating Bank may
only designate one Designated Bank at any time to make Loans in respect of such
Designating Bank’s Commitment. In addition, each party hereto hereby agrees
that prior to the date that is one year and one day after the payment in full
of all outstanding senior indebtedness of any Designated Bank, no party will
institute against, or join any other Person in instituting against, such
Designated Bank any bankruptcy, reorganization, arrangement, insolvency or
liquidation proceedings under any federal or state bankruptcy or similar law
arising from any actions of such Designated Bank under this Agreement.
Notwithstanding anything to the contrary contained in this Agreement, any
Designated Bank may disclose on a confidential basis any non-public information
relating to its funding of Loans to any rating agency, commercial paper dealer
or provider of any surety or guarantee to such Designated Bank, provided that
if any of the foregoing Persons shall not agree to be bound by the provisions
of Section 11.15 (as to which the respective Designating Bank shall notify the
Borrower), the respective Designating Bank shall remain liable pursuant to
Section 11.15 for disclosure by such Person of any such non-public information.



 









 





          (b) Notwithstanding anything to the contrary contained herein, to the
extent that a transfer of Loans pursuant to this Section 11.14 would, at the
time of such transfer, result in increased costs under Section 1.10, 1.11 or
3.04 from those being charged by the respective Bank prior to such transfer,
then the Borrower shall not be obligated to pay such increased costs (although
the Borrower shall be obligated to pay any other increased costs of the type
described above resulting from changes after the date of the respective
transfer).



          11.15 Confidentiality. (a) Each Bank shall (i) hold all non-public information (including,
without limitation, all financial projections and analyses) furnished by the
Borrower in connection with such Bank’s evaluation of whether to become a Bank
hereunder or obtained by such Bank pursuant to the requirements of this
Agreement (“Confidential Information”) confidential, (ii) use Confidential
Information only for purposes related to this Agreement and its position as a
Bank hereunder and (iii) not disclose such Confidential Information other than
as provided herein; provided that any Bank and/or its affiliates may disclose
any such Confidential Information (a) as has become generally available to the
public other than as a result of disclosure in violation of this Section 11.15,
(b) as has become available to such Bank or any such affiliate on a
non-confidential basis from a source other than the Borrower and its
affiliates, provided that the source is not known by such Bank to be prohibited
from transmitting such information to such Bank by a contractual, legal or
fiduciary obligation, (c) as may be required or appropriate in any report,
statement or testimony submitted to any municipal, state or Federal regulatory
body having or claiming to have jurisdiction over such Bank and/or its
affiliates, (d) as may be required or appropriate in respect to any summons or
subpoena or in connection with any litigation or other judicial process (it
being understood that, to the extent reasonably practicable under the
circumstances, the Borrower shall be given prior notice and an opportunity to
contest any proposed disclosure pursuant to this clause (d)), (e) in order to
comply with any law, order, regulation or ruling applicable to such Bank and/or
its affiliates, and (f) to any permitted prospective or actual syndicate member
or participant in any Loans, provided that such prospective or actual syndicate
member or participant agrees with the respective assigning Bank to be bound by
the provisions of this Section 11.15. The provisions of this Section 11.15
shall survive any termination of this Agreement.



          (b) Notwithstanding anything herein to the contrary, each party to this
Agreement (and any employee, representative or other agent of each such party)
may disclose to any and all persons, without limitation of any kind, the U.S.
federal income tax treatment and the U.S. federal income tax structure of the
transactions contemplated hereby and all materials of any kind (including
opinions or other tax analyses) that are provided to it relating to such tax
treatment and tax structure. However, no disclosure of any information
relating to such tax treatment or tax structure may be made to the extent
nondisclosure is reasonably necessary in order to comply with applicable
securities laws. The provisions of this Section 11.15(b) shall survive the
termination of the Commitments and repayment of the Loans.



          11.16 WAIVER OF JURY TRIAL. EACH OF THE PARTIES TO THIS AGREEMENT HEREBY
IRREVOCABLY WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE CREDIT DOCUMENTS
OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.



 









 





          11.17 Register. The Borrower hereby designates the Administrative Agent
to serve as its agent, solely for purposes of this Section 11.17, to maintain a
register (the “Register”) on which it will record the Commitments from time to
time of each of the Banks, the Loans made by each of the
Banks and each repayment in respect of the principal amount of the Loans
of each Bank. Failure to make any such recordation, or any error in such
recordation shall not affect the obligations of the Borrower in respect of such
Loans. With respect to any Bank, the transfer of the Commitments of such Bank
and the rights to the principal of, and interest on, any Loan made pursuant to
such Commitments shall not be effective until such transfer is recorded on the
Register maintained by the Administrative Agent with respect to ownership of
such Commitments and Loans and prior to such recordation all amounts owing to
the transferor with respect to such Commitments and Loans shall remain owing to
the transferor. The registration of assignment or transfer of all or part of
any Commitments and Loans shall be recorded by the Administrative Agent on the
Register only upon the acceptance by the Administrative Agent of a properly
executed and delivered Assignment and Assumption Agreement pursuant to Section
11.04(b). Coincident with the delivery of such an Assignment and Assumption
Agreement to the Administrative Agent for acceptance and registration of
assignment or transfer of all or part of a Loan, or as soon thereafter as
practicable, the assigning or transferor Bank shall surrender the Note
evidencing such Loan, and thereupon one or more new Notes in the same aggregate
principal amount shall be issued to the assigning or transferor Bank and/or the
new Bank. The Borrower agrees to indemnify the Administrative Agent from and
against any and all losses, claims, damages and liabilities of whatsoever
nature which may be imposed on, asserted against or incurred by the
Administrative Agent in performing its duties under this Section 11.17 (but
excluding any such losses, liabilities, claims, damages or expenses to the
extent incurred by reason of the gross negligence or willful misconduct of the
Administrative Agent).



          11.18 Executive Stock Purchase Program. Notwithstanding anything to the
contrary contained in this Agreement, the Borrower may establish and administer
an executive stock purchase program pursuant to which the Borrower offers to
employees of the Borrower and its Subsidiaries the opportunity to purchase from
the Borrower treasury shares of the Borrower’s common stock using either
personal funds of such employees or funds borrowed from a third-party financial
institution, which loans may be guaranteed by the Borrower; provided that at no
time shall the aggregate outstanding principal amount of loans guaranteed by
the Borrower pursuant to this Section 11.18 exceed $25,000,000. In addition,
so long as no Default or Event of Default exists or would result therefrom,
notwithstanding anything to the contrary contained in this Agreement, and in
addition to any other funds available to the Borrower for such purpose, the
Borrower may use the proceeds received from the employees pursuant to the
common stock purchases described above in this Section 11.18 to make purchases
of its common stock and/or convertible equity units in the open market or
otherwise.



          11.19 Unrestricted Subsidiaries. Notwithstanding anything to the contrary
contained in this Agreement, (i) the Borrower may create or acquire one or more
Subsidiaries and designate (by written notice to the Administrative Agent and
each Bank) such Subsidiary or Subsidiaries as an “Unrestricted Subsidiary”
(which Unrestricted Subsidiaries may include, without limitation, any Person
which is a Subsidiary of the Borrower on the Effective Date, (ii) such
Unrestricted Subsidiaries shall not (x) constitute Material Subsidiaries, (y)
constitute Subsidiaries for purposes of the definition of Material Subsidiaries
or (z) be subject to Sections



 









 




5, 6, 7 or 8 of this Agreement (and the operations, assets and liabilities of such Unrestricted Subsidiaries shall
not be included in determining compliance with the financial covenants set
forth in Sections 7.10, 7.11 and 7.12, except that the carrying value of such
Unrestricted Subsidiaries recorded in accordance with GAAP shall be included in
the definition of Net Worth), (iii) the financial reports required to be
provided hereunder (including, without limitation, those provided pursuant to
Section 6.01) shall be prepared in a manner (reasonably satisfactory to the
Administrative Agent) which distinguishes the operations, assets and
liabilities of the Unrestricted Subsidiaries from those of the Borrower and its
other Subsidiaries, and (iv) the sum of (x) the aggregate amount paid by the
Borrower and its Subsidiaries (other than Unrestricted Subsidiaries) in
connection with the acquisitions of all Unrestricted Subsidiaries plus (y) the
aggregate amount of liability of and recourse to the Borrower and its
Subsidiaries (other than Unrestricted Subsidiaries) relating to the business
and operations of all Unrestricted Subsidiaries (whether pursuant to Contingent
Obligations or otherwise) plus (z) the aggregate amount of investments
(including loans, advances and capital contributions) by the Borrower and its
Subsidiaries (other than Unrestricted Subsidiaries) in all Unrestricted
Subsidiaries shall not exceed $100,000,000 at any time.




* * *




 









 





          IN WITNESS WHEREOF, each of the parties hereto has caused a counterpart of
this Agreement to be duly executed and delivered as of the date first above
written.



	 	 	 	 	 	 	 	 	 
	Address:
	 	 	 	 	 	 	 	 
	699 Walnut Street	 	AMERUS GROUP CO.
	Des Moines, Iowa 50309	 	 	 	 	 	 
	Tel: (515) 362-3630	 	 	 	 	 	 
	Fax: (515) 362-3648	 	By	 	/s/Brenda J. Cushing
	Attention:

	 	Brenda Cushing	 	 	 	Name:
	 	Brenda J. Cushing
	

	 	Senior Vice President and

Controller
	 	 	 	Title:
	 	Senior Vice President — Controller







 









 




	 	 	 	 	 
	 	JPMORGAN CHASE BANK,

Individually, as Administrative Agent and as Issuing Bank

 	 
	 	By  	/s/Lawrence Palumbo, Jr.
 	 
	 	 	Name:  	Lawrence Palumbo, Jr. 	 
	 	 	Title:  	Vice President 	 
	 




 









 




	 	 	 	 	 
	 	THE BANK OF NEW YORK,

Individually and as Co-Syndication Agent

 	 
	 	By  	/s/Ben Balkind
 	 
	 	 	Name:  	Ben Balkind 	 
	 	 	Title:  	Vice President 	 
	 




 









 




	 	 	 	 	 
	 	BANK ONE, NA,

Individually and as Co-Syndication Agent

 	 
	 	By  	/s/Thomas A. Kiepura
 	 
	 	 	Name:  	Thomas A. Kiepura 	 
	 	 	Title:  	Director 	 
	 




 









 




	 	 	 	 	 
	 	FLEET NATIONAL BANK,

Individually and as Co-Syndication Agent

 	 
	 	By  	/s/Marcio Chapina
 	 
	 	 	Name:  	Marcio Chapina 	 
	 	 	Title:  	Vice President 	 
	 




 









 




	 	 	 	 	 
	 	MELLON BANK, N.A.,

Individually and as Co-Syndication Agent

 	 
	 	By  	/s/Carrie Burnham
 	 
	 	 	Name:  	Carrie Burnham 	 
	 	 	Title:  	Assistant Vice President 	 
	 




 









 




	 	 	 	 	 
	 	FIFTH THIRD BANK

 	 
	 	By  	/s/Mike Mendenhall
 	 
	 	 	Name:  	Mike Mendenhall 	 
	 	 	Title:  	Corporate Banking Officer 	 
	 




 









 




	 	 	 	 	 
	 	MERRILL LYNCH BANK USA

 	 
	 	By  	/s/Louis Alder
 	 
	 	 	Name:  	Louis Alder 	 
	 	 	Title:  	Vice President 	 
	 




 









 




	 	 	 	 	 
	 	CREDIT SUISSE FIRST BOSTON

 	 
	 	By  	/s/Credit Suisse First Boston
 	 
	 	 	/s/Cassandra Droogan
 	 
	 	 	Name:  	Jay Chall          Cassandra Droogan 	 
	 	 	Title:  	Director           Associate 	 
	 




 









 




	 	 	 	 	 
	 	ING CAPITAL, LLC

 	 
	 	By  	/s/Mary Forstner
 	 
	 	 	Name:  	Mary Forstner 	 
	 	 	Title:  	Vice President 	 
	 




 









 





Annex I




LIST OF BANKS AND COMMITMENTS




	 	 	 	 	 
	Bank Name
	 	Commitments

	JPMorgan Chase Bank
	 	$	25,000,000	 
	The Bank of New York
	 	$	25,000,000	 
	Bank One, NA
	 	$	25,000,000	 
	Fleet National Bank
	 	$	25,000,000	 
	Mellon Bank, N.A.
	 	$	25,000,000	 
	Fifth Third Bank
	 	$	20,000,000	 
	Merrill Lynch Bank USA
	 	$	20,000,000	 
	Credit Suisse First Boston
	 	$	17,500,000	 
	ING Capital, LLC
	 	$	17,500,000	 
	Total:
	 	$	200,000,000