exv10w6






Exhibit 10.6




REVOLVING CREDIT AGREEMENT



dated as of June 16, 2010



among



FORTEGRA FINANCIAL CORPORATION AND

LOTS INTERMEDIATE CO.,

as Borrowers



THE LENDERS FROM TIME TO TIME PARTY HERETO



and



SUNTRUST BANK

as Administrative Agent



 




SUNTRUST ROBINSON HUMPHREY, INC.,


as Sole Lead Arranger and Sole Book Manager









 









 






TABLE OF CONTENTS




	 	 	 	 	 	 	 
	 	 	 	 	Page	 
	 
	 	 	 	 	 	 
	ARTICLE I DEFINITIONS; CONSTRUCTION	 	 	1	 
	Section 1.1.
	 	Definitions	 	 	1	 
	Section 1.2.
	 	Accounting Terms and Determination	 	 	26	 
	Section 1.3.
	 	Terms Generally	 	 	27	 
	 
	 	 	 	 	 	 
	ARTICLE II AMOUNT AND TERMS OF THE COMMITMENTS	 	 	28	 
	Section 2.1.
	 	General Description of Facilities	 	 	28	 
	Section 2.2.
	 	Revolving Loans	 	 	28	 
	Section 2.3.
	 	Procedure for Revolving Borrowings	 	 	28	 
	Section 2.4.
	 	Funding of Borrowings	 	 	29	 
	Section 2.5.
	 	Interest Elections	 	 	29	 
	Section 2.6.
	 	Optional Reduction and Termination of Revolving Commitments	 	 	30	 
	Section 2.7.
	 	Repayment of Loans	 	 	31	 
	Section 2.8.
	 	Evidence of Indebtedness	 	 	31	 
	Section 2.9.
	 	Optional Prepayments	 	 	32	 
	Section 2.10.
	 	Mandatory Prepayments	 	 	32	 
	Section 2.11.
	 	Interest on Loans	 	 	33	 
	Section 2.12.
	 	Fees	 	 	34	 
	Section 2.13.
	 	Computation of Interest and Fees	 	 	35	 
	Section 2.14.
	 	Inability to Determine Interest Rates	 	 	35	 
	Section 2.15.
	 	Illegality	 	 	36	 
	Section 2.16.
	 	Increased Costs	 	 	36	 
	Section 2.17.
	 	Funding Indemnity	 	 	37	 
	Section 2.18.
	 	Taxes	 	 	38	 
	Section 2.19.
	 	Payments Generally; Pro Rata Treatment; Sharing of Set-offs	 	 	40	 
	Section 2.20.
	 	Payments to Defaulting Lenders	 	 	41	 
	Section 2.21.
	 	Increase of Revolving Commitments; Additional Lenders	 	 	42	 
	Section 2.22.
	 	Mitigation of Obligations	 	 	43	 
	Section 2.23.
	 	Replacement of Lenders	 	 	43	 
	 
	 	 	 	 	 	 
	ARTICLE III CONDITIONS PRECEDENT TO LOANS	 	 	44	 
	Section 3.1.
	 	Conditions To Effectiveness	 	 	44	 
	Section 3.2.
	 	Each Credit Event	 	 	48	 
	Section 3.3.
	 	Delivery of Documents	 	 	48	 
	 
	 	 	 	 	 	 
	ARTICLE IV REPRESENTATIONS AND WARRANTIES	 	 	49	 
	Section 4.1.
	 	Existence; Power	 	 	49	 
	Section 4.2.
	 	Organizational Power; Authorization	 	 	49	 
	Section 4.3.
	 	Governmental Approvals; No Conflicts	 	 	49	 
	Section 4.4.
	 	Financial Statements	 	 	50	 
	Section 4.5.
	 	Statutory Financial Statements	 	 	50	 
	Section 4.6.
	 	Litigation and Environmental Matters	 	 	50	 






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	 	 	 	 	Page	 
	 
	Section 4.7.
	 	Compliance with Laws and Agreements	 	 	50	 
	Section 4.8.
	 	Insurance Licenses	 	 	51	 
	Section 4.9.
	 	Investment Company Act, Etc.	 	 	51	 
	Section 4.10.
	 	Taxes	 	 	51	 
	Section 4.11.
	 	Margin Regulations	 	 	52	 
	Section 4.12.
	 	ERISA	 	 	52	 
	Section 4.13.
	 	Ownership of Property	 	 	53	 
	Section 4.14.
	 	Disclosure	 	 	53	 
	Section 4.15.
	 	Labor Relations	 	 	53	 
	Section 4.16.
	 	Subsidiaries	 	 	54	 
	Section 4.17.
	 	Insolvency	 	 	54	 
	Section 4.18.
	 	Subordination of Subordinated Debt	 	 	54	 
	Section 4.19.
	 	OFAC	 	 	54	 
	Section 4.20.
	 	Patriot Act	 	 	55	 
	Section 4.21.
	 	Security Documents	 	 	55	 
	Section 4.22.
	 	Material Agreements	 	 	56	 
	 
	 	 	 	 	 	 
	ARTICLE V AFFIRMATIVE COVENANTS	 	 	56	 
	Section 5.1.
	 	Financial Statements and Other Information	 	 	56	 
	Section 5.2.
	 	Notices of Material Events	 	 	58	 
	Section 5.3.
	 	Existence; Conduct of Business	 	 	59	 
	Section 5.4.
	 	Compliance with Laws, Etc.	 	 	60	 
	Section 5.5.
	 	Payment of Obligations	 	 	60	 
	Section 5.6.
	 	Books and Records	 	 	60	 
	Section 5.7.
	 	Visitation, Inspection, Etc.	 	 	61	 
	Section 5.8.
	 	Maintenance of Properties; Insurance	 	 	61	 
	Section 5.9.
	 	Use of Proceeds	 	 	61	 
	Section 5.10.
	 	Additional Subsidiaries	 	 	61	 
	Section 5.11.
	 	Further Assurances	 	 	62	 
	 
	 	 	 	 	 	 
	ARTICLE VI FINANCIAL COVENANTS	 	 	63	 
	Section 6.1.
	 	Total Leverage Ratio	 	 	63	 
	Section 6.2.
	 	Senior Leverage Ratio	 	 	64	 
	Section 6.3.
	 	Fixed Charge Coverage Ratio	 	 	64	 
	Section 6.4.
	 	Reinsurance Ratio	 	 	64	 
	 
	 	 	 	 	 	 
	ARTICLE VII NEGATIVE COVENANTS	 	 	64	 
	Section 7.1.
	 	Indebtedness and Preferred Equity	 	 	64	 
	Section 7.2.
	 	Liens	 	 	66	 
	Section 7.3.
	 	Fundamental Changes	 	 	68	 
	Section 7.4.
	 	Investments, Loans, Acquisitions,
Etc.	 	 	69	 
	Section 7.5.
	 	Restricted Payments	 	 	70	 
	Section 7.6.
	 	Sale of Assets	 	 	71	 
	Section 7.7.
	 	Transactions with Affiliates	 	 	72	 
	Section 7.8.
	 	Restrictive Agreements	 	 	73	 
	Section 7.9.
	 	Sale and Leaseback Transactions	 	 	74	 
	Section 7.10.
	 	Hedging Transactions	 	 	74	 






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	 	 	 	 	Page	 
	 
	Section 7.11.
	 	Amendment to Material Documents	 	 	74	 
	Section 7.12.
	 	Permitted Subordinated Indebtedness	 	 	74	 
	Section 7.13.
	 	Accounting Changes	 	 	75	 
	Section 7.14.
	 	Lease Obligations	 	 	75	 
	Section 7.15.
	 	Government Regulation	 	 	75	 
	Section 7.16.
	 	ERISA	 	 	75	 
	 
	 	 	 	 	 	 
	ARTICLE VIII EVENTS OF DEFAULT	 	 	76	 
	Section 8.1.
	 	Events of Default	 	 	76	 
	Section 8.2.
	 	Application of Proceeds from Collateral	 	 	79	 
	 
	 	 	 	 	 	 
	ARTICLE IX THE ADMINISTRATIVE AGENT	 	 	80	 
	Section 9.1.
	 	Appointment of Administrative Agent	 	 	80	 
	Section 9.2.
	 	Nature of Duties of Administrative Agent	 	 	80	 
	Section 9.3.
	 	Lack of Reliance on the Administrative Agent	 	 	81	 
	Section 9.4.
	 	Certain Rights of the Administrative Agent	 	 	81	 
	Section 9.5.
	 	Reliance by Administrative Agent	 	 	81	 
	Section 9.6.
	 	The Administrative Agent in its Individual Capacity	 	 	82	 
	Section 9.7.
	 	Successor Administrative Agent	 	 	82	 
	Section 9.8.
	 	Authorization to Execute other Loan Documents; Collateral	 	 	83	 
	Section 9.9.
	 	No Other Duties, etc.	 	 	84	 
	Section 9.10.
	 	Withholding Tax	 	 	84	 
	Section 9.11.
	 	Administrative Agent May File Proofs of Claim	 	 	84	 
	 
	 	 	 	 	 	 
	ARTICLE X MISCELLANEOUS	 	 	85	 
	Section 10.1.
	 	Notices	 	 	85	 
	Section 10.2.
	 	Waiver; Amendments	 	 	87	 
	Section 10.3.
	 	Expenses; Indemnification	 	 	88	 
	Section 10.4.
	 	Successors and Assigns	 	 	90	 
	Section 10.5.
	 	Governing Law; Jurisdiction; Consent to Service of Process	 	 	94	 
	Section 10.6.
	 	WAIVER OF JURY TRIAL	 	 	95	 
	Section 10.7.
	 	Right of Setoff	 	 	95	 
	Section 10.8.
	 	Counterparts; Integration	 	 	95	 
	Section 10.9.
	 	Survival	 	 	96	 
	Section 10.10.
	 	Severability	 	 	96	 
	Section 10.11.
	 	Confidentiality	 	 	96	 
	Section 10.12.
	 	Interest Rate Limitation	 	 	97	 
	Section 10.13.
	 	Waiver of Effect of Corporate Seal	 	 	97	 
	Section 10.14.
	 	Patriot Act	 	 	97	 
	Section 10.15.
	 	Independence of Covenants	 	 	98	 
	Section 10.16.
	 	All Obligations to Constitute Joint and Several Obligations	 	 	98	 






iii









 







TABLE OF CONTENTS




	 	 	 	 	 	 	 
	 	 	 	 	 	 	Page
	Schedules
	 	 	 	 	 	 
	Schedule I

	 	—
	 	Applicable Margin and Applicable Percentage	 	 
	Schedule II

	 	—
	 	Revolving Commitment Amounts	 	 
	Schedule 3.1

	 	—
	 	Post-Closing Obligations	 	 
	Schedule 4.16

	 	—
	 	Subsidiaries	 	 
	Schedule 4.21

	 	—
	 	Owned and Leased Real Property	 	 
	Schedule 4.22

	 	—
	 	Material Agreements	 	 
	Schedule 7.1

	 	—
	 	Outstanding Indebtedness	 	 
	Schedule 7.2

	 	—
	 	Existing Liens	 	 
	Schedule 7.4

	 	—
	 	Existing Investments	 	 
	Schedule 7.7

	 	—
	 	Transactions with Affiliates	 	 
	Schedule 7.8

	 	—
	 	Restrictive Agreements	 	 
	 
	 	 	 	 	 	 
	Exhibits
	 	 	 	 	 	 
	Exhibit A

	 	—
	 	Form of Assignment and Acceptance	 	 
	Exhibit B

	 	—
	 	Form of Pledge Agreement	 	 
	Exhibit C

	 	—
	 	Form of Revolving Credit Note	 	 
	Exhibit D

	 	—
	 	Form of Security Agreement	 	 
	Exhibit E

	 	—
	 	Form of Subsidiary Guarantee Agreement	 	 
	Exhibit 2.3

	 	—
	 	Form of Notice of Revolving Borrowing	 	 
	Exhibit 2.5

	 	—
	 	Form of Notice of Continuation/Conversion	 	 
	Exhibit 3.1(b)(vi)

	 	—
	 	Form of Secretary’s Certificate	 	 
	Exhibit 3.1(b)(ix)

	 	—
	 	Form of Officer’s Certificate	 	 
	Exhibit 5.1(f)

	 	—
	 	Form of Compliance Certificate	 	 











iv









 








REVOLVING CREDIT AGREEMENT




          THIS REVOLVING CREDIT AGREEMENT (this “Agreement”) is made and entered into as of June
16, 2010, by and among FORTEGRA FINANCIAL CORPORATION, a corporation incorporated under the laws of
the State of Georgia (“Fortegra”), and LOTS INTERMEDIATE CO., a corporation incorporated
under the laws of the State of Delaware (“LOTS”, and together with Fortegra, each a
“Borrower” and collectively the “Borrowers”), the several banks and other financial
institutions and lenders from time to time party hereto (the “Lenders”), SUNTRUST BANK, in
its capacity as administrative agent for the Lenders (the “Administrative Agent”) and
SunTrust Robinson Humphrey, Inc., as Sole Lead Arranger and Bookrunner (the “Arranger”).



WITNESSETH:




          WHEREAS, the Borrowers have requested that the Lenders establish a $35,000,000 revolving
credit facility in favor of the Borrowers; and



          WHEREAS, subject to the terms and conditions of this Agreement, the Lenders, to the extent of
their respective Revolving Commitments as defined herein, are willing severally to establish the
requested revolving credit facility in favor of and severally to make the term loans to the
Borrowers.



          NOW, THEREFORE, in consideration of the premises and the mutual covenants herein contained,
the Borrowers, the Lenders and the Administrative Agent agree as follows:



ARTICLE I




DEFINITIONS; CONSTRUCTION



          Section 1.1. Definitions.



          In addition to the other terms defined herein, the following terms used herein shall have the
meanings herein specified (to be equally applicable to both the singular and plural forms of the
terms defined):



          “Additional Lender” shall have the meaning given to such term in Section 2.21.



          “Adjusted LIBO Rate” shall mean, with respect to each Interest Period for a Eurodollar
Borrowing, the rate per annum obtained by dividing (i) LIBOR for such Interest Period by (ii) a
percentage equal to 1.00 minus the Eurodollar Reserve Percentage.



          “Administrative Agent” shall have the meaning assigned to such term in the opening
paragraph hereof.



          “Administrative Questionnaire” shall mean, with respect to each Lender, an
administrative questionnaire in the form prepared by the Administrative Agent and submitted to the
Administrative Agent duly completed by such Lender.



1









 





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



          “Aggregate Revolving Commitment Amount” shall mean the aggregate principal amount of
the Aggregate Revolving Commitments from time to time. On the Closing Date, the Aggregate
Revolving Commitment Amount equals $35,000,000.



          “Aggregate Revolving Commitments” shall mean, collectively, all Revolving Commitments
of all Lenders at any time outstanding.



          “Annual Statement” shall mean the annual statutory financial statement of any
Regulated Insurance Company required to be filed with the Applicable Insurance Regulatory of the
jurisdiction of incorporation or organization of such Regulated Insurance Company, which statement
shall be in the form required by the state in which such Regulated Insurance Company is domiciled
or, if no specific form is so required, in the form of financial statements permitted by such
Applicable Insurance Regulatory Authority to be used for filing annual statutory financial
statements and shall contain the type of information required and/or permitted by such Applicable
Insurance Regulatory Authority to be disclosed therein, together with all exhibits or schedules
filed therewith.



          “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 (a) each state or other jurisdiction in which such Regulated Insurance Company is
domiciled or (b) to the extent asserting regulatory jurisdiction over such Regulated Insurance
Company, the insurance department, authority or agency in each state or other jurisdiction in which
such Regulated Insurance Company is licensed, and shall include any Federal or national insurance
regulatory department, authority or agency that may be created that that asserts regulatory
jurisdiction over such Regulated Insurance Company.



          “Applicable Lending Office” shall mean, for each Lender and for each Type of Loan, the
lending office of such Lender (or an Affiliate of such Lender) designated for such Type of Loan in
the Administrative Questionnaire submitted by such Lender or such other office of such Lender (or
an Affiliate of such Lender) as such Lender may from time to time specify to the Administrative
Agent and the Borrowers as the office by which its Loans of such Type are to be made and
maintained.



          “Applicable Margin” shall mean, as of any date, with respect to interest on all
Revolving Loans outstanding on such date, or the letter of credit fee on such date, as the case may
be, a percentage per annum determined by reference to the applicable Total Leverage Ratio in effect
on such date as set forth on Schedule I; provided, that a change in the Applicable
Margin resulting from a change in the Total Leverage Ratio shall be effective on the second
Business Day after the date on which the Borrowers deliver the financial statements required by
Section 5.1(a) or (c) and the Compliance Certificate required by Section 5.1(f);
provided further, that if at any time the Borrowers shall have failed to deliver such
financial statements and such Compliance Certificate when so required, the Applicable Margin shall
be at Level III as set forth on Schedule I until such time as such financial statements and
Compliance Certificate are



2









 




delivered, at which time the Applicable Margin shall be determined as provided above.
Notwithstanding the foregoing, the Applicable Margin from the Closing Date until the financial
statements and Compliance Certificate for the Fiscal Quarter ending June 30, 2010 are required to
be delivered shall be at Level III as set forth on Schedule I.




          “Applicable Percentage” shall mean, as of any date, with respect to the commitment fee
as of such date, the percentage per annum determined by reference to the applicable Total Leverage
Ratio in effect on such date as set forth on Schedule I; provided, that a change in
the Applicable Percentage resulting from a change in the Total Leverage Ratio shall be effective on
the second Business Day after the date on which the Borrowers deliver the financial statements
required by Section 5.1(a) or (c) and the Compliance Certificate required by Section
5.1(f); provided further, that if at any time the Borrowers shall have failed
to deliver such financial statements and such Compliance Certificate when so required, the
Applicable Percentage shall be at Level III as set forth on Schedule I until such time as
such financial statements and Compliance Certificate are delivered, at which time the Applicable
Percentage shall be determined as provided above. Notwithstanding the foregoing, the Applicable
Percentage for the commitment fee from the Closing Date until the financial statements and
Compliance Certificate for the Fiscal Quarter ending June 30, 2010 are required to be delivered
shall be at Level III as set forth on Schedule I.



          “Approved Fund” shall mean any Person (other than a natural Person) that is (or will
be) engaged in making, purchasing, holding or otherwise investing in commercial loans and similar
extensions of credit in the ordinary course of its business and that is administered or managed by
(i) a Lender, (ii) an Affiliate of a Lender or (iii) an entity or an Affiliate of an entity that
administers or manages a Lender.



          “Arranger” shall mean SunTrust Robinson Humphrey, Inc.



          “Assignment and Acceptance” shall mean an assignment and acceptance entered into by a
Lender and an assignee (with the consent of any party whose consent is required by Section
10.4(b)) and accepted by the Administrative Agent, in the form of Exhibit A attached
hereto or any other form approved by the Administrative Agent.



          “Availability Period” shall mean the period from the Closing Date to the Maturity
Date.



          “Base Rate” shall mean the highest of (i) the per annum rate which the Administrative
Agent publicly announces from time to time as its prime lending rate, as in effect from time to
time, (ii) the Federal Funds Rate, as in effect from time to time, plus one-half of one percent
(0.50%) per annum and (iii) the Adjusted LIBO Rate determined on a daily basis for an Interest
Period of one (1) month, plus one percent (1.00%) per annum. The Administrative Agent’s prime
lending rate is a reference rate and does not necessarily represent the lowest or best rate
actually charged to any customer. The Administrative Agent may make commercial loans or other
loans at rates of interest at, above or below the Administrative Agent’s prime lending rate. Each
change in the any of the rates described above in this definition shall be effective from and
including the date such change is announced as being effective.



3









 





          “Borrowers” shall have the meaning in the introductory paragraph hereof.



          “Borrowing” shall mean a borrowing consisting of Loans of the same Type, made,
converted or continued on the same date and in the case of Eurodollar Loans, as to which a single
Interest Period is in effect.



          “Business Day” shall mean (i) any day other than a Saturday, Sunday or other day on
which commercial banks in Atlanta, Georgia and New York, New York are authorized or required by law
to close and (ii) if such day relates to a Borrowing of, a payment or prepayment of principal or
interest on, a conversion of or into, or an Interest Period for, a Eurodollar Loan or a notice with
respect to any of the foregoing, any day on which banks are open for dealings in dollar deposits in
the London interbank market.



          “Capital Expenditures” shall mean for any period, without duplication, all
expenditures for property, plant and equipment and other capital expenditures of the Borrowers and
their Subsidiaries that are (or would be) set forth on a consolidated statement of cash flows of
the Borrowers for such period prepared in accordance with GAAP; provided that “Capital
Expenditures” shall not include: (a) expenditures made in connection with the replacement,
substitution or restoration of assets (i) to the extent financed from insurance proceeds, (ii) with
awards of compensation arising from the taking by eminent domain or condemnation of the assets
being replaced or (iii) to the extent financed with the proceeds from the sale of assets, in each
case to the extent such proceeds or awards are not required to prepay the Obligations pursuant to
Section 2.10, (b) the purchase price of equipment that is purchased simultaneously with the trade
in of existing equipment to the extent that the gross amount of such purchase price is reduced by
the credit granted by the seller of such equipment for the equipment being traded in at such time,
(c) interest capitalized during such period, (d) expenditures made with any Permitted Equity
Issuance, and (e) acquisitions permitted by Section 7.4 but only to the extent that such
acquisitions are deemed to be capital expenditures pursuant to GAAP; provided further, that
the purchase prices referred to in clause (b) above will not be included in Capital Expenditures to
the extent the total aggregate amount of all such purchase prices do not exceed $1,000,000 in any
fiscal year of the Borrowers.



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



          “Capital Stock” shall mean all shares, options, warrants, general or limited
partnership interests, membership interests or other equivalents (regardless of how designated) of
or in a corporation, partnership, limited liability company or equivalent entity whether voting or
nonvoting, including common stock, preferred stock or any other “equity security” (as such term is
defined in Rule 3a11-1 of the General Rules and Regulations promulgated by the Securities and
Exchange Commission under the Securities Exchange Act of 1934).



4









 





          “Change in Control” shall mean the occurrence of one or more of the following events:
(i) any sale, lease, exchange or other transfer (in a single transaction or a series of related
transactions) of all or substantially all of the assets of the Borrowers to any person or entity or
“group” (within the meaning of the Securities Exchange Act of 1934 and the rules of the Securities
and Exchange Commission thereunder in effect on the date hereof) other than pursuant to a merger,
consolidation, acquisition or sale of assets permitted under Sections 7.3, 7.4 and 7.6, (ii) (a)
prior to the date of an initial public offering by Fortegra or a direct or indirect parent of
Fortegra, if Summit Partners, its Affiliates and its related co-investors in the Borrowers fail to
own 51% or more of the outstanding voting Capital Stock of Fortegra or (b) on or after the date of
an initial public offering by Fortegra or a direct or indirect parent of Fortegra, the acquisition
of ownership, directly or indirectly, beneficially or of record, by any person or entity or “group”
(within the meaning of the Securities Exchange Act of 1934 and the rules of the Securities and
Exchange Commission thereunder as in effect on the date hereof), other than any group of which
Summit Partners and its Affiliates and its related co-investors in the Borrowers holds 51% or more
of the outstanding voting Capital Stock held by such group, of 25% or more of the outstanding
shares of the voting Capital Stock of Fortegra, or (iii) occupation of a majority of the seats
(other than vacant seats) on the board of directors of Fortegra by persons or entities who were
neither (a) nominated by the current board of directors or Summit Partners its Affiliates or its
related co-investors in the Borrowers nor (b) appointed by directors so nominated or Summit
Partners its Affiliates or its related co-investors in the Borrowers.



          “Change in Law” shall mean (i) the adoption of any applicable law, rule or regulation
after the date of this Agreement, (ii) any change in any applicable law, rule or regulation, or any
change in the interpretation or application thereof, by any Governmental Authority after the date
of this Agreement, or (iii) compliance by any Lender (or its Applicable Lending Office) or by the
parent corporation of such Lender with any request, guideline or directive (whether or not having
the force of law) of any Governmental Authority made or issued after the date of this Agreement.



          “Closing Date” shall mean the date on which the conditions precedent set forth in
Section 3.1 and Section 3.2 have been satisfied or waived in accordance with
Section 10.2.



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



          “Collateral” shall mean all property and assets of the Loan Parties, now owned or
hereafter acquired, upon which a Lien is purported to be created by any Security Document.
Collateral shall not include (a) letter of credit rights in favor of Regulated Insurance Companies,
(b) (i) leasehold real property (other than the Borrowers’ Florida Headquarters) or (ii) fee-owned
real property with a fair market value of less than $2,000,000, (c) vehicles and other assets
subject to certificates of title, (d) ownership interests in joint ventures and non-wholly-owned
Subsidiaries to the extent that such ownership interests cannot be pledged without the consent of
one or more non-Affiliate third parties, (e) any lease, license, permit, contract or agreement to
which any Loan Party is a party or any of such Loan Party’s rights or interests thereunder if and
only for so long as the grant of a Lien thereon shall (i) give any other Person party to such
lease, license, permit, contract or agreement the right to terminate its obligations thereunder,
(ii) constitute or result in the abandonment, invalidation or unenforceability of any right, title
or



5









 




interest of any Loan Party therein or (iii) constitute or result in a breach or termination
pursuant to the terms of, or a default under, any such lease, license, permit, contract or
agreement (other than to the extent that any such term would be rendered ineffective pursuant to
Sections 9-406, 9-407, 9-408 or 9-409 of the UCC (or any successor provision or provisions));
provided that such lease, license, permit, contract or agreement shall be excluded from the
definition of “Collateral” only to the extent and for so long as the consequences specified above
shall exist and shall cease to be excluded from the definition of “Collateral” and shall become
subject to the Liens granted under the Collateral Documents, immediately and automatically, at such
time as such consequences shall no longer exist, (f) any asset if the grant or perfection of a
security interest is prohibited by applicable law, (g) United States intent-to-use trademark
applications to the extent that, and solely during the period during which, the grant of a security
interest therein would impair the validity or enforceability of such intent-to-use trademark
applications under applicable federal law, (h) any Capital Stock held by any Loan Party, other than
the Capital Stock of LOTS held by Fortegra but only for so long as the Indenture dated June 20,
2007 between LOTS, as issuer, and Wilmington Trust Company, as trustee, is in effect, and (i) any
property acquired by any Loan Party if and to the extent that the Administrative Agent and the
Borrowers shall have determined that the costs (including, without limitation, recording taxes and
filing fees) of creating and perfecting a Lien on such property interests are excessive in relation
to the value of the security afforded thereby.




          “Compliance Certificate” shall mean a certificate from the principal executive officer
or the principal financial officer of the Borrowers in the form of, and containing the
certifications set forth in, the certificate attached hereto as Exhibit 5.1(f).



          “Consolidated Adjusted EBITDA” shall mean, Consolidated EBITDA for any period



          (a) plus, to the extent deducted in determining Consolidated Net Income for such period
without duplication, the following:




          (i) reasonable acquisition costs relating to a Permitted Acquisition,




          (ii) impairment of goodwill and other non-cash charges (including write downs and
impairment of property, plant, equipment and intangibles and other long lived assets) or
expenses which do not represent a cash item in such period or in any future period; provided
that any non-cash charge or expense which may result in a cash item in a future period may
be added back so long as such cash charge is otherwise deducted from Consolidated EBITDA in
the future period in which such payment occurs (excluding any such non-cash charge or
expense to the extent that it represents amortization of a prepaid cash expense);




          (iii) any financing or financial advisory fees, accounting fees, legal fees and other
out-of-pocket expenses of the Borrowers or any of their Restricted Subsidiaries incurred in
connection with an initial public offering of the common stock of Fortegra and this
Agreement (including any amendment, restatement, amendment and restatement, waiver,
supplement or other modification of this Agreement and the Loan Documents);



6









 






          (iv) any financing or financial advisory fees, accounting fees, legal fees, transfer or
mortgage recording taxes and other out-of-pocket expenses of the Borrowers or any of their
Restricted Subsidiaries incurred in connection with any transactions permitted by this
Agreement in an amount not to exceed $5,000,000 in any fiscal year of the Borrowers;




          (v) unusual or non-recurring cash charges;




          (vi) to the extent actually reimbursed, expenses incurred to the extent covered by
indemnification provisions in any agreement in connection with a Permitted Acquisition;




          (vii) to the extent covered by insurance (and as to which the applicable insurance
carrier has not denied coverage), expenses with respect to liability or casualty events or
business interruption;




          (viii) all charges and expenses relating to severance payments pertaining to the
Borrowers or their Restricted Subsidiaries, including any amounts expended to repurchase
Capital Stock of the Borrowers or their Restricted Subsidiaries from the minority holders
thereof upon the death, retirement or termination of such holder;




          (ix) other cash charges satisfactory to the Administrative Agent in its reasonable
discretion; and



          (b) minus, to the extent added in determining Consolidated Net Income for such period without
duplication, all non-cash items increasing Consolidated Net Income other than ordinary course
accruals in accordance with GAAP (in each case of or by the Borrowers and their Restricted
Subsidiaries for such period).



          “Consolidated EBITDA” shall mean, for the Borrowers and their Restricted Subsidiaries
on a consolidated basis for any period, an amount equal to the sum of (i) Consolidated Net Income
for such period plus (ii) to the extent deducted in determining Consolidated Net Income for such
period and without duplication, (A) Consolidated Interest Expense, (B) expense for taxes on or
measured by income, franchise taxes and other taxes in lieu of income taxes, in each case,
determined on a consolidated basis in accordance with GAAP, and (C) depreciation and amortization
determined on a consolidated basis in accordance with GAAP, determined on a consolidated basis in
accordance with GAAP, in each case for such period.



          “Consolidated Fixed Charges” shall mean, for the Borrowers and their Restricted
Subsidiaries for any period, the sum (without duplication) of (i) Consolidated Interest Expense
payable in cash for such period, (ii) scheduled principal payments made on Consolidated Total Debt
during such period and (iii) Restricted Payments (other than Restricted Payments paid to any
Restricted Subsidiary of the Borrowers) paid during such period.



          “Consolidated Interest Expense” shall mean, for the Borrowers and their Restricted
Subsidiaries for any period determined on a consolidated basis in accordance with GAAP, the sum of
(i) total interest expense, including without limitation the interest component



7









 




of any payments in respect of Capital Lease Obligations capitalized or expensed during such
period (whether or not actually paid during such period) plus (ii) the net amount payable (or minus
the net amount receivable) with respect to Hedging Transactions during such period (whether or not
actually paid or received during such period).




          “Consolidated Net Income” shall mean, for the Borrowers and their Restricted
Subsidiaries for any period, the net income (or loss) of the Borrowers and their Restricted
Subsidiaries for such period determined on a consolidated basis in accordance with GAAP, but
excluding therefrom (to the extent otherwise included therein) (i) any extraordinary gains or
losses, (ii) any gains attributable to write-ups of assets and (iii) any equity interest of either
Borrower or any Restricted Subsidiary of either Borrower in the unremitted earnings of any Person
that is not a Subsidiary.



          “Consolidated Senior Debt” shall mean, as of any date, all Indebtedness of the
Borrowers and their Restricted Subsidiaries measured on a consolidated basis as of such date, but
excluding Indebtedness of the type described in subsection (xi) of the definition of “Indebtedness”
and excluding any Permitted Subordinated Debt.



          “Consolidated Total Debt” shall mean, as of any date, all Indebtedness of the
Borrowers and their Restricted Subsidiaries measured on a consolidated basis as of such date, but
excluding Indebtedness of the type described in subsection (xi) of the definition of
“Indebtedness”.



          “Contractual Obligation” of any Person shall mean any provision of any security issued
by such Person or of any agreement, instrument or undertaking under which such Person is obligated
or by which it or any of the property in which it has an interest is bound.



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



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



          “Default Interest” shall have the meaning set forth in Section 2.11(b).



          “Defaulting Lender” shall mean, at any time, a Lender as to which the Administrative
Agent has notified the Borrowers that (i) such Lender has failed for three or more Business Days to
comply with its obligations under this Agreement to make a Loan (a “funding obligation”),
(ii) such Lender has notified the Administrative Agent, or has stated publicly, that it will not
comply with any such funding obligation hereunder or has defaulted on its funding obligations under
any other loan agreement, credit agreement or similar or other financing agreement, (iii) such
Lender has, for three or more Business Days, failed to confirm in writing to the Administrative
Agent, in response to a written request of the Administrative Agent, that it will comply with its
funding obligations hereunder, or (iv) a Lender Insolvency Event has occurred and is continuing
with respect to such Lender. Any determination that a Lender is a Defaulting Lender under clauses
(i) through (iv) above will be made by the Administrative Agent



8









 




in its sole discretion acting in good faith. The Administrative Agent will promptly send to
all parties hereto a copy of any notice to the Borrowers provided for in this definition.




          “Dollar(s)” and the sign “$” shall mean lawful money of the United States of America.



          “Domestic Subsidiary” shall mean a direct or indirect Subsidiary of the Borrowers
organized under the laws of one of the fifty states or commonwealths of the United States or the
District of Columbia.



          “Employee Benefit Plan” shall have that meaning as defined in Section 3(2) of ERISA
and for which the Borrowers or an ERISA Affiliate maintains, contributes to or has an obligation to
contribute to on behalf of participants who are or were employed by the Borrowers or their ERISA
Affiliates or on behalf of beneficiaries of such participants.



          “Environmental Laws” shall mean all applicable laws, rules, regulations, codes,
ordinances, orders, decrees, judgments, injunctions, notices or binding agreements issued,
promulgated or entered into by or with any Governmental Authority, relating to the protection of
the environment, preservation or reclamation of natural resources, or the management, Release or
threatened Release of any Hazardous Material.



          “Environmental Liability” shall mean any liability, contingent or otherwise (including
any liability for damages, costs of environmental investigation and remediation, costs of
administrative oversight, fines, natural resource damages, penalties or indemnities), of either
Borrower or any Subsidiary resulting from or based upon (i) any actual or alleged violation of any
Environmental Law, (ii) the generation, use, handling, transportation, storage, treatment or
disposal of any Hazardous Materials, (iii) any actual or alleged exposure to any Hazardous
Materials, (iv) the Release or threatened Release of any Hazardous Materials or (v) any contract,
agreement or other consensual arrangement pursuant to which liability is assumed or imposed with
respect to any of the foregoing.



          “ERISA” shall mean the Employee Retirement Income Security Act of 1974, as amended
from time to time, and any successor statute including any regulations promulgated thereunder.



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



          “ERISA Event” shall mean with respect to the Borrowers or any ERISA Affiliate, (i) any
“reportable event”, as defined in Section 4043 of ERISA with respect to a Plan (other than an event
for which the 30-day notice period is waived); (ii) the failure of any Plan to meet the minimum
funding standard applicable to the Plan for a plan year under Section 412 of the Code or Section
302 of ERISA, whether or not waived; (iii) the filing pursuant to Section 412(c) of the Code or
Section 302(c) of ERISA of an application for a waiver of the minimum funding standard with respect
to any Plan; (iv) the imposition of any liability under Title IV of ERISA, other than for PBGC
premiums due but not delinquent under Section 4007 of ERISA, or the



9









 




imposition of an Lien in favor of the PBGC under Title IV of ERISA; (v) the receipt from the
PBGC or a plan administrator appointed by the PBGC of any notice relating to an intention to
terminate any Plan or Plans or to appoint a trustee to administer any Plan; (vi) any other event or
condition that might reasonably be expected to constitute grounds under Section 4042 of ERISA for
the termination of, or the appointment of a trustee to administer, any Plan or Multiemployer Plan
or for the imposition of liability under Section 4069 or 4212(c) of ERISA; (vii) the incurrence of
any liability with respect to the withdrawal or partial withdrawal from any Plan including the
withdrawal from a Plan subject to Section 4063 of ERISA during a plan year in which it was a
substantial employer, as defined in Section 4001(a)(2) of ERISA, or a cessation of operations that
is treated as such a withdrawal under Section 4062(e) of ERISA; (viii) or the incurrence of any
Withdrawal Liability with respect to any Multiemployer Plan; (ix) the receipt of any notice,
concerning the imposition of Withdrawal Liability or a determination that a Multiemployer Plan is,
or is expected to be, insolvent (within the meaning of Section 4245 of ERISA) or in reorganization
(within the meaning of Section 4241 of ERISA), or in “critical” status (within the meaning of
Section 432 of the Code or Section 304 of ERISA); or (x) a determination that a Plan is in “at
risk” status (within the meaning of Section 430 of the Code or Section 303 of ERISA).




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



          “Eurodollar Reserve Percentage” shall mean the aggregate of the maximum reserve
percentages (including, without limitation, any emergency, supplemental, special or other marginal
reserves) expressed as a decimal (rounded upwards to the next 1/100th of 1%) in effect
on any day to which the Administrative Agent is subject with respect to the Adjusted LIBO Rate
pursuant to regulations issued by the Board of Governors of the Federal Reserve System (or any
Governmental Authority succeeding to any of its principal functions) with respect to eurocurrency
funding (currently referred to as “eurocurrency liabilities” under Regulation D). Eurodollar Loans
shall be deemed to constitute eurocurrency funding and to be subject to such reserve requirements
without benefit of or credit for proration, exemptions or offsets that may be available from time
to time to any Lender under Regulation D. The Eurodollar Reserve Percentage shall be adjusted
automatically on and as of the effective date of any change in any reserve percentage.



          “Event of Default” shall have the meaning provided in ARTICLE VIII.



          “Excluded Subsidiaries” shall mean the Regulated Insurance Companies, the Unrestricted
Subsidiary and any Subsidiary that is prohibited by law from Guaranteeing the Obligations.



          “Excluded Taxes” shall mean with respect to the Administrative Agent, any Lender or
any other recipient of any payment to be made by or on account of any obligation of the Borrowers
hereunder, (a) income Taxes, net worth Taxes, capital Taxes, Taxes on loans or liabilities or
franchise Taxes imposed by the United States of America, or by the jurisdiction under the laws of
which such recipient is organized or in which its principal office is located or, in the case of
any Lender, in which its Applicable Lending Office is located, (b) any branch



10









 




profits Taxes imposed by the United States of America or any similar Tax imposed by any other
jurisdiction in which any Lender is located, (c) any U.S. federal withholding tax that would not
have been imposed but for a failure by the Administrative Agent or any Lender (or any financial
institution through which any payment is made to such agent or lender) to comply with the
applicable requirements of Sections 1471-1474 of the Code, any applicable Treasury Regulation
promulgated thereunder or any administrative guidance issued with respect thereto, and (d) in the
case of a Lender, any withholding Tax that (i) is imposed on amounts payable to such Lender at the
time such Lender becomes a party to this Agreement, (ii) is imposed on amounts payable to such
Lender at any time that such Lender designates a new lending office, other than Taxes that have
accrued prior to the designation of such lending office that are otherwise not Excluded Taxes, or
(iii) is attributable to such Lender’s failure to comply with the requirements of Section 2.18(e).




          “Existing Lender” shall mean Columbus Bank & Trust.



          “Federal Funds Rate” shall mean, for any day, the rate per annum (rounded upwards, if
necessary, to the next 1/100th of 1%) equal to the weighted average of the rates on
overnight Federal funds transactions with member banks of the Federal Reserve System arranged by
Federal funds brokers, as published by the Federal Reserve Bank of New York on the next succeeding
Business Day or if such rate is not so published for any Business Day, the Federal Funds Rate for
such day shall be the average rounded upwards, if necessary, to the next 1/100th of 1% of the
quotations for such day on such transactions received by the Administrative Agent from three
Federal funds brokers of recognized standing selected by the Administrative Agent.



          “Fee Letter” shall mean that certain fee letter, dated as of April 6, 2010, executed
by SunTrust Robinson Humphrey, Inc. and SunTrust Bank and accepted by Borrowers.



          “Fiscal Quarter” shall mean any fiscal quarter of the Borrowers.



          “Fiscal Year” shall mean any fiscal year of the Borrowers.



          “Fixed Charge Coverage Ratio” shall mean, as of any date, the ratio of (a)
Consolidated Adjusted EBITDA less the actual amount paid by the Borrowers and their Subsidiaries in
cash on account of Capital Expenditures less cash taxes to (b) Consolidated Fixed Charges, in each
case measured for the four consecutive Fiscal Quarters ending on or immediately prior to such date.



          “Florida Headquarters” shall mean the principal office of the Borrowers located at 100
West Bay Street, Jacksonville, Florida.



          “Foreign Lender” shall mean any Lender that is not a United States person under
Section 7701(a)(30) of the Code.



          “Foreign Subsidiary” shall mean any Subsidiary that is organized under the laws of a
jurisdiction other than one of the fifty states or commonwealths of the United States or the
District of Columbia.



          “Fortegra” shall mean Fortegra Financial Corporation, a Georgia corporation.



11









 





          “Fortegra Preferred Stock” shall mean the following series of preferred stock issued
by Fortegra: (a) Series A (fixed rate of 8.25%, matures 2034); (b) Series B (floating rate of 90
day LIBOR plus 4%, matures 2034); and (c) Series C (fixed rate of 8.25%, matures 2034).



          “GAAP” shall mean generally accepted accounting principles in the United States
applied on a consistent basis and subject to the terms of Section 1.2.



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



          “Guarantee” of or by any Person (the “guarantor”) shall mean any obligation,
contingent or otherwise, of the guarantor guaranteeing or having the economic effect of
guaranteeing any Indebtedness or other obligation of any other Person (the “primary
obligor”) in any manner, whether directly or indirectly and including any obligation, direct or
indirect, of the guarantor (i) to purchase or pay (or advance or supply funds for the purchase or
payment of) such Indebtedness or other obligation or to purchase (or to advance or supply funds for
the purchase of) any security for the payment thereof, (ii) to purchase or lease property,
securities or services for the purpose of assuring the owner of such Indebtedness or other
obligation of the payment thereof, (iii) to maintain working capital, equity capital or any other
financial statement condition or liquidity of the primary obligor so as to enable the primary
obligor to pay such Indebtedness or other obligation or (iv) as an account party in respect of any
letter of credit or letter of guaranty issued in support of such Indebtedness or obligation;
provided, that the term “Guarantee” shall not include endorsements for collection or
deposits in the ordinary course of business. The amount of any Guarantee shall be deemed to be an
amount equal to the stated or determinable amount of the primary obligation in respect of which
Guarantee is made or, if not so 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. The term “Guarantee” used as a verb has a corresponding meaning.



          “Hazardous Materials” shall mean all substances or wastes that are defined or
regulated as explosive, radioactive, hazardous, toxic, a pollutant or a contaminant pursuant to any
Environmental Law, including petroleum or petroleum distillates, asbestos or asbestos containing
materials, polychlorinated biphenyls, radon gas, infectious or medical wastes.



          “Hedging Obligations” of any Person shall mean any and all obligations of such Person,
whether absolute or contingent and howsoever and whensoever created, arising, evidenced or acquired
under (i) any and all Hedging Transactions, (ii) any and all cancellations, buy backs, reversals,
terminations or assignments of any Hedging Transactions and (iii) any and all renewals, extensions
and modifications of any Hedging Transactions and any and all substitutions for any Hedging
Transactions.



          “Hedging Transaction” of any Person shall mean (a) any transaction (including an
agreement with respect to any such transaction) now existing or hereafter entered into by such
Person that is a rate swap transaction, swap option, basis swap, forward rate transaction,



12









 




commodity swap, commodity option, equity or equity index swap or option, bond option, interest
rate option, foreign exchange transaction, cap transaction, floor transaction, collar transaction,
currency swap transaction, cross-currency rate swap transaction, currency option, spot transaction,
credit protection transaction, credit swap, credit default swap, credit default option, total
return swap, credit spread transaction, repurchase transaction, reverse repurchase transaction,
buy/sell-back transaction, securities lending transaction, or any other similar transaction
(including any option with respect to any of these transactions) or any combination thereof,
whether or not any such transaction is governed by or subject to any master agreement and (b) any
and all transactions of any kind, and the related confirmations, which are subject to the terms and
conditions of, or governed by, any form of master agreement published by the International Swaps
and Derivatives Association, Inc., any International Foreign Exchange Master Agreement, or any
other master agreement (any such master agreement, together with any related schedules, a
“Master Agreement”), including any such obligations or liabilities under any Master
Agreement.




          “Indebtedness” of any Person shall mean, without duplication (i) all obligations of
such Person for borrowed money, (ii) all obligations of such Person evidenced by bonds, debentures,
notes or other similar instruments, (iii) all obligations of such Person in respect of the deferred
purchase price of property or services (other than trade payables incurred and expenses accrued in
the ordinary course of business; provided, that for purposes of Section 8.1(g),
trade payables overdue by more than 120 days shall be included in this definition except to the
extent that any of such trade payables are being disputed in good faith and by appropriate
measures), (iv) all obligations of such Person under any conditional sale or other title retention
agreement(s) relating to property acquired by such Person, (v) all Capital Lease Obligations of
such Person, (vi) all obligations, contingent or otherwise, of such Person in respect of letters of
credit, acceptances or similar extensions of credit, (vii) all Guarantees of such Person of the
type of Indebtedness described in clauses (i) through (vi) above and (xi) below, (viii) all
Indebtedness of a third party secured by any Lien on property owned by such Person, whether or not
such Indebtedness has been assumed by such Person, (ix) all obligations of such Person, contingent
or otherwise, to purchase, redeem, retire or otherwise acquire for value any Capital Stock of such
Person to the extent that such obligation to purchase, redeem, retire or otherwise acquire for
value such Capital Stock matures, or is mandatorily redeemable, or is redeemable at the option of
the holder thereof, in whole or in part, on or prior to the Maturity Date, (x) Off-Balance Sheet
Liabilities and (xi) all Hedging Obligations. The Indebtedness of any Person shall include the
Indebtedness of any partnership or joint venture in which such Person is a general partner or a
joint venturer, except to the extent that the terms of such Indebtedness provide that such Person
is not liable therefor. For purposes of determining the amount of attributed Indebtedness from
Hedging Obligations, the “principal amount” of any Hedging Obligations at any time shall be the Net
Mark-to-Market Exposure of such Hedging Obligations.



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



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



13









 





          “Intellectual Property” shall mean, with respect to the Borrowers and their
Subsidiaries, all patents, licenses, franchises, trademarks, trademark rights, service marks,
service mark rights, trade names, trade name rights, trade secrets and copyrights.



          “Interest Period” shall mean with respect to any Eurodollar Borrowing, a period of
one, two, three or six months; provided, that:




     (i) the initial Interest Period for such Borrowing shall commence on the date of such
Borrowing (including the date of any conversion from a Borrowing of another Type), 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 would otherwise end on a day other than a Business Day,
such Interest Period shall be extended to the next succeeding Business Day, unless such
Business Day falls in another calendar month, in which case such Interest Period would end
on the next preceding Business Day;




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




     (iv) each principal installment of the Term Loans shall have an Interest Period ending
on each installment payment date and the remaining principal balance (if any) of the Term
Loans shall have an Interest Period determined as set forth above; and




     (v) no Interest Period may extend beyond the Maturity Date, unless on the Maturity Date
the aggregate outstanding principal amount of Term Loans is equal to or greater than the
aggregate principal amount of Eurodollar Loans with Interest Periods expiring after such
date, and no Interest Period may extend beyond the Maturity Date.



          “Investments” shall have the meaning as set forth in Section 7.4.



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



          “Lenders” shall have the meaning assigned to such term in the opening paragraph of
this Agreement and shall include, where appropriate, each Additional Lender that joins this
Agreement pursuant to Section 2.21.



          “LIBOR” shall mean, for any Interest Period with respect to a Eurodollar Loan, the
rate per annum (rounded upwards, if necessary, to the nearest 1/100 of 1%) appearing on



14









 




Reuters Screen LIBOR01 Page (or any successor page) as the London interbank offered rate for
deposits in Dollars at approximately 11:00 a.m. (London, England time) two Business Days prior to
the first day of such Interest Period for a term comparable to such Interest Period. If for any
reason such rate is not available, LIBOR shall be, for any Interest Period, the rate per annum
reasonably determined by the Administrative Agent as the rate of interest at which Dollar deposits
in the approximate amount of the Eurodollar Loan comprising part of such borrowing would be offered
by the Administrative Agent to major banks in the London interbank Eurodollar market at their
request at or about 10:00 a.m. two Business Days prior to the first day of such Interest Period for
a term comparable to such Interest Period.




          “License” shall mean any license, certificate of authority, permit or other
authorization which is required to be obtained from any Applicable Insurance Regulatory Authority
or other Governmental Authority in connection with the operation, ownership or transaction of
Insurance Business.



          “Lien” shall mean any mortgage, pledge, security interest, lien (statutory or
otherwise), charge, encumbrance, hypothecation, assignment, deposit arrangement, or any preference,
priority or other arrangement, in each case, having the practical effect of a security interest or
any other security agreement or preferential arrangement having the practical effect of a security
interest of any kind or nature whatsoever (including any conditional sale or other title retention
agreement and any capital lease having the same economic effect as any of the foregoing but
excluding operating leases).



          “Loan Documents” shall mean, collectively, this Agreement, the Notes (if any), the
Subsidiary Guaranty Agreement, the Security Documents, all Notices of Borrowing, all Notices of
Conversion/Continuation and all Compliance Certificates.



          “Loan Obligations” shall mean all amounts owing by the Loan Parties to the
Administrative Agent or any Lender pursuant to or in connection with this Agreement or any other
Loan Document or otherwise with respect to any Loan, including, without limitation, all principal,
interest (including any interest accruing after the filing of any petition in bankruptcy or the
commencement of any insolvency, reorganization or like proceeding relating to either Borrower,
whether or not a claim for post-filing or post-petition interest is allowed in such proceeding),
all reimbursement obligations, fees, expenses, indemnification and reimbursement payments, costs
and expenses (including all fees and expenses of counsel to the Administrative Agent and any Lender
incurred, or required to be reimbursed, by the Borrowers, in each case, pursuant to this Agreement
or any other Loan Document), whether direct or indirect, absolute or contingent, liquidated or
unliquidated, now existing or hereafter arising hereunder or thereunder.



          “Loan Parties” shall mean the Borrowers and the Subsidiary Loan Parties.



          “Loans” shall mean all Revolving Loans in the aggregate or any of them, as the context
shall require.



          “LOTS” shall mean LOTS Intermediate Co.



          “Mandatory Prepayment Percentage” shall mean (a) 50%, if the Total Leverage Ratio on a
Pro Forma Basis, after giving effect to the use of the proceeds of the issuance of any



15









 




debt or equity securities, is greater than 2.50:1.00 as of any date of determination or (b)
0%, if the Total Leverage Ratio on a Pro Forma Basis, after giving effect to the use of the
proceeds of the issuance of any debt or equity securities, is less than or equal to 2.50:1.00 as of
any date of determination.




          “Material Adverse Effect” shall mean, with respect to any event, act, condition or
occurrence of whatever nature (including any adverse determination in any litigation, arbitration,
or governmental investigation or proceeding), whether singularly or in conjunction with any other
event or events, act or acts, condition or conditions, occurrence or occurrences whether or not
related, a material adverse change in, or a material adverse effect on, (i) the business, results
of operations, financial condition, assets, operations or liabilities (contingent or otherwise) of
the Borrowers and their Restricted Subsidiaries taken as a whole, (ii) the ability of the Loan
Parties to perform any of their respective obligations under the Loan Documents, (iii) the rights
and remedies of the Administrative Agent and the Lenders under any of the Loan Documents or (iv)
the legality, validity or enforceability of any of the Loan Documents.



          “Material Agreement” shall mean any contract or other arrangement (other than the Loan
Documents), to which either Borrower or any Restricted Subsidiary is a party as to which the
breach, nonperformance, termination, cancellation or failure to renew by any party thereto could
reasonably be expected to have a Material Adverse Effect.



          “Material Indebtedness” shall mean Indebtedness (other than the Loans) and Hedging
Obligations of the Borrowers or any of their Restricted Subsidiaries, individually or in an
aggregate committed or outstanding principal amount exceeding $5,000,000.



          “Material Domestic Subsidiary” shall mean at any time any Material Subsidiary of the
Borrowers that is also a Domestic Subsidiary.



          “Material Subsidiary” shall mean at any time any direct or indirect wholly-owned
Subsidiary of the Borrowers: (a) having assets (determined on a consolidating basis) in an amount
equal to at least 5% of the total assets of the Borrowers and their Subsidiaries determined on a
consolidated basis as of the last day of the most recent Fiscal Quarter at such time; or (b) having
net income (determined on a consolidating basis) in an amount equal to at least 5% of the net
income of the Borrowers and their Subsidiaries on a consolidated basis for the 12-month period
ending on the last day of the most recent Fiscal Quarter at such time; or (c) that is obligated to
another Restricted Subsidiary in respect of Indebtedness permitted by Section 7.1 in an amount in
excess of $5,000,000.



          “Maturity Date” shall mean the earliest to occur of: (a) June 16, 2013; (b) the date
on which the Revolving Commitments are terminated pursuant to Section 2.6; and (c) the date
on which all amounts outstanding under this Agreement have been declared or have automatically
become due and payable (whether by acceleration or otherwise).



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



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



16









 





          “Multiemployer Plan” shall have the meaning set forth in Section 4001(a)(3) of ERISA.



          “Net Mark-to-Market Exposure” of any Person shall mean, as of any date of
determination with respect to any Hedging Obligation, the excess (if any) of all unrealized losses
over all unrealized profits of such Person arising from such Hedging Obligation. “Unrealized
losses” shall mean the fair market value of the cost to such Person of replacing the Hedging
Transaction giving rise to such Hedging Obligation as of the date of determination (assuming the
Hedging Transaction were to be terminated as of that date), and “unrealized profits” means the fair
market value of the gain to such Person of replacing such Hedging Transaction as of the date of
determination (assuming such Hedging Transaction were to be terminated as of that date).



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



          “Notes” shall mean the Revolving Credit Notes.



          “Notices of Borrowing” shall mean the Notices of Revolving Borrowing.



          “Notice of Conversion/Continuation” shall mean the notice given by the Borrowers to
the Administrative Agent in respect of the conversion or continuation of an outstanding Borrowing
as provided in Section 2.5(b).



          “Notice of Revolving Borrowing” shall have the meaning as set forth in Section
2.3.



          “Obligations” shall mean (a) all Loan Obligations, (b) all Hedging Obligations owed by
any Loan Party to any Lender or Affiliate of any Lender, (c) all Treasury Management Obligations
and (d) all obligations and indebtedness of either Borrower or any other Loan Party under corporate
card agreements, arrangements or programs (including, without limitation, purchasing card and
travel and entertainment card agreements, arrangements or programs) maintained with any Lender,
together with all renewals, extensions, modifications or refinancings of any of the foregoing.



          “OFAC” shall mean the U.S. Department of the Treasury’s Office of Foreign Assets
Control.



          “Off-Balance Sheet Liabilities” of any Person shall mean (i) any repurchase obligation
or liability of such Person with respect to accounts or notes receivable sold by such Person, (ii)
any liability of such Person under any sale and leaseback transactions that do not create a
liability on the balance sheet of such Person, (iii) any Synthetic Lease Obligation or (iv) any
obligation arising with respect to any other transaction which is the functional equivalent of or
takes the place of borrowing but which does not constitute a liability on the balance sheet of such
Person; provided that operating leases entered into by such Person in the ordinary course of
business (including any sale and leaseback transaction that is treated as an operating lease) shall
not be deemed to be Off-Balance Sheet Liabilities.



17









 





          “OSHA” shall mean the Occupational Safety and Health Act of 1970, as amended from time
to time, and any successor statute.



          “Other Taxes” shall mean any and all present or future stamp or documentary taxes or
any other excise or property taxes, charges or similar levies arising from any payment made
hereunder or under any other Loan Document or from the execution, delivery or enforcement of, or
otherwise with respect to, this Agreement or any other Loan Document.



          “Parent Company” shall mean, with respect to a Lender, the bank holding company (as
defined in Federal Reserve Board Regulation Y), if any, of such Lender, and/or any Person owning,
beneficially or of record, directly or indirectly, a majority of the shares of such Lender.



          “Participant” shall have the meaning set forth in Section 10.4(d).



          “Patriot Act” shall have the meaning set forth in Section 10.14.



          “Payment Office” shall mean the office of the Administrative Agent located at 303
Peachtree Street, N.E., Atlanta, Georgia 30308, or such other location as to which the
Administrative Agent shall have given written notice to the Borrowers and the other Lenders.



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



          “Permitted Acquisitions” shall mean the acquisition (in one transaction or a series of
transactions) of all or substantially all of the assets or Capital Stock of a Person, or any assets
of any other Person that constitute a business unit or division of any other Person of any other
Person (each an “Acquisition”); provided that (a) such business or line of business is in the same,
a similar, substantially related, ancillary, incidental or a complimentary line of business as the
business of the Borrowers and their Subsidiaries, taken as a whole, conducted on the Closing Date;
(b) such Acquisition is made with the approval of the board of directors of the Person to be
acquired; (c) both before and immediately after any such Acquisition on a Pro Forma Basis no
Default or Event of Default shall have occurred and be continuing; (d) immediately after such
Acquisition on a Pro Forma Basis, the Borrowers would be in compliance with the financial covenants
in ARTICLE VI and the Administrative Agent shall have received a Compliance Certificate
evidencing such compliance on a Pro Forma Basis; (e) the total consideration (including cash and
non-cash consideration) paid in connection with any individual Acquisition shall not exceed the sum
of (i) $35,000,000 and (ii) any proceeds of any Permitted Equity Issuance or Permitted Subordinated
Debt that has not theretofore increased the amount referred to in clause (i) with respect to such
individual Acquisition; (f) the total consideration (including cash and non-cash consideration)
paid in connection with such Acquisition, when taken together with the aggregate amount of all cash
and non-cash consideration in connection with all Acquisitions during the term of this Agreement,
shall not exceed the sum of (i) $75,000,000 and (ii) any proceeds of any Permitted Equity Issuances
or Permitted Subordinated Debt that have not theretofore increased the amount referred to in clause
(e)(i) or (f)(i) in the aggregate for all such Acquisitions; and (h) Lender has received each item
required pursuant to Section 5.10 and Section 5.11.



18









 





          “Permitted Encumbrances” shall mean:




     (i) Liens for Taxes (A) not yet due, (B) which are being contested in good faith and by
appropriate proceedings, if adequate reserves with respect thereto are maintained on the
books of the applicable Person in accordance with GAAP or (C) with respect to which the
failure to make payment could not reasonably be expected to have a Material Adverse Effect;




     (ii) statutory Liens of landlords, carriers, warehousemen, mechanics, materialmen,
repairmen, landlords and other like Liens imposed by operation of law in the ordinary course
of business for amounts (A) not yet due, (B) which are being contested in good faith by
appropriate proceedings and with respect to which adequate reserves are being maintained in
accordance with GAAP or (C) with respect to which the failure to make payment could not be
reasonably expected to have a Material Adverse Effect;




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




     (iv) deposits to secure the performance of bids, trade contracts, leases, statutory
obligations, surety, stay and appeal bonds, performance bonds and other obligations of a
like nature, in each case in the ordinary course of business;




     (v) judgment and attachment liens not giving rise to an Event of Default or Liens
created by or existing from any litigation or legal proceeding that are currently being
contested in good faith by appropriate proceedings and with respect to which adequate
reserves are being maintained in accordance with GAAP;




     (vi) easements, zoning restrictions, rights-of-way and similar encumbrances on real
property imposed by law or arising in the ordinary course of business that do not secure any
monetary obligations and do not materially detract from the value of the affected property
or materially interfere with the ordinary conduct of business of the Borrowers and their
Subsidiaries taken as a whole;




     (vii) customary rights of set-off relating to (A) revocation, refund or chargeback
under deposit agreements or under the Uniform Commercial Code or common law of banks or
other financial institutions where either Borrower or any of its Restricted Subsidiaries
maintains deposits (other than deposits intended as cash collateral) in the ordinary course
of business and (B) purchase orders and other similar agreements entered into in the
ordinary course of business; and




     (viii) Liens, if any, securing the Obligations;


provided, that the term “Permitted Encumbrances” shall not include any Lien securing
Indebtedness (other than the Obligations).







19









 








          “Permitted Equity Issuance” shall mean Capital Stock of Fortegra (or Stock of a Person
of which Fortegra is a direct or indirect Subsidiary), that is issued on terms and conditions,
except in the case of common stock, satisfactory to the Administrative Agent in connection with a
Permitted Acquisition or Capital Expenditure and (i) delivered as consideration for such Permitted
Acquisition or Capital Expenditure (so long as no Change of Control occurs as a consequence
thereof), or (ii) the net proceeds of which are applied to the consideration payable for such
Permitted Acquisition or Capital Expenditure at the time of consummation of such Permitted
Acquisition or Capital Expenditure. A Permitted Equity Issuance shall not be applied to any purpose
other than such consideration.



          “Permitted Investments” shall mean:




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




     (ii) commercial paper having the highest rating, at the time of acquisition thereof, of
S&P or Moody’s and in either case maturing within six months from the date of acquisition
thereof;




     (iii) certificates of deposit, bankers’ acceptances and time deposits maturing within
one year of the date of acquisition thereof issued or guaranteed by or placed with, and
money market deposit accounts issued or offered by, any domestic office of any commercial
bank organized under the laws of the United States or any state thereof which has a combined
capital and surplus and undivided profits of not less than $500,000,000;




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




     (v) mutual funds investing solely in any one or more of the Permitted Investments
described in clauses (i) through (iv) above.



          “Permitted Liens” shall have the meaning set forth in Section 7.2.



          “Permitted Subordinated Debt” shall mean any Indebtedness of either Borrower or any
Subsidiary (i) that is expressly subordinated to the Obligations on terms satisfactory to the
Administrative Agent in its sole discretion, (ii) that matures by its terms no earlier than six
months after the later of the Maturity Date with no scheduled principal payments permitted prior to
such maturity, and (iii) that is evidenced by an indenture or other similar agreement that is in
form and substance reasonably satisfactory to the Administrative Agent; provided, however, that,
notwithstanding clause (ii) above, the Indebtedness under the Subordinated Debenture Purchase
Agreement and additional subordinated Indebtedness thereunder of up to $20,000,000 shall be
“Permitted Subordinated Debt” for purposes of this definition.



          “Person” shall mean any individual, partnership, firm, corporation, association, joint
venture, limited liability company, trust or other entity, or any Governmental Authority.



20









 





          “Plan” shall mean any Employee Benefit Plan (other than a Multiemployer Plan) subject
to the provisions of Title IV of ERISA or Section 412 of the Code or Section 302 of ERISA, and in
respect of which either Borrower or any ERISA Affiliate either (i) maintains, contributes to or has
an obligation to contribute to on behalf of participants who are or were employed by any of them or
(ii) is (or, if such plan were terminated, would under Section 4069 of ERISA be deemed to be) an
“employer” as defined in Section 3(5) of ERISA or a “contributing sponsor” (as defined in ERISA
Section 4001(a)(13)).



          “Pledge Agreement” shall mean that certain Pledge Agreement, dated as of the date
hereof and substantially in the form of Exhibit B, executed by Fortegra, in favor of the
Administrative Agent for the benefit of the Lenders, pursuant to which Fortegra shall pledge all of
the Capital Stock of LOTS, as amended, restated, supplemented or otherwise modified from time to
time.



          “Pro Forma Basis” means, for purposes of calculating compliance with any financial
covenant or condition herein (whether for purposes of Article VI or to determine whether a
condition to a specific action has been or will be satisfied) in respect of a Specified
Transaction, that such Specified Transaction and the following transactions in connection therewith
shall be deemed to have occurred as of the first day of the applicable Measurement Period with
respect to such covenant or condition: (a) income statement items (whether positive or negative)
attributable to the property or Person subject to such Specified Transaction, in the case of a
Permitted Acquisition or Investment, shall be included, (b) any retirement of Indebtedness and (c)
any Indebtedness incurred or assumed by the Borrowers or any Restricted Subsidiary in connection
with such Specified Transaction, and if such Indebtedness has a floating or formula rate, shall
have an implied rate of interest for the applicable period for purposes of this definition
determined by utilizing the rate which is or would be in effect with respect to such Indebtedness
as at the relevant date of determination; provided that the foregoing pro forma adjustments
may be applied to the calculation of the financial covenants referred to above to the extent that
such adjustments are consistent with the definition of Consolidated Adjusted EBITDA
adjusted by (a) any credit received for acquisition related costs and savings to the extent
expressly permitted pursuant to SEC Article 11 of Form S-X and (b) other extraordinary expenses,
increased costs, identifiable and verifiable expense reductions, excess management compensation and
other adjustments, if any, in each case calculated by Borrowers and approved by the Administrative
Agent in its reasonable discretion.



          “Pro Rata Share” shall mean (i) with respect to any Revolving Commitment of any Lender
at any time, a percentage, the numerator of which shall be such Lender’s Revolving Commitment (or
if such Revolving Commitments have been terminated or expired or the Loans have been declared to be
due and payable, such Lender’s Revolving Credit Exposure), and the denominator of which shall be
the sum of such Revolving Commitments of all Lenders (or if such Revolving Commitments have been
terminated or expired or the Loans have been declared to be due and payable, all Revolving Credit
Exposure of all Lenders) and (ii) with respect to all Revolving Commitments of any Lender at any
time, the numerator of which shall be the sum of such Lender’s Revolving Commitment (or if such
Revolving Commitments have been terminated or expired or the Loans have been declared to be due and
payable, such Lender’s Revolving Credit Exposure) and the denominator of which shall be the sum of
all Lenders’ Revolving Commitments (or if such Revolving Commitments have been terminated or
expired or



21









 




the Loans have been declared to be due and payable, all Revolving Credit Exposure of all
Lenders funded under such Revolving Commitments).




          “Qualified Plan” shall mean an Employee Benefit Plan that is intended to be
tax-qualified under Section 401(a) of the Code.



          “Register” shall have the meaning given such term in Section 10.4(c).



          “Regulated Insurance Company” shall mean any Subsidiary of the Borrowers, 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, T, U and X” shall mean Regulation D, T, U and X, respectively, of the
Board of Governors of the Federal Reserve System, as the same may be in effect from time to time,
and any successor regulations.



          “Reinsurance Ratio” shall mean, as of any date of determination, the ratio (expressed
as a percentage) of (a) the aggregate amounts recoverable by the Borrowers and its Restricted
Subsidiaries from reinsurers divided by (b) the sum of (i) policy and claim liabilities plus (ii)
unearned premiums, in each case of the Borrowers and their Restricted Subsidiaries determined in
accordance with GAAP.



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



          “Release” shall mean any release, spill, emission, leaking, dumping, injection,
pouring, deposit, disposal, discharge, dispersal, leaching or migration into the environment
(including ambient air, surface water, groundwater, land surface or subsurface strata) or within
any building, structure, facility or fixture.



          “Required Lenders” shall mean, at any time, (a) if there are two or fewer Lenders
hereunder, all Lenders, (b) if there are three Lenders hereunder, those Lenders holding more than
66 2/3% of the aggregate outstanding Revolving Commitments at such time or if
the Lenders have no Revolving Commitments outstanding, then Lenders holding more than 66
2/3% of the Revolving Credit Exposure and (c) if there are four or more
Lenders hereunder, those Lenders holding more than 50% of the aggregate outstanding Revolving
Commitments at such time or if the Lenders have no Revolving Commitments outstanding, then Lenders
holding more than 50% of the Revolving Credit Exposure; provided, however, that to the extent that
any Lender is a Defaulting Lender, such Defaulting Lender and all of its Revolving Commitments and
Revolving Credit Exposure shall be excluded for purposes of determining Required Lenders.



          “Requirement of Law” for any Person shall mean any law, treaty, rule or regulation, or
determination of a Governmental Authority having the force of law, in each case applicable to or
binding upon such Person or any of its property or to which such Person or any of its property is
subject.



22









 





          “Responsible Officer” shall mean any of the president, the chief executive officer,
the chief operating officer, the chief financial officer, the treasurer or a vice president of the
Borrowers or such other representative of the Borrowers as may be designated in writing by any one
of the foregoing with the consent of the Administrative Agent; provided, that, with respect to the
financial covenants and Compliance Certificate, Responsible Officer shall mean only the chief
financial officer or the treasurer of the Borrowers.



          “Restricted Payment” shall have the meaning set forth in Section 7.5.



          “Restricted Subsidiaries” shall mean all Subsidiaries other than the Unrestricted
Subsidiary.



          “Revolving Commitment” shall mean, with respect to each Lender, the obligation of such
Lender to make Revolving Loans to the Borrowers in an aggregate principal amount not exceeding the
amount set forth with respect to such Lender on Schedule II, as such schedule may be
amended pursuant to Section 2.21, or in the case of a Person becoming a Lender after the
Closing Date through an assignment of an existing Revolving Commitment, the amount of the assigned
“Revolving Commitment” as provided in the Assignment and Acceptance executed by such Person as an
assignee, as the same may be increased or decreased pursuant to terms hereof.



          “Revolving Credit Exposure” shall mean, with respect to any Lender at any time, the
sum of the outstanding principal amount of such Lender’s Revolving Loans.



          “Revolving Credit Note” shall mean a promissory note of the Borrowers payable to a
requesting Lender in the principal amount of such Lender’s Revolving Commitment, in substantially
the form of Exhibit C.



          “Revolving Loan” shall mean a loan made by a Lender to the Borrowers under its
Revolving Commitment, which may either be a Base Rate Loan or a Eurodollar Loan.



          “S&P” shall mean Standard & Poor’s, a Division of the McGraw-Hill Companies.



          “SAP” shall mean, with respect to any Regulated Insurance Company, the statutory
accounting practices prescribed or permitted by the Applicable Insurance Regulatory Authority in
the state in which such Regulated Insurance Company is domiciled for the preparation of Annual
Statements and other financial reports by insurance companies of the same type as such Regulated
Insurance Company in effect from time to time, applied in a manner consistent with those used in
preparing the Statutory Financial Statements referred to in Section 4.5.



          “Sanctioned Country” shall mean a country subject to a sanctions program identified on
the list maintained by OFAC and available at
http://www.treas.gov/offices/eotffc/ofac/sanctions/index.html, or as otherwise published
from time to time.



          “Sanctioned Person” shall mean (i) a Person named on the list of “Specially
Designated Nationals and Blocked Persons” maintained by OFAC available at
http://www.treas.gov/offices/eotffc/ofac/sdn/index.html, or as otherwise published from
time to



23









 




time, or (ii) (A) an agency of the government of a Sanctioned Country, (B) an organization
controlled by a Sanctioned Country, or (C) a person resident in a Sanctioned Country, to the extent
subject to a sanctions program administered by OFAC.




          “Security Agreement” shall mean the Security Agreement, dated as of the date hereof
and substantially in the form of Exhibit D, made by the Borrowers and the Subsidiary Loan
Parties in favor of the Administrative Agent for the benefit of the Lenders.



          “Security Documents” shall mean the Pledge Agreement, the Security Agreement and each
of the security agreements, mortgages and other instruments and documents executed and delivered
pursuant thereto or pursuant to Section 5.10 and/or Section 5.11.



          “Senior Leverage Ratio” shall mean, as of any date, the ratio of (i) Consolidated
Senior Debt as of such date to (ii) Consolidated Adjusted EBITDA for the four consecutive Fiscal
Quarters ending on or immediately prior to such date.



          “South Bay Guaranty” has the meaning given such term in Section 7.1(e).



          “South Bay Investment” has the meaning given such term in Section 7.4(d)(ii).



          “Specified Transaction” means any Investment or incurrence of Indebtedness, or in the
determination of the Mandatory Prepayment Percentage, in respect of which compliance with one or
more financial covenants or conditions set forth in this Agreement is by the terms of this
Agreement required to be calculated on a Pro Forma Basis.



          “Subordinated Debenture Purchase Agreement” shall mean that certain Subordinated
Debenture Purchase Agreement dated as of June 20, 2007 by an among LOTS and the purchasers party
thereto, as the same may be amended, supplemented or otherwise modified from time to time.



          “Subordinated Debt Documents” shall mean any indenture, agreement or similar
instrument governing any Permitted Subordinated Debt.



          “Subsidiary” shall mean, with respect to any Person (the “parent”), any
corporation, partnership, joint venture, limited liability company, association or other entity the
accounts of which would be consolidated with those of the parent in the parent’s consolidated
financial statements if such financial statements were prepared in accordance with GAAP as of such
date, as well as any other corporation, partnership, joint venture, limited liability company,
association or other entity (i) of which securities or other ownership interests representing more
than 50% of the ordinary voting power, or in the case of a partnership, more than 50% of the
general partnership interests are, as of such date, owned, controlled or held by the parent or one
or more Subsidiaries of the parent or by the parent and one or more Subsidiaries of the parent.
Unless otherwise indicated, all references to “Subsidiary” hereunder shall mean a Subsidiary of
either Borrower.



          “Subsidiary Guaranty Agreement” shall mean the Subsidiary Guaranty Agreement, dated as
of the date hereof and substantially in the form of Exhibit E, made by all



24









 




Material Domestic Subsidiaries of the Borrowers, other than the Excluded Subsidiaries, in
favor of the Administrative Agent for the benefit of the Lenders.




          “Subsidiary Guaranty Supplement” shall mean each supplement substantially in the form
of Schedule II to the Subsidiary Guaranty Agreement executed and delivered by a Domestic
Subsidiary of the Borrowers pursuant to Section 5.10.



          “Subsidiary Loan Party” shall mean any Subsidiary that executes or becomes a party to
the Subsidiary Guaranty Agreement.



          “Summit Partners” shall mean Summit Partners, L.P., a limited partnership organized
under the laws of the Commonwealth of Massachusetts.



          “Synthetic Lease” shall mean a lease transaction under which the parties intend that
(i) the lease will be treated as an “operating lease” by the lessee pursuant to Statement of
Financial Accounting Standards No. 13, as amended and (ii) the lessee will be entitled to various
tax and other benefits ordinarily available to owners (as opposed to lessees) of like property.



          “Synthetic Lease Obligations” shall mean, with respect to any Person, the sum of (i)
all remaining rental obligations of such Person as lessee under Synthetic Leases which are
attributable to principal and, without duplication, (ii) all rental and purchase price payment
obligations of such Person under such Synthetic Leases assuming such Person exercises the option to
purchase the lease property at the end of the lease term.



          “Taxes” shall mean any and all present or future taxes, levies, imposts, duties,
deductions, charges, assessments or withholdings imposed by any Governmental Authority, including
any interest, additions to tax or penalties applicable thereto.



          “Total Leverage Ratio” shall mean, as of any date, the ratio of (i) Consolidated Total
Debt as of such date to (ii) Consolidated Adjusted EBITDA for the four consecutive Fiscal Quarters
ending on or immediately prior to such date.



          “Treasury Management Obligations” shall mean, collectively, all obligations and other
liabilities of any Loan Parties pursuant to any agreements governing the provision to such Loan
Parties of treasury or cash management services, including deposit accounts, funds transfer,
purchasing card services, automated clearing house, zero balance accounts, returned check
concentration, controlled disbursement, lockbox, account reconciliation and reporting and trade
finance services.



          “Type”, when used in reference to a Loan or Borrowing, refers to whether the rate of
interest on such Loan, or on the Loans comprising such Borrowing, is determined by reference to the
Adjusted LIBO Rate or the Base Rate.



          “Unrestricted Subsidiary” shall mean South Bay Acceptance Corporation, a corporation
incorporated under the laws of the State of California.



25









 





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



          Section 1.2. Accounting Terms and Determination.



          (a) Unless otherwise defined or specified herein, all accounting terms used herein shall be
interpreted, all accounting determinations hereunder shall be made, and all financial statements
required to be delivered hereunder shall be prepared, in accordance with GAAP as in effect from
time to time, applied on a basis consistent with the most recent audited consolidated financial
statements of the Borrowers and their Subsidiaries delivered pursuant to Section 5.1(a)
(or, if no such financial statements have been delivered, on a basis consistent with the audited
consolidated financial statements of the Borrowers and their Subsidiaries last delivered to the
Administrative Agent in connection with this Agreement); provided, that if the Borrowers
notify the Administrative Agent that the Borrowers wish to amend any covenant in ARTICLE VI
to eliminate the effect of any change in GAAP on the operation of such covenant (or if the
Administrative Agent notifies the Borrowers that the Required Lenders wish to amend ARTICLE
VI for such purpose), then the Borrowers’ compliance with such covenant shall be determined on
the basis of GAAP in effect immediately before the relevant change in GAAP became effective, until
either such notice is withdrawn or such covenant is amended in a manner satisfactory to the
Borrowers and the Required Lenders. The parties hereto hereby agree to negotiate in good faith to
amend such covenant to preserve the original intent thereof in light of such change to GAAP.
Furthermore, the Borrowers hereby agree that any election pursuant to FASB Statement No. 159 shall
be disregarded for all purposes of this Agreement, including, without limitation, for calculating
financial ratios herein and determining compliance with the financial covenants herein.



          (b) Notwithstanding anything to the contrary contained herein, financial ratios and other
financial calculations pursuant to this Agreement and any other Loan Document shall, following the
consummation of any Specified Transaction, be calculated on a Pro Forma Basis until the completion
of four full fiscal quarters following such Specified Transaction.



          Section 1.3. Terms Generally.



          The definitions of terms herein shall apply equally to the singular and plural forms of the
terms defined. Whenever the context may require, any pronoun shall include the corresponding
masculine, feminine and neuter forms. The words “include”, “includes” and “including” shall be
deemed to be followed by the phrase “without limitation”. The word “will” shall be construed to
have the same meaning and effect as the word “shall”. In the computation of periods of time from a
specified date to a later specified date, the word “from” means “from and including” and the word
“to” means “to but excluding”. Unless the context requires otherwise (i) any definition of or
reference to any agreement, instrument or other document herein shall be construed as referring to
such agreement, instrument or other document as it was originally executed or as it may from time
to time be amended, restated, supplemented or otherwise modified (subject to any restrictions on
such amendments, supplements or modifications set forth herein), (ii) any reference herein to any
Person shall be construed to include such Person’s successors and permitted assigns, (iii) the
words “hereof”, “herein” and



26









 




“hereunder” and words of similar import shall be construed to refer to this Agreement as a
whole and not to any particular provision hereof, (iv) all references to Articles, Sections,
Exhibits and Schedules shall be construed to refer to Articles, Sections, Exhibits and Schedules to
this Agreement; (v) any reference to any law or regulation herein shall, unless otherwise
specified, refer to such law or regulation as amended, modified or supplemented from time to time
and (vi) the words “asset” and “property” shall be construed to have the same meaning and effect
and to refer to any and all tangible and intangible assets and properties, including cash,
securities, accounts and contract rights. To the extent that any of the representations and
warranties contained in ARTICLE IV under this Agreement is qualified by “Material Adverse
Effect”, then the qualifier “in all material respects” contained in Section 8.1(c) shall
not apply. Unless otherwise indicated, all references to time are references to Eastern Standard
Time or Eastern Daylight Savings Time, as the case may be. Unless otherwise expressly provided
herein, all references to dollar amounts shall mean Dollars. In determining whether any
individual event, act, condition or occurrence of the foregoing types could reasonably be expected
to result in a Material Adverse Effect, notwithstanding that a particular event, act, condition or
occurrence does not itself have such effect, a Material Adverse Effect shall be deemed to have
occurred if the cumulative effect of such event, act, condition or occurrence and all other such
events, acts, conditions or occurrences of the foregoing types which have occurred could reasonably
be expected to result in a Material Adverse Effect.




ARTICLE II




AMOUNT AND TERMS OF THE COMMITMENTS



          Section 2.1. General Description of Facilities.



          Subject to and upon the terms and conditions herein set forth, the Lenders hereby establish in
favor of the Borrowers a revolving credit facility pursuant to which each Lender severally agrees
(to the extent of such Lender’s Revolving Commitment) to make Revolving Loans to the Borrowers in
accordance with Section 2.2, provided, that in no event shall the aggregate principal
amount of all outstanding Revolving Loans exceed at any time the Aggregate Revolving Commitment
Amount from time to time in effect.



          Section 2.2. Revolving Loans.



          Subject to the terms and conditions set forth herein, each Lender severally agrees to make
Revolving Loans, ratably in proportion to its Pro Rata Share, to the Borrowers, from time to time
during the Availability Period, in an aggregate principal amount outstanding at any time that will
not result in (a) such Lender’s Revolving Credit Exposure exceeding such Lender’s Revolving
Commitment or (b) the sum of the aggregate Revolving Credit Exposures of all Lenders exceeding the
Aggregate Revolving Commitment Amount. During the Availability Period, the Borrowers shall be
entitled to borrow, prepay and reborrow Revolving Loans in accordance with the terms and conditions
of this Agreement; provided, that the Borrowers may not borrow or reborrow should there
exist a Default or Event of Default.



27









 





          Section 2.3. Procedure for Revolving Borrowings.



          The Borrowers shall give the Administrative Agent written notice (or telephonic notice
promptly confirmed in writing) of each Revolving Borrowing substantially in the form of Exhibit
2.3 (a “Notice of Revolving Borrowing”) (x) prior to 11:00 a.m. one (1) Business Day
prior to the requested date of each Base Rate Borrowing and (y) prior to 11:00 a.m. three (3)
Business Days prior to the requested date of each Eurodollar Borrowing. Each Notice of Revolving
Borrowing shall be irrevocable and shall specify: (i) the aggregate principal amount of such
Borrowing, (ii) the date of such Borrowing (which shall be a Business Day), (iii) the Type of such
Revolving Loan comprising such Borrowing and (iv) in the case of a Eurodollar Borrowing, the
duration of the initial Interest Period applicable thereto (subject to the provisions of the
definition of Interest Period). Each Revolving Borrowing shall consist entirely of Base Rate Loans
or Eurodollar Loans, as the Borrowers may request. The aggregate principal amount of each
Eurodollar Borrowing shall be not less than $1,000,000 or a larger multiple of $100,000, and the
aggregate principal amount of each Base Rate Borrowing shall not be less than $1,000,000 or a
larger multiple of $100,000. At no time shall the total number of Eurodollar Borrowings
outstanding at any time exceed eight. Promptly following the receipt of a Notice of Revolving
Borrowing in accordance herewith, the Administrative Agent shall advise each Lender of the details
thereof and the amount of such Lender’s Revolving Loan to be made as part of the requested
Revolving Borrowing.



          Section 2.4. Funding of Borrowings.



          (a) Each Lender will make available each Loan to be made by it hereunder on the proposed date
thereof by wire transfer in immediately available funds by 11:00 a.m. to the Administrative Agent
at the Payment Office. The Administrative Agent will make such Loans available to the Borrowers by
promptly crediting the amounts that it receives, in like funds by the close of business on such
proposed date, to an account maintained by the Borrowers with the Administrative Agent or at the
Borrowers’ option, by effecting a wire transfer of such amounts to an account designated by the
Borrowers to the Administrative Agent.



          (b) Unless the Administrative Agent shall have been notified by any Lender prior to 5:00 p.m.
one (1) Business Day prior to the date of a Borrowing in which such Lender is to participate that
such Lender will not make available to the Administrative Agent such Lender’s share of such
Borrowing, the Administrative Agent may assume that such Lender has made such amount available to
the Administrative Agent on such date, and the Administrative Agent, in reliance on such
assumption, may make available to the Borrowers on such date a corresponding amount. If such
corresponding amount is not in fact made available to the Administrative Agent by such Lender on
the date of such Borrowing, the Administrative Agent shall be entitled to recover such
corresponding amount on demand from such Lender together with interest at the Federal Funds Rate
until the second Business Day after such demand and thereafter at the Base Rate. If such Lender
does not pay such corresponding amount forthwith upon the Administrative Agent’s demand therefor,
the Administrative Agent shall promptly notify the Borrowers, and the Borrowers shall immediately
pay such corresponding amount to the Administrative Agent together with interest at the rate
specified for such Borrowing. Nothing in this subsection shall be deemed to relieve any Lender
from its obligation to fund its



28









 




Pro Rata Share of any Borrowing hereunder or to prejudice any rights which the Borrowers may
have against any Lender as a result of any default by such Lender hereunder.




          (c) All Revolving Borrowings shall be made by the Lenders on the basis of their respective Pro
Rata Shares. No Lender shall be responsible for any default by any other Lender in its obligations
hereunder, and each Lender shall be obligated to make its Loans provided to be made by it
hereunder, regardless of the failure of any other Lender to make its Loans hereunder.



          Section 2.5. Interest Elections.



          (a) Each Borrowing initially shall be of the Type specified in the applicable Notice of
Borrowing, and in the case of a Eurodollar Borrowing, shall have an initial Interest Period as
specified in such Notice of Borrowing. Thereafter, the Borrowers may elect to convert such
Borrowing into a different Type or to continue such Borrowing, and in the case of a Eurodollar
Borrowing, may elect Interest Periods therefor, all as provided in this Section 2.6. The
Borrowers may elect different options with respect to different portions of the affected Borrowing,
in which case each such portion shall be allocated ratably among the Lenders holding Loans
comprising such Borrowing, and the Loans comprising each such portion shall be considered a
separate Borrowing.



          (b) To make an election pursuant to this Section 2.5, the Borrowers shall give the
Administrative Agent prior written notice (or telephonic notice promptly confirmed in writing) of
each Borrowing substantially in the form of Exhibit 2.5 attached hereto (a “Notice of
Conversion/Continuation”) that is to be converted or continued, as the case may be, (x) prior to
10:00 a.m. one (1) Business Day prior to the requested date of a conversion into a Base Rate
Borrowing and (y) prior to 11:00 a.m. three (3) Business Days prior to a continuation of or
conversion into a Eurodollar Borrowing. Each such Notice of Conversion/Continuation shall be
irrevocable and shall specify (i) the Borrowing to which such Notice of Conversion/Continuation
applies and if different options are being elected with respect to different portions thereof, the
portions thereof that are to be allocated to each resulting Borrowing (in which case the
information to be specified pursuant to clauses (iii) and (iv) shall be specified for each
resulting Borrowing); (ii) the effective date of the election made pursuant to such Notice of
Conversion/Continuation, which shall be a Business Day, (iii) whether the resulting Borrowing is to
be a Base Rate Borrowing or a Eurodollar Borrowing; and (iv) if the resulting Borrowing is to be a
Eurodollar Borrowing, the Interest Period applicable thereto after giving effect to such election,
which shall be a period contemplated by the definition of “Interest Period”. If any such Notice of
Conversion/Continuation requests a Eurodollar Borrowing but does not specify an Interest Period,
the Borrowers shall be deemed to have selected an Interest Period of one month. The principal
amount of any resulting Borrowing shall satisfy the minimum borrowing amount for Eurodollar
Borrowings and Base Rate Borrowings set forth in Section 2.3.



          (c) If, on the expiration of any Interest Period in respect of any Eurodollar Borrowing, the
Borrowers shall have failed to deliver a Notice of Conversion/ Continuation, then, unless such
Borrowing is repaid as provided herein, the Borrowers shall be deemed to have elected to convert
such Borrowing to a Base Rate Borrowing. No Borrowing may be converted into, or continued as, a
Eurodollar Borrowing if an Event of Default exists, unless the



29









 




Administrative Agent and the Required Lenders shall have otherwise consented in writing. No
conversion of any Eurodollar Loans shall be permitted except on the last day of the Interest Period
in respect thereof.




          (d) Upon receipt of any Notice of Conversion/Continuation, the Administrative Agent shall
promptly notify each Lender of the details thereof and of such Lender’s portion of each resulting
Borrowing.



          Section 2.6. Optional Reduction and Termination of Revolving Commitments.



          (a) Unless previously terminated, all Revolving Commitments shall terminate on the Maturity
Date.



          (b) Upon at least three (3) Business Days’ prior written notice (or telephonic notice promptly
confirmed in writing) to the Administrative Agent (which notice shall be irrevocable), the
Borrowers may reduce the Aggregate Revolving Commitments in part or terminate the Aggregate
Revolving Commitments in whole; provided, that (i) any partial reduction shall apply to
reduce proportionately and permanently the Revolving Commitment of each Lender, (ii) any partial
reduction pursuant to this Section 2.6 shall be in an amount of at least $1,000,000 and any
larger multiple of $500,000 and (iii) no such reduction shall be permitted which would reduce the
Aggregate Revolving Commitment Amount to an amount less than the outstanding Revolving Credit
Exposures of all Lenders.



          (c) The Borrowers may terminate (on a non-ratable basis) the unused amount of the Revolving
Commitment of a Defaulting Lender upon not less than five (5) Business Days’ prior notice to the
Administrative Agent (which will promptly notify the Lenders thereof), and in such event the
provisions of Section 2.20 will apply to all amounts thereafter paid by the Borrowers for the
account of any such Defaulting Lender under this Agreement (whether on account of principal,
interest, fees, indemnity or other amounts), provided that such termination will not be deemed to
be a waiver or release of any claim the Borrowers, the Administrative Agent or any Lender may have
against such Defaulting Lender.



          Section 2.7. Repayment of Loans.



          The outstanding principal amount of all Revolving Loans shall be due and payable (together
with accrued and unpaid interest thereon) on the Maturity Date.



          Section 2.8. Evidence of Indebtedness.



          (a) Each Lender shall maintain in accordance with its usual practice appropriate records
evidencing the Indebtedness of the Borrowers to such Lender resulting from each Loan made by such
Lender from time to time, including the amounts of principal and interest payable thereon and paid
to such Lender from time to time under this Agreement. The Administrative Agent shall maintain
appropriate records in which shall be recorded (i) the Revolving Commitment of each Lender, (ii)
the amount of each Loan made hereunder by each Lender, the Type thereof and the Interest Period
applicable thereto, (iii) the date of each continuation thereof pursuant to Section 2.5,
(iv) the date of each conversion of all or a portion



30









 




thereof to another Type pursuant to Section 2.5, (v) the date and amount of any
principal or interest due and payable or to become due and payable from the Borrowers to each
Lender hereunder in respect of such Loans and (vi) both the date and amount of any sum received by
the Administrative Agent hereunder from the Borrowers in respect of the Loans and each Lender’s Pro
Rata Share thereof. The entries made in such records shall be prima facie evidence of the
existence and amounts of the obligations of the Borrowers therein recorded; provided, that
the failure or delay of any Lender or the Administrative Agent in maintaining or making entries
into any such record or any error therein shall not in any manner affect the obligation of the
Borrowers to repay the Loans (both principal and unpaid accrued interest) of such Lender in
accordance with the terms of this Agreement.




          (b) At the request of any Lender at any time, the Borrowers agree that they will execute and
deliver to such Lender a Revolving Credit Note, payable to the order of such Lender.



          Section 2.9. Optional Prepayments.



          The Borrowers shall have the right at any time and from time to time to prepay any Borrowing,
in whole or in part, without premium or penalty, by giving irrevocable written notice (or
telephonic notice promptly confirmed in writing) to the Administrative Agent no later than (i) in
the case of prepayment of any Eurodollar Borrowing, 11:00 a.m. not less than three (3) Business
Days prior to any such prepayment and (ii) in the case of any prepayment of any Base Rate
Borrowing, not less than one Business Day prior to the date of such prepayment. Each such notice
shall be irrevocable and shall specify the proposed date of such prepayment and the principal
amount of each Borrowing or portion thereof to be prepaid. Upon receipt of any such notice, the
Administrative Agent shall promptly notify each affected Lender of the contents thereof and of such
Lender’s Pro Rata Share of any such prepayment. If such notice is given, the aggregate amount
specified in such notice shall be due and payable on the date designated in such notice, together
with accrued interest to such date on the amount so prepaid in accordance with Section
2.11(c); provided, that if a Eurodollar Borrowing is prepaid on a date other than the
last day of an Interest Period applicable thereto, the Borrowers shall also pay all amounts
required pursuant to Section 2.17. Each partial prepayment of any Loan shall be in an
amount that would be permitted in the case of an advance of a Revolving Borrowing of the same Type
pursuant to Section 2.3. Each prepayment of a Borrowing shall be applied ratably to the
Loans comprising such Borrowing.



          Section 2.10. Mandatory Prepayments.



          (a) Within 5 Business Days of receipt by a Borrower or any Restricted Subsidiary of proceeds
of any sale or disposition by such Borrower or such Restricted Subsidiary of any of their assets,
or receipt of proceeds of any casualty or condemnation loss of any Collateral or other assets of
any Borrower or any Restricted Subsidiary (excluding (i) sales permitted by Section 7.6(b),
Section 7.6(c), Section 7.6(d), Section 7.6(f), Section 7.6(g) and
Section 7.6(h), (ii) sales of assets the proceeds of which are reinvested in assets of a
kind then used or useful in the business of the Borrowers and their Restricted Subsidiaries within
180 days after such assets are sold or disposed of; provided, however, that the proceeds from the
sale of any Subsidiary, line of business, fixed assets or operating assets shall not be reinvested
in



31









 




Permitted Investments (other than Permitted Investments that are acquired in connection with a
Permitted Acquisition)), the Borrowers shall prepay the Loans in an amount equal to all such
proceeds, net of (i) commissions and other reasonable and customary transaction costs, fees and
expenses properly attributable to such transaction and payable by such Borrower in connection
therewith (in each case, paid to non-Affiliates) and (ii) Taxes paid or reasonably estimated to be
payable as a result thereof (after taking into account any tax sharing arrangements) and, with
respect to any such proceeds received by a Foreign Subsidiary, the amount of any Taxes that are
reasonably estimated to be payable by any applicable Affiliate as a result of the repatriation of
such proceeds; provided, however so long as no Event of Default has occurred and is continuing,
such net proceeds in an amount of up to $1,000,000 in any Fiscal Year shall not be required to
prepay the Loans. Any such prepayment under this clause (a) shall be applied in accordance with
paragraph (c) below.




          (b) If either Borrower or any of their Restricted Subsidiaries issues any debt or equity
securities (other than (i) Indebtedness permitted under Section 7.1, (ii) equity securities
issued by a Borrower or a Restricted Subsidiary of the Borrowers as all or a portion of the
consideration to be paid in connection with a Permitted Acquisition, (iii) proceeds from the
issuance of equity securities that are applied to the repayment of the Fortegra Preferred Stock and
Indebtedness outstanding under the Subordinated Debenture Purchase Agreement, (iv) equity
securities issued to Summit Partners its Affiliates, or other Persons co-investing in Fortegra with
Summit Partners, and (v) equity issued to senior management of the Borrowers), then no later than
the fifth Business Day following the date of receipt of the proceeds thereof, the Borrowers shall
prepay the Loans in an amount equal to the Mandatory Prepayment Percentage of all such proceeds,
net of (x) underwriting discounts and commissions and other reasonable costs paid to non-Affiliates
in connection therewith and (y) with respect to any such proceeds received by a Foreign Subsidiary,
the amount of any Taxes that are reasonably estimated to be payable by any applicable Affiliate as
a result of the repatriation of such proceeds. Any such prepayment under this clause (b) shall be
applied in accordance with Section 2.10(c).



          (c) Any prepayments made by the Borrowers pursuant to Section 2.10(a) or (b)
above shall be applied by the Administrative Agent as follows: first, to Administrative
Agent’s fees and reimbursable expenses then due and payable pursuant to any of the Loan Documents;
second, to all other fees and reimbursable expenses of the Lenders then due and payable
pursuant to any of the Loan Documents, pro rata to the Lenders based on their respective Pro Rata
Shares of such fees and expenses; third, to interest then due and payable on the Loans made
to Borrowers, pro rata to the Lenders based on their respective Revolving Commitments; and
fourth, to the principal balance of the Loans, until the same shall have been paid in full,
pro rata to the Lenders based on their respective Revolving Commitments. The Revolving Commitments
of the Lenders shall not be permanently reduced by the amount of any prepayments made pursuant to
this subsection (c).



          (d) If at any time the Revolving Credit Exposure of all Lenders exceeds the Aggregate
Revolving Commitment Amount, as reduced pursuant to Section 2.6 or otherwise, the Borrower
shall immediately repay Revolving Loans in an amount equal to such excess, together with all
accrued and unpaid interest on such excess amount and any amounts due under Section 2.17.
Each prepayment shall be applied first to the Base Rate Loans to the full extent thereof, and
second to Eurodollar Loans to the full extent thereof.



32









 





          Section 2.11. Interest on Loans.



          (a) The Borrowers shall pay interest on each Base Rate Loan at the Base Rate in effect from
time to time and on each Eurodollar Loan at the Adjusted LIBO Rate for the applicable Interest
Period in effect for such Loan, plus, in each case, the Applicable Margin in effect from time to
time.



          (b) Notwithstanding clauses (a) and (b) above, if an Event of Default has occurred and is
continuing, the Borrowers shall pay interest (“Default Interest”) with respect to all
Eurodollar Loans at the rate per annum equal to 2.0% above the otherwise applicable interest rate
for such Eurodollar Loans for the then-current Interest Period until the last day of such Interest
Period, and thereafter, and with respect to all Base Rate Loans and all other Obligations hereunder
(other than Loans), at the rate per annum equal to 2.0% above the otherwise applicable interest
rate for Base Rate Loans.



          (c) Interest on the principal amount of all Loans shall accrue from and including the date
such Loans are made to but excluding the date of any repayment thereof. Interest on all
outstanding Base Rate Loans shall be payable quarterly in arrears on the last day of each March,
June, September and December and on the Maturity Date. Interest on all outstanding Eurodollar
Loans shall be payable on the last day of each Interest Period applicable thereto, and, in the case
of any Eurodollar Loans having an Interest Period in excess of three months or 90 days,
respectively, on each day which occurs every three months or 90 days, as the case may be, after the
initial date of such Interest Period, and on the Maturity Date or the Maturity Date, as the case
may be. Interest on any Loan which is converted into a Loan of another Type or which is repaid or
prepaid shall be payable on the date of such conversion or on the date of any such repayment or
prepayment (on the amount repaid or prepaid) thereof. All Default Interest shall be payable on
demand.



          (d) The Administrative Agent shall determine each interest rate applicable to the Loans
hereunder and shall promptly notify the Borrowers and the Lenders of such rate in writing (or by
telephone, promptly confirmed in writing). Any such determination shall be conclusive and binding
for all purposes, absent manifest error.



          Section 2.12. Fees.



          (a) The Borrowers shall pay to the Administrative Agent for its own account fees in the
amounts and at the times previously agreed upon in writing by the Borrowers and the Administrative
Agent.



          (b) The Borrowers agree to pay to the Administrative Agent for the account of each Lender a
commitment fee, which shall accrue at the Applicable Percentage per annum (determined daily in
accordance with Schedule I) on the daily amount of the unused Revolving Commitment of such
Lender during the Availability Period.



          (c) The Borrowers shall pay to the Administrative Agent, for the ratable benefit of each
Lender, the upfront fee previously agreed upon by the Borrowers and the Administrative Agent, which
shall be due and payable on the Closing Date.



33









 





          (d) Accrued fees under paragraph (b) above shall be payable quarterly in arrears on the last
day of each March, June, September and December, commencing on June 30, 2010 and on the Maturity
Date (and if later, the date the Loans shall be repaid in their entirety); provided
further, that any such fees accruing after the Maturity Date shall be payable on demand.



          (e) Anything herein to the contrary notwithstanding, during such period as a Lender is a
Defaulting Lender, such Defaulting Lender will not be entitled to any fees accruing during such
period pursuant to clause (b) of this Section (without prejudice to the rights of the Lenders other
than Defaulting Lenders in respect of such fees), or any amendment fees hereafter offered to any
Lender, and the pro rata payment provisions of Section 2.19 will automatically be deemed
adjusted to reflect the provisions of this Section.



          Section 2.13. Computation of Interest and Fees.



          Interest hereunder based on the Administrative Agent’s prime lending rate shall be computed on
the basis of a year of 365 days (or 366 days in a leap year) and paid for the actual number of days
elapsed (including the first day but excluding the last day). All other computations of interest
and fees hereunder shall be made on the basis of a year of 360 days for the actual number of days
(including the first day but excluding the last day) occurring in the period for which such
interest or fees are payable (to the extent computed on the basis of days elapsed). Each
determination by the Administrative Agent of an interest amount or fee hereunder shall be made in
good faith and, except for manifest error, shall be final, conclusive and binding for all purposes.



          Section 2.14. Inability to Determine Interest Rates.



          If prior to the commencement of any Interest Period for any Eurodollar Borrowing,




     (i) the Administrative Agent shall have determined (which determination shall be
conclusive and binding upon the Borrowers) that, by reason of circumstances affecting the
relevant interbank market, adequate means do not exist for ascertaining LIBOR for such
Interest Period, or




     (ii) the Administrative Agent shall have received notice from the Required Lenders that
the Adjusted LIBO Rate does not adequately and fairly reflect the cost to such Lenders of
making, funding or maintaining their (or its, as the case may be) Eurodollar Loans for such
Interest Period,


the Administrative Agent shall give written notice (or telephonic notice, promptly confirmed in
writing) to the Borrowers and to the Lenders as soon as practicable thereafter. Until the
Administrative Agent shall notify the Borrowers and the Lenders that the circumstances giving rise
to such notice no longer exist, (i) the obligations of the Lenders to make Eurodollar Revolving
Loans or to continue or convert outstanding Loans as or into Eurodollar Loans shall be suspended
and (ii) all such affected Loans shall be converted into Base Rate Loans on the last day of the
then current Interest Period applicable thereto unless the Borrowers prepay such Loans in
accordance with this Agreement. Unless the Borrowers notify the Administrative Agent at least one
Business Day before the date of any Eurodollar Revolving Borrowing for which a






34









 







Notice of Revolving Borrowing or Notice of Conversion/Continuation has previously been given that
it elects not to borrow on such date, then such Revolving Borrowing shall be made as a Base Rate
Borrowing.




          Section 2.15. Illegality.



          If any Change in Law shall make it unlawful or impossible for any Lender to make, maintain or
fund any Eurodollar Loan and such Lender shall so notify the Administrative Agent, the
Administrative Agent shall promptly give notice thereof to the Borrowers and the other Lenders,
whereupon until such Lender notifies the Administrative Agent and the Borrowers that the
circumstances giving rise to such suspension no longer exist, the obligation of such Lender to make
Eurodollar Revolving Loans, or to continue or convert outstanding Loans as or into Eurodollar
Loans, shall be suspended. In the case of the making of a Eurodollar Revolving Borrowing, such
Lender’s Revolving Loan shall be made as a Base Rate Loan as part of the same Revolving Borrowing
for the same Interest Period and if the affected Eurodollar Loan is then outstanding, such Loan
shall be converted to a Base Rate Loan either (i) on the last day of the then current Interest
Period applicable to such Eurodollar Loan if such Lender may lawfully continue to maintain such
Loan to such date or (ii) immediately if such Lender shall determine that it may not lawfully
continue to maintain such Eurodollar Loan to such date. Notwithstanding the foregoing, the
affected Lender shall, prior to giving such notice to the Administrative Agent, designate a
different Applicable Lending Office if such designation would avoid the need for giving such notice
and if such designation would not otherwise be disadvantageous to such Lender in the good faith
exercise of its discretion.



          Section 2.16. Increased Costs.



          (a) If any Change in Law shall:




     (i) impose, modify or deem applicable any reserve, special deposit or similar
requirement that is not otherwise included in the determination of the Adjusted LIBO Rate
hereunder against assets of, deposits with or for the account of, or credit extended or
participated in by, any Lender (except any such reserve requirement reflected in the
Adjusted LIBO Rate); or




     (ii) [Intentionally Deleted.]; or




     (iii) impose on any Lender or the eurodollar interbank market any other condition, cost
or expense affecting this Agreement or any Eurodollar Loans made by such Lender (other than
one relating to Taxes);


and the result of any of the foregoing is to increase the cost to such Lender of making, converting
into, continuing or maintaining a Eurodollar Loan or to increase the cost to such Lender or to
reduce the amount received or receivable by such Lender hereunder (whether of principal, interest
or any other amount), then the Borrowers shall promptly pay, upon written notice from and demand by
such Lender on the Borrowers (with a copy of such notice and demand to the Administrative Agent),
to the Administrative Agent for the account of such Lender, within five Business Days after the
date of such notice and demand, additional amount or amounts sufficient






35









 







to compensate such Lender, as the case may be, for such additional costs incurred or reduction
suffered.




          (b) If any Lender shall have determined that on or after the date of this Agreement any Change
in Law regarding capital requirements has or would have the effect of reducing the rate of return
on such Lender’s capital (or on the capital of the Parent Company of such Lender) as a consequence
of its obligations hereunder to a level below that which such Lender or the Parent Company of such
Lender could have achieved but for such Change in Law (taking into consideration such Lender’s
policies or the policies of the Parent Company of such Lender with respect to capital adequacy)
then, from time to time, within five (5) Business Days after receipt by the Borrowers of written
demand by such Lender (with a copy thereof to the Administrative Agent), the Borrowers shall pay to
such Lender such additional amounts as will compensate such Lender or the Parent Company of such
Lender for any such reduction suffered.



          (c) A certificate of a Lender setting forth the amount or amounts necessary to compensate such
Lender or the Parent Company of such Lender, specified in paragraph (a) or (b) of this Section
2.16 shall be delivered to the Borrowers (with a copy to the Administrative Agent) and shall be
conclusive, absent manifest error. The Borrowers shall pay any such Lender, as the case may be,
such amount or amounts within 10 days after receipt thereof.



          (d) Failure or delay on the part of any Lender to demand compensation pursuant to this
Section 2.16 shall not constitute a waiver of such Lender’s right to demand such
compensation.



          Section 2.17. Funding Indemnity.



          In the event of (a) the payment of any principal of a Eurodollar Loan other than on the last
day of the Interest Period applicable thereto (including as a result of an Event of Default), (b)
the conversion or continuation of a Eurodollar Loan other than on the last day of the Interest
Period applicable thereto, (c) the failure by the Borrowers to borrow, prepay, convert or continue
any Eurodollar Loan on the date specified in any applicable notice (regardless of whether such
notice is withdrawn or revoked), or (d) a reallocation of Loans among the Lenders by the
Administrative Agent pursuant to Section 2.21(f), then, in any such event, the Borrowers shall
compensate each Lender, within five (5) Business Days after written demand from such Lender, for
any loss, cost or expense attributable to such event. In the case of a Eurodollar Loan, such loss,
cost or expense shall be deemed to include an amount determined by such Lender to be the excess, if
any, of (A) the amount of interest that would have accrued on the principal amount of such
Eurodollar Loan if such event had not occurred at the Adjusted LIBO Rate applicable to such
Eurodollar Loan for the period from the date of such event to the last day of the then current
Interest Period therefor (or in the case of a failure to borrow, convert or continue, for the
period that would have been the Interest Period for such Eurodollar Loan) over (B) the amount of
interest that would accrue on the principal amount of such Eurodollar Loan for the same period if
the Adjusted LIBO Rate were set on the date such Eurodollar Loan was prepaid or converted or the
date on which the Borrowers failed to borrow, convert or continue such Eurodollar Loan. A
certificate as to any additional amount payable under this Section 2.16 submitted to the
Borrowers by any Lender (with a copy to the Administrative Agent) shall be conclusive, absent
manifest error.



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          Section 2.18. Taxes.



          (a) Any and all payments by or on account of any obligation of the Borrowers hereunder or
under any other Loan Document shall be made free and clear of and without deduction for any
Indemnified Taxes or Other Taxes; provided, that if the Borrowers shall be required to
deduct any Indemnified Taxes or Other Taxes from such payments, then (i) the sum payable shall be
increased as necessary so that after making all required deductions (including deductions
applicable to Indemnified Taxes and Other Taxes) the Administrative Agent or any Lender (as the
case may be) shall receive an amount equal to the sum it would have received had no such deductions
been made, (ii) the Borrowers shall make such deductions and (iii) the Borrowers shall pay the full
amount deducted to the relevant Governmental Authority in accordance with applicable law.



          (b) In addition, the Borrowers shall pay, without duplication, any Other Taxes to the relevant
Governmental Authority in accordance with applicable law.



          (c) The Borrowers shall indemnify the Administrative Agent and each Lender, twenty (20)
Business Days after written demand therefor, for the full amount of any Indemnified Taxes or Other
Taxes paid by the Administrative Agent or such Lender, as the case may be, on or with respect to
any payment by or on account of any obligation of the Borrowers hereunder (including Indemnified
Taxes or Other Taxes imposed or asserted on or attributable to amounts payable under this
Section 2.18) and any penalties, interest and reasonable expenses arising therefrom or with
respect thereto, whether or not such Indemnified Taxes or Other Taxes were correctly or legally
imposed or asserted by the relevant Governmental Authority. A certificate as to the amount of such
payment delivered to the Borrowers by a Lender, or by the Administrative Agent on its own behalf or
on behalf of a Lender, shall be conclusive absent manifest error; provided, however, that as soon
as practicable after any payment of such Indemnified Taxes by such Lender or the Administrative
Agent to any Governmental Authority, such Lender or the Administrative Agent shall deliver to the
Borrowers, as soon as reasonably practicable, the original or a certified copy of a receipt issued
by such authority evidencing such payment, a copy of the return reporting such payment or other
evidence of such payment reasonably satisfactory to the Borrowers. The Lender or the
Administrative Agent shall cooperate with any reasonable request by the Borrowers to challenge the
assertion by any Governmental Authority of any liability for Indemnified Taxes or Other Taxes.



          (d) As soon as practicable after any payment of Indemnified Taxes or Other Taxes by the
Borrowers to a Governmental Authority, the Borrowers shall, to the extent available to the
Borrowers, deliver to the Administrative Agent the original or a certified copy of a receipt issued
by such Governmental Authority evidencing such payment, a copy of the return reporting such payment
or other evidence of such payment reasonably satisfactory to the Administrative Agent.



          (e) Any Lender that is entitled to an exemption from or reduction of withholding tax under the
Code or any treaty to which the United States is a party, with respect to payments under the Loan
Documents shall deliver to the Borrowers (with a copy to the Administrative Agent), at the time or
times prescribed by applicable law, such properly completed and executed documentation prescribed
by applicable law or reasonably requested by



37









 




the Borrowers as will permit such payments to be made without withholding or at a reduced
rate. Without limiting the generality of the foregoing, each Foreign Lender agrees that it will
deliver to the Administrative Agent and the Borrowers (or in the case of a Participant, to the
Lender from which the related participation shall have been purchased and to the Administrative
Agent), as appropriate, two (2) duly completed originals of (i) Internal Revenue Service Form W-8
ECI, or any successor form thereto, certifying that the payments received from the Borrowers under
the Loan Documents are effectively connected with such Foreign Lender’s conduct of a trade or
business in the United States; or (ii) Internal Revenue Service Form W-8 BEN, or any successor form
thereto, certifying that such Foreign Lender is entitled to benefits under an income tax treaty to
which the United States is a party which eliminates or reduces the rate of withholding tax on
payments of interest; or (iii) Internal Revenue Service Form W-8 BEN, or any successor form
prescribed by the Internal Revenue Service, together with a certificate (A) establishing that the
payment to the Foreign Lender qualifies as “portfolio interest” exempt from U.S. withholding tax
under Code section 871(h) or 881(c), and (B) stating that (1) the Foreign Lender is not a bank for
purposes of Code section 881(c)(3)(A), or the obligation of the Borrowers hereunder is not,
with respect to such Foreign Lender, a loan agreement entered into in the ordinary course of its
trade or business, within the meaning of that section; (2) the Foreign Lender is not a 10%
shareholder of the Borrowers within the meaning of Code section 871(h)(3) or 881(c)(3)(B); and (3)
the Foreign Lender is not a controlled foreign corporation that is related to the Borrowers within
the meaning of Code section 881(c)(3)(C); or (iv) such other Internal Revenue Service forms as may
be applicable to the Foreign Lender, including Forms W-8 IMY (including all required statements) or
W-8 EXP. Each non-Foreign Lender agrees that it will deliver to the Administrative Agent and the
Borrowers (or in the case of a Participant, to the Lender from which the related participation
shall have been purchased and to the Administrative Agent), as appropriate, two (2) duly completed
originals of Form W-9, or any successor form thereto, certifying that such non-Foreign Lender is
entitled to an exemption from U.S. backup withholding tax. Each Lender shall deliver to the
Borrowers and the Administrative Agent such forms required to be delivered to it by this Section
2.18(e) on or before the date that it becomes a party to this Agreement (or in the case of a
Participant, on or before the date such Participant purchases the related participation). In
addition, each Lender shall deliver to the Borrowers and the Administrative Agent such forms
promptly upon (i) the obsolescence, expiration, or invalidity of any form previously delivered by
such Lender and (ii) the reasonable request from a Borrower or the Administrative Agent from time
to time. Each such Lender shall promptly notify the Borrowers and the Administrative Agent at any
time that it determines that it is no longer in a position to provide any previously delivered
certificate to the Borrowers (or any other form of certification adopted by the Internal Revenue
Service for such purpose).




          (f) If the Administrative Agent or a Lender determines, in its sole discretion, that it has
received a refund of any Indemnified Taxes or Other Taxes as to which it has been indemnified by a
Borrower or with respect to which the Borrowers have paid additional amounts pursuant to this
Section 2.18, the Administrative Agent or such Lender shall pay to the Borrowers an amount
equal to such refund (but only to the extent of indemnity payments made, or additional amounts
paid, by the Borrowers under this Section 2.18 with respect to the Indemnified Taxes or
Other Taxes giving rise to such refund), net of all out-of-pocket expenses of the Administrative
Agent or such Lender and without interest (other than any interest paid by the relevant
Governmental Authority with respect to such refund); provided that the Borrowers, upon the request
of the Administrative Agent or such Lender, agree to repay the amount paid



38









 




over to the Borrowers (plus any penalties, interest or other charges imposed by the relevant
authority) to the Administrative Agent or such Lender in the event the Administrative Agent or such
Lender is required to repay such refund to such authority. This paragraph shall not be construed to
require the Administrative Agent or any Lender to make available its tax returns (or any other
information that it deems confidential) to the Borrowers or any other person.




          Section 2.19. Payments Generally; Pro Rata Treatment; Sharing of Set-offs.



          (a) The Borrowers shall make each payment required to be made by them hereunder (whether of
principal, interest or fees, or of amounts payable under Section 2.16, Section 2.17
or Section 2.18, or otherwise) prior to 12:00 noon on the date when due, in immediately
available funds, free and clear of any defenses, rights of set-off, or counterclaim. Any amounts
received after such time on any date may, in the discretion of the Administrative Agent, be deemed
to have been received on the next succeeding Business Day for purposes of calculating interest
thereon. All such payments shall be made to the Administrative Agent at the Payment Office, except
that payments pursuant to Section 2.16, Section 2.17 and Section 2.18 and
Section 10.3 shall be made directly to the Persons entitled thereto. The Administrative
Agent shall distribute any such payments received by it for the account of any other Person to the
appropriate recipient promptly following receipt thereof. If any payment hereunder shall be due on
a day that is not a Business Day, the date for payment shall be extended to the next succeeding
Business Day, and, in the case of any payment accruing interest, interest thereon shall be made
payable for the period of such extension. All payments hereunder shall be made in Dollars.



          (b) If at any time insufficient funds are received by and available to the Administrative
Agent to pay fully all amounts of principal, interest and fees then due hereunder, such funds shall
be applied (i) first, to the fees and reimbursable expenses of the Administrative Agent then due
and payable pursuant to any of the Loan Documents, (ii) second, towards payment of interest and
fees then due hereunder, ratably among the parties entitled thereto in accordance with the amounts
of interest and fees then due to such parties, (iii) third, towards payment of principal then due
hereunder, ratably among the parties entitled thereto in accordance with the amounts of principal
then due to such parties, and (iv) last, towards payment of all other Obligations then due, ratably
among the parties entitled thereto in accordance with the amounts of such Obligations then due to
such parties.



          (c) If any Lender shall, by exercising any right of set-off or counterclaim or otherwise,
obtain payment in respect of any principal of or interest on any of its Loans that would result in
such Lender receiving payment of a greater proportion of the aggregate amount of its Loans and
accrued interest thereon than the proportion received by any other Lender, then the Lender
receiving such greater proportion shall purchase (for cash at face value) participations in the
Loans of other Lenders to the extent necessary so that the benefit of all such payments shall be
shared by the Lenders ratably in accordance with the aggregate amount of principal of and accrued
interest on their respective Loans; provided, that (i) if any such participations are
purchased and all or any portion of the payment giving rise thereto is recovered, such
participations shall be rescinded and the purchase price restored to the extent of such recovery,
without interest, and (ii) the provisions of this paragraph shall not be construed to apply to any



39









 




payment made by the Borrowers pursuant to and in accordance with the express terms of this
Agreement or any payment obtained by a Lender as consideration for the assignment of or sale of a
participation in any of its Loans to any assignee or participant, other than to the Borrowers or
any Subsidiary or Affiliate thereof (as to which the provisions of this paragraph shall apply).
The Borrowers consent to the foregoing and agree, to the extent they may effectively do so under
applicable law, that any Lender acquiring a participation pursuant to the foregoing arrangements
may exercise against the Borrowers rights of set-off and counterclaim with respect to such
participation as fully as if such Lender were a direct creditor of the Borrowers in the amount of
such participation.




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



          Section 2.20. Payments to Defaulting Lenders.



          Any amount paid by the Borrower for the account of a Defaulting Lender under this Agreement
(whether on account of principal, interest, fees, indemnity payments or other amounts) will not be
paid or distributed to such Defaulting Lender, but will instead be retained by the Administrative
Agent in a segregated non-interest bearing account until the termination of the Revolving
Commitments at which time the funds in such account will be applied by the Administrative Agent, to
the fullest extent permitted by law, in the following order of priority: first to the
payment of any amounts owing by such Defaulting Lender to the Administrative Agent under this
Agreement, second to the payment of post-default interest and then current interest due and
payable to the Non-Defaulting Lenders, ratably among them in accordance with the amounts of such
interest then due and payable to them, third to the payment of fees then due and payable to
the Non-Defaulting Lenders hereunder, ratably among them in accordance with the amounts of such
fees then due and payable to them, fourth to the ratable payment of other amounts then due
and payable to the Non-Defaulting Lenders, and fifth to pay amounts owing under this
Agreement to such Defaulting Lender or as a court of competent jurisdiction may otherwise direct.



          Section 2.21. Increase of Revolving Commitments; Additional Lenders.



          (a) So long as no Default or Event of Default has occurred and is continuing, from time to
time after the Closing Date, Borrowers may, upon at least 30 days’ written notice (other than in
respect of increases by the Existing Lender) to the Administrative Agent (who



40









 




shall promptly provide a copy of such notice to each Lender), propose to increase the
Aggregate Revolving Commitments by an amount not to exceed $50,000,000 (the amount of any such
increase, the “Additional Commitment Amount”). Each Lender shall have the right for a
period of 15 days (or 3 days in respect of increases by the Existing Lender) following receipt of
such notice, to elect by written notice to the Borrowers and the Administrative Agent, to increase
its Revolving Commitment by a principal amount equal to its Pro Rata Share of the Additional
Commitment Amount. No Lender (or any successor thereto) shall have any obligation to increase its
Revolving Commitment or its other obligations under this Agreement and the other Loan Documents,
and any decision by a Lender to increase its Revolving Commitment shall be made in its sole
discretion independently from any other Lender.




          (b) If any Lender shall not elect to increase its Revolving Commitment pursuant to subsection
(a) of this Section 2.21 or shall fail to respond to the Borrowers’ requested increase
pursuant to the time period set forth in such subsection , the Borrowers may designate another bank
or other financial institution (which may be, but need not be, one or more of the existing Lenders)
which at the time agrees to, in the case of any such Person that is an existing Lender, increase
its Revolving Commitment and in the case of any other such Person (an “Additional Lender”),
become a party to this Agreement; provided, however, that any new bank or financial
institution other than the Existing Lender must be acceptable to the Administrative Agent, which
acceptance will not be unreasonably withheld or delayed. The sum of the increases in the Revolving
Commitments of the existing Lenders pursuant to this subsection (b) plus the Revolving Commitments
of the Additional Lenders shall not in the aggregate exceed the unsubscribed amount of the
Additional Commitment Amount.



          (c) The Additional Commitment Amount of any Lender or any Additional Lender shall mature no
earlier than the Maturity Date and the combination of the interest rate applicable to, and any
upfront fees (other than arrangement fees payable to the Arranger, if any) payable in connection
with, such Additional Commitment Amount (as agreed by the Administrative Agent and Borrowers) shall
not be greater than the pricing (including interest and fees) of the existing Revolving Commitments
unless the pricing of the existing Revolving Commitments is increased in a manner determined by the
Administrative Agent to cause the pricing of the existing Revolving Commitments to equal the
pricing of the Additional Commitment Amount.



          (d) An increase in the aggregate amount of the Revolving Commitments pursuant to this
Section 2.21 shall become effective upon the receipt by the Administrative Agent of:




     (i) a supplement or joinder in form and substance satisfactory to the Administrative
Agent executed by the Borrowers and by each Additional Lender and by each other Lender whose
Revolving Commitment is to be increased, setting forth the new Revolving Commitments of such
Lenders and setting forth the agreement of each Additional Lender to become a party to this
Agreement and to be bound by all the terms and provisions hereof, together with Notes
evidencing such increase in the Revolving Commitments,



41









 






     (ii) evidence of appropriate corporate authorization on the part of the Borrowers with
respect to the increase in the Revolving Commitments, and




     (iii) a certificate of a Responsible Officer of the Borrowers to the effect that (A)
the conditions set forth in Section 3.2(a), (b) and (c) will be
satisfied before and after giving effect to the increase of the Revolving Commitment
provided for under this Section and (B) after giving effect to such increase and the payment
of any related fees, the Borrower would be in compliance on a Pro Forma Basis with the
covenants set forth in ARTICLE VI (after giving effect to any Borrowings to be made
on the date that the increase in the Revolving Commitments becomes effective).



          (e) Upon the acceptance of any such agreement by the Administrative Agent, the Aggregate
Revolving Commitment Amount shall automatically be increased by the amount of the Revolving
Commitments added through such agreement and Schedule II shall automatically be deemed
amended to reflect the Revolving Commitments of all Lenders after giving effect to the addition of
such Revolving Commitments.



          (f) Upon any increase in the aggregate amount of the Revolving Commitments pursuant to this
Section 2.21 that is not pro rata among all Lenders, the Administrative Agent shall
reallocate on its books the Loans then outstanding among the Lenders so that, after giving effect
to such reallocation, all outstanding Loans are held by the Lenders in proportion to their
respective Revolving Commitments after giving effect to such increase. In the event that any of
the outstanding Loans are Eurodollar Loans, the Borrowers may be required by an affected Lender to
indemnify such Lender pursuant to Section 2.17.



          Section 2.22. Mitigation of Obligations.



          If any Lender requests compensation under Section 2.16, or if the Borrowers are
required to indemnify or pay any additional amount to any Lender or any Governmental Authority for
the account of any Lender pursuant to Section 2.18, then such Lender shall use reasonable
efforts to designate a different lending office for funding or booking its Loans hereunder or to
assign its rights and obligations hereunder to another of its offices, branches or affiliates, if
such designation or assignment (i) would eliminate or reduce amounts payable under Section
2.16 or Section 2.18, as the case may be, in the future and (ii) in the sole judgment
of such Lender, would not subject such Lender to any unreimbursed cost or expense and would not
otherwise be disadvantageous to such Lender. The Borrowers hereby agree to pay all costs and
expenses incurred by any Lender in connection with such designation or assignment.



          Section 2.23. Replacement of Lenders.



          (a) If any Lender requests compensation under Section 2.16, or (b) if the Borrowers
are required to indemnify or pay any additional amount to any Lender or any Governmental Authority
for the account of any Lender pursuant to Section 2.18, or (c) if any Lender is a
Defaulting Lender, or (d) if, in connection with any proposed amendment, waiver, or consent, the
consent of all of the Lenders, or all of the Lenders directly and adversely affected thereby, is
required pursuant to Section 10.2, and any such Lender refuses to consent to such amendment, waiver
or consent as to which the Required Lenders have consented, then the



42









 




Borrowers may, at their sole expense and effort (but without prejudice to any rights or
remedies the Borrowers may have against such Defaulting Lender), upon notice to such Lender and the
Administrative Agent, require such Lender to assign and delegate, without recourse (in accordance
with and subject to the restrictions set forth in Section 10.4(b)) all its interests,
rights and obligations under this Agreement to an assignee that shall assume such obligations
(which assignee may be another Lender but excluding any Defaulting Lender); provided, that (i) the
Borrowers shall have received the prior written consent of the Administrative Agent, which consent
shall not be unreasonably withheld, (ii) such Lender shall have received payment of an amount equal
to the outstanding principal amount of all Loans owed to it, accrued interest thereon, accrued fees
and all other amounts payable to it hereunder, from the assignee (in the case of such outstanding
principal and accrued interest) and from the Borrowers (in the case of all other amounts) and (iii)
in the case of a claim for compensation under Section 2.16 or payments required to be made
pursuant to Section 2.18, such assignment will result in a reduction in such compensation
or payments. A Lender shall not be required to make any such assignment and delegation if, prior
thereto, as a result of a waiver by such Lender or otherwise, the circumstances entitling the
Borrowers to require such assignment and delegation cease to apply.




ARTICLE III




CONDITIONS PRECEDENT TO LOANS



          Section 3.1. Conditions To Effectiveness.



          The obligations of the Lenders to make the initial Loans hereunder shall not become effective
until the date on which each of the following conditions is satisfied (or waived in accordance with
Section 10.2).



          (a) The Administrative Agent shall have received payment of all fees, expenses and other
amounts due and payable on or prior to the Closing Date, including reimbursement or payment of all
out-of-pocket expenses (including reasonable fees, charges and disbursements of counsel to the
Administrative Agent to the extent received on or prior to the Closing Date) required to be
reimbursed or paid by the Borrowers hereunder, under any other Loan Document and under any
agreement with the Administrative Agent or the Arranger (including the Fee Letter).



          (b) The Administrative Agent (or its counsel) shall have received the following, each to be in
form and substance reasonably satisfactory to the Administrative Agent:




     (i) a counterpart of this Agreement signed by or on behalf of each party hereto or
written evidence satisfactory to the Administrative Agent (which may include telecopy
transmission of a signed signature page of this Agreement) that such party has signed a
counterpart of this Agreement;




     (ii) duly executed Revolving Credit Notes payable to each Lender;



43









 






     (iii) the Subsidiary Guaranty Agreement duly executed by each Subsidiary Loan Party;




     (iv) copies of duly executed payoff letters, in form and substance satisfactory to
Administrative Agent, executed by the Existing Lender, together with (a) UCC-3 or other
appropriate termination statements, in form and substance reasonably satisfactory to the
Administrative Agent, releasing all liens of the Existing Lender upon any of the personal
property of the Borrowers and their Subsidiaries, (b) cancellations and releases, in form
and substance reasonably satisfactory to the Administrative Agent, releasing all liens of
the Existing Lender upon any of the real property of the Borrowers and their Subsidiaries,
and (c) any other releases, terminations or other documents reasonably required by the
Administrative Agent to evidence the payoff of Indebtedness owed to the Existing Lender;




     (v) the Pledge Agreement and the Security Agreement, each duly executed by the Loan
Parties party thereto;




     (vi) a certificate of the Secretary or Assistant Secretary of each Loan Party
substantially in the form of Exhibit 3.1(b)(vi), attaching and certifying copies of
its bylaws and of the resolutions of its board of directors, or partnership agreement or
limited liability company agreement, or comparable organizational documents and
authorizations, authorizing the execution, delivery and performance of the Loan Documents to
which it is a party and certifying the name, title and true signature of each officer of
such Loan Party executing the Loan Documents to which it is a party;




     (vii) certified copies of the articles or certificate of incorporation, certificate of
organization or limited partnership, or other registered organizational documents of each
Loan Party, together with certificates of good standing or existence, as may be available
from the Secretary of State of (x) the jurisdiction of organization of such Loan Party and
(y) each other jurisdiction where such Loan Party is required to be qualified to do business
as a foreign entity and where the failure to be so qualified could reasonably be expected to
have a Material Adverse Effect;




     (viii) a favorable written opinion addressed to the Administrative Agent and each other
Lender of (x) Weil, Gotshal & Manges LLP, as special counsel to the Loan Parties, and (y)
Kilpatrick Stockton LLP, as special Georgia counsel to the Loan Parties, and covering such
matters relating to the Loan Parties, the Loan Documents and the transactions contemplated
therein as the Administrative Agent or the Required Lenders shall reasonably request;




     (ix) a certificate substantially in the form of Exhibit 3.1(b)(ix), dated as of
the Closing Date and signed by a Responsible Officer, certifying that, after giving effect
to the funding of any initial Loan (x) no Default or Event of Default exists, (y) all
representations and warranties of each Loan Party set forth in the Loan Documents are true
and correct in all material respects (except where such representations and warranties that
are qualified by materiality, in which such case such representations and warranties shall
be true and correct without qualification) and (z) since the date of the financial



44









 







statements of the Borrowers described in Section 4.4, there shall have been no
change which has had or could reasonably be expected to have a Material Adverse Effect;




     (x) a duly executed Notice of Borrowing;




     (xi) (a) copies of the audited consolidated financial statements for Borrowers and
their Subsidiaries for the Fiscal Year ending December 31, 2009; (b) copies of the audited
financial statements for the Unrestricted Subsidiary for the Fiscal Year ending December 31,
2009; and (c) the budget, income and expense projections of the Borrowers and their
Subsidiaries prepared on a quarterly basis for the Fiscal Year ending December 31, 2010;




     (xii) UCC, tax, judgment and bankruptcy lien search results with respect to each Loan
Party from all appropriate jurisdictions and filing offices;




     (xiii) certified copies of all agreements, indentures or notes governing the terms of
any Material Indebtedness and all other Material Agreements to which any Loan Party or any
Restricted Subsidiary or any of its assets are bound; notwithstanding the foregoing, the
Borrowers shall also cause to be delivered all agreements, documents and instruments
relating to the financing of the Unrestricted Subsidiary; provided, that the term “Material
Indebtedness” as used in this clause (xiii) only, shall refer to Material Indebtedness that
individually, and not in the aggregate, exceeds $5,000,000;




     (xiv) A Trademark Security Agreement executed by Fortegra and LOTSolutions, Inc., in
form and substance reasonably satisfactory to the Administrative Agent;




     (xv) the Borrowers shall use their commercially reasonable efforts to deliver to the
Administrative Agent either (x) a leasehold mortgage on behalf of the Lenders on the Florida
Headquarters, which shall be acknowledged by the owner of such headquarters building, and,
if reasonably requested by the Administrative Agent, a local counsel opinion, or (y) a
landlord waiver and agreement with respect to the Florida Headquarters, related to, among
other things, the Collateral located at the Florida Headquarters and the Lender’s access
rights to such Collateral;




     (xvi) certificates of insurance issued on behalf of insurers of the Borrowers and all
other Loan Parties, describing in reasonable detail the types and amounts of insurance
(property and liability) maintained by the Borrowers and all other Loan Parties, naming the
Administrative Agent as additional insured on liability policies and lender loss payee
endorsements for property and casualty policies.


Without limiting the generality of the provisions of this Section 3.1, for purposes of
determining compliance with the conditions specified in this Section 3.1, each Lender that
has signed this Agreement shall be deemed to have consented to, approved or accepted or to be
satisfied with, each document or other matter required hereunder to be consented to or approved by
or acceptable or satisfactory to a Lender unless the Administrative Agent shall have received
notice from such Lender prior to the proposed Closing Date specifying its objection thereto.







45









 








          (c) The Administrative Agent shall have received (i) the certificates, if any, representing
the shares of Capital Stock pledged pursuant to the Pledge Agreement and the Security Agreement,
together with an undated stock power for each such certificate executed in blank by a duly
authorized officer of the pledgor thereof and (ii) each promissory note pledged to the
Administrative Agent pursuant to the Security Agreement endorsed in blank (or accompanied by an
executed transfer form in blank reasonably satisfactory to the Administrative Agent) by the pledgor
thereof.



          (d) All consents, approvals and authorizations required to be obtained under any Requirement
of Law, or by any Contractual Obligation of each Loan Party, in connection with the execution,
delivery, performance, validity and enforceability of the Loan Documents or any of the transactions
contemplated thereby shall be in full force and effect and all applicable waiting periods shall
have expired, and no investigation or inquiry by any Governmental Authority regarding this
Agreement or any transaction being financed with the proceeds hereof shall be ongoing; certified
copies of all such consents, approvals and authorizations, if reasonably requested by the
Administrative Agent, shall have been delivered to the Administrative Agent.



          (e) All actions necessary to establish to the Administrative Agent’s satisfaction that the
Liens granted pursuant to the Security Documents will be first priority perfected Liens on the
Collateral (subject only to Permitted Liens) shall have been taken; provided, that the Borrowers
will not be required to perfect a Lien in Collateral to the extent that the burden or cost of
perfecting such a Lien would outweigh the benefit of the security afforded thereby as determined by
the Borrowers and the Administrative Agent and provided, further, that with respect to any
Collateral the Lien in which may not be perfected by filing of a UCC financing statement, if the
perfection of the security interest in such Collateral may not be accomplished prior to the Closing
Date after use of commercially reasonable efforts to do so, then delivery of documents and
instruments for perfection of such security interest shall not constitute a condition precedent
under Section 3.1 so long as the Borrowers agree to deliver or cause to be delivered such documents
and instruments, and take or cause to be taken such other actions as may be required by the
Administrative Agent to perfect such security interests, and the Borrowers further agree to take or
cause to be taken any other actions set forth on Schedule 3.1, within the time frames set forth on
Schedule 3.1, and the failure to deliver such documents or instruments or to take or cause to be
taken such other actions within such time frame shall be an immediate and automatic Event of
Default.



          (f) The Indebtedness under the Subordinated Debenture Purchase Agreement shall have been
either (i) paid in full with the proceeds of Indebtedness permitted by this Agreement (other than
the proceeds of Loans); provided that the maturity of such Indebtedness shall not be earlier than
180 days after the third anniversary of the Closing Date, or (ii) the maturity date of such
Indebtedness shall have been otherwise extended to no earlier than 180 days after the third
anniversary of the Closing Date.



          Section 3.2. Each Credit Event.



          The obligation of each Lender to make a Loan on the occasion of any Borrowing is subject to
the satisfaction of the following conditions:



46









 





          (a) at the time of and immediately after giving effect to such Borrowing, no Default or Event
of Default shall exist;



          (b) at the time of and immediately after giving effect to such Borrowing, all representations
and warranties of each Loan Party set forth in the Loan Documents shall be true and correct in all
material respects on and as of the date of such Borrowing before and after giving effect thereto,
(except (i) for those representations and warranties that are qualified by materiality, in which
such case such representations and warranties shall be true and correct without qualification and
(ii) to the extent that such representation or warranty expressly relates to an earlier date (in
which event such representation and warranty shall be true and correct in all material respects as
of such earlier date));



          (c) since the date of the financial statements of the Borrowers described in Section
4.4, there shall have been no change which has had or could reasonably be expected to have a
Material Adverse Effect; and



          (d) the Borrowers shall have delivered the required Notice of Borrowing.



          Each Borrowing shall be deemed to constitute a representation and warranty by the Borrowers on
the date thereof as to the matters specified in paragraphs (a), (b) and (c) of this Section
3.2.



          Section 3.3. Delivery of Documents.



          All of the Loan Documents, certificates, legal opinions and other documents and papers
referred to in this ARTICLE III, unless otherwise specified, shall be delivered to the
Administrative Agent for the account of each of the Lenders and, except for the Notes, in
sufficient counterparts or copies for each of the Lenders and shall be in form and substance
reasonably satisfactory in all respects to the Administrative Agent.



ARTICLE IV




REPRESENTATIONS AND WARRANTIES



          The Borrowers represent and warrant to the Administrative Agent and each Lender as follows:



          Section 4.1. Existence; Power.



          Each Borrower and each of their Restricted Subsidiaries (i) is duly organized, validly
existing and in good standing (if applicable) as a corporation, partnership or limited liability
company under the laws of the jurisdiction of its organization, (ii) has all requisite power and
authority to carry on its business as now conducted, and (iii) is duly qualified to do business,
and is in good standing (if applicable), in each jurisdiction where such qualification is required,
except, in the case of either of clauses (ii) or (iii), where the failure to do so could not
reasonably be expected to result in a Material Adverse Effect.



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          Section 4.2. Organizational Power; Authorization.



          The execution, delivery and performance by each Loan Party of the Loan Documents to which it
is a party are within such Loan Party’s organizational powers and have been duly authorized by all
necessary organizational, and if required, shareholder, partner or member, action. This Agreement
has been duly executed and delivered by the Borrowers, and constitutes, and each other Loan
Document to which any Loan Party is a party, when executed and delivered by such Loan Party, will
constitute, valid and binding obligations of the Borrowers or such Loan Party (as the case may be),
enforceable against it in accordance with their respective terms, except as may be limited by
applicable bankruptcy, insolvency, fraudulent transfer, reorganization, receivership, moratorium,
or similar laws affecting the enforcement of creditors’ rights generally and by general principles
of equity.



          Section 4.3. Governmental Approvals; No Conflicts.



          The execution, delivery and performance by the Borrowers of this Agreement, and by each Loan
Party of the other Loan Documents to which it is a party (a) do not require any consent or approval
of, registration or filing with, or any action by, any Governmental Authority, except (i) those as
have been obtained or made and are in full force and effect (ii) recordings and filings in
connection with the Liens granted to the Administrative Agent under the Security Documents, (b)
will not violate any Requirements of Law applicable to the Borrowers or any of their Restricted
Subsidiaries or any judgment, order or ruling of any Governmental Authority, (c) will not violate
or result in a breach or default under any Material Agreement or give rise to a right thereunder to
require any payment to be made by the Borrowers or any of their Restricted Subsidiaries and (d)
will not result in the creation or imposition of any Lien on any asset of the Borrowers or any of
their Restricted Subsidiaries, except Liens (if any) created under the Loan Documents.



          Section 4.4. Financial Statements.



          The Borrowers have furnished to each Lender the audited consolidated balance sheet of the
Borrowers and their Subsidiaries as of December 31, 2009 and the related consolidated statements of
income, shareholders’ equity and cash flows for the Fiscal Year then ended prepared by
PricewaterhouseCoopers, LLP. Such financial statements fairly present in all material respects the
consolidated financial condition of the Borrowers and their Subsidiaries as of such dates and the
consolidated results of operations for such periods in conformity with GAAP consistently applied,
subject to year end audit adjustments. Since December 31, 2009, there have been no changes with
respect to the Borrowers and their Subsidiaries which have had or could reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect.



          Section 4.5. Statutory Financial Statements.



          The Annual Statement of each of the Regulated Insurance Companies (including, without
limitation, the provisions made therein for investments and the valuation thereof, reserves, policy
and contract claims and statutory liabilities) as filed with the Applicable Insurance Regulatory
Authority of the state in which such Regulated Insurance Company is



48









 




domiciled and delivered to the Administrative Agent prior to the execution and delivery of
this Agreement, as of and for the Fiscal Year ending December 31, 2009 have been prepared in
accordance with SAP consistently applied. Each such Annual Statement was in material compliance
with applicable law when filed.




          Section 4.6. Litigation and Environmental Matters.



          (a) No litigation, investigation or proceeding of or before any arbitrators or Governmental
Authorities is pending against or, to the knowledge of the Borrowers, threatened against or
affecting the Borrowers or any of their Restricted Subsidiaries (i) as to which could reasonably be
expected to have, either individually or in the aggregate, a Material Adverse Effect or (ii) which
questions the validity or enforceability of this Agreement or any other Loan Document.



          (b) Except as could not reasonably be expected to have a Material Adverse Effect, (i) each of
the Borrowers and their Restricted Subsidiaries is in compliance with all Environmental Laws, which
compliance includes obtaining, maintaining and complying with any permit, license or other approval
required under any Environmental Law, and (ii) none of the Borrowers or any of their Subsidiaries
(x) has become subject to any Environmental Liability, (y) has received notice of any claim with
respect to any Environmental Liability or (z) knows of any basis for any Environmental Liability.



          Section 4.7. Compliance with Laws and Agreements.



          Each Borrower and each Restricted Subsidiary is in compliance with (a) all Requirements of Law
and all judgments, decrees and orders of any Governmental Authority and (b) all Material
Agreements, except, in the case of each of clauses (a) and (b), where non-compliance, either singly
or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect.



          Section 4.8. Insurance Licenses.



          To the extent required by applicable law, each Regulated Insurance Company holds a License and
is authorized to transact insurance business in (i) the line or lines of insurance it is engaged in
and (ii) the state, states or jurisdictions it transacts business in, except to the extent that the
failure to have such a License or authority could not reasonably be expected to have a Material
Adverse Effect. No such License, the loss of which could reasonably be expected to have a Material
Adverse Effect, is the subject of a proceeding for suspension, limitation or revocation. To the
Borrowers’ knowledge, no such suspension, limitation or revocation has been threatened by any
Applicable Insurance Regulatory Authority or other Governmental Authority. The Regulated Insurance
Companies do not transact any business, directly or indirectly, requiring any license, permit,
governmental approval, consent or other authorization other than those currently obtained, except
to the extent of which could not reasonably be expected to have a Material Adverse Affect.



49









 





          Section 4.9. Investment Company Act, Etc.



          None of the Borrowers nor any of their Restricted Subsidiaries is (a) an “investment company”
or is “controlled” by an “investment company”, as such terms are defined in, or subject to
regulation under, the Investment Company Act of 1940, as amended, or (b) otherwise subject to any
other regulatory scheme limiting its ability to incur debt or requiring any approval or consent
from or registration or filing with, any Governmental Authority in connection therewith.



          Section 4.10. Taxes.



          The Borrowers and their Restricted Subsidiaries have timely filed or caused to be filed all
Federal income tax returns and all other material tax returns that are required to be filed by
them, and have paid all taxes shown to be due and payable on such returns or on any assessments
made against it or its property and all other taxes, fees or other charges imposed on it or any of
its property by any Governmental Authority, except (i) where the same (a) are not overdue or (b)
are currently being contested in good faith by appropriate proceedings and for which such Borrower
or such Restricted Subsidiary, as the case may be, has set aside on its books adequate reserves in
accordance with GAAP or (ii) where the failure to file or pay could not, individually or in the
aggregate, have a Material Adverse Effect. The charges, accruals and reserves on the books of the
Borrowers and their Restricted Subsidiaries in respect of such taxes are adequate (determined based
on GAAP), and no tax liabilities that could be materially in excess of the amount so provided are
anticipated with respect to the periods covered by such charges, accruals or reserves at the time
such Borrower or such Restricted Subsidiary establishes such charges, accruals and reserves.



          Section 4.11. Margin Regulations.



          None of the proceeds of any of the Loans will be used, directly or indirectly, for
“purchasing” or “carrying” any “margin stock” with the respective meanings of each of such terms
under Regulation U or for any purpose that violates the provisions of the Regulation T, U or X.
None of the Borrowers or any of their Restricted Subsidiaries is engaged principally, or as one of
its important activities, in the business of extending credit for the purpose of purchasing or
carrying “margin stock.”



          Section 4.12. ERISA.



          (a) No ERISA Event has occurred or is reasonably expected to occur that, when taken together
with all other such ERISA Events for which liability is reasonably expected to occur, could
reasonably be expected to result in a Material Adverse Effect. The “benefit obligations” of all
Plans did not, as of the date of the most recent financial statements reflecting such amounts,
exceed the “fair market value of the assets” of such Plans by more than $2,500,000. No event has
occurred since the issuance of such financial statements that would cause the “benefit obligations”
of all Plans to exceed the “fair market value of the assets” of such Plans by the dollar amount
specified in the previous sentence. The terms “benefit obligations” and “fair market value of
assets” shall be determined by and with such terms defined in accordance with Statement of
Financial Accounting Standards No. 158.



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          (b) Each Employee Benefit Plan is in compliance except as could reasonably be expected to
result in a Material Adverse Effect with the applicable provisions ERISA, the Code and other
Requirements of Law. Except with respect to Multiemployer Plans, each Qualified Plan has received
a favorable determination from the IRS and each such Qualified Plan is in compliance with Revenue
Procedure 2007-44. To the best of Borrowers’ knowledge, no event has occurred which would cause
the loss of the Borrowers’ or any ERISA Affiliate’s reliance on the Qualified Plan’s favorable
determination letter or opinion letter.



          (c) With respect to any Employee Benefit Plan that is a retiree welfare benefit arrangement,
all amounts have been accrued on the Borrowers’ financial statements in accordance with Statement
of Financial Accounting Standards No. 106.



          (d) Except as would not reasonably be expected, individually or in the aggregate, to have a
Material Adverse Effect: (i) there are no pending or to the best of the Borrowers’ knowledge,
threatened claims, actions or lawsuits or action by any Governmental Authority with respect to a
Employee Benefit Plan; (ii) there are no violations of the fiduciary responsibility rules with
respect to any Employee Benefit Plan; and (iii) none of the Borrowers or any ERISA Affiliate has
engaged in a non-exempt “prohibited transaction,” as defined in Section 406 of ERISA and Section
4975 of the Code, in connection with any Employee Benefit Plan, that would subject the Borrowers to
a tax on prohibited transactions imposed by Section 502(i) of ERISA or Section 4975 of the Code.



          Section 4.13. Ownership of Property.



          (a) Each of the Borrowers and their Restricted Subsidiaries has good and marketable title to,
or valid leasehold interests in (pursuant to valid and subsisting leases that are in full force),
all of its real and personal property material to the operation of its business, in each case free
and clear of Liens prohibited by this Agreement.



          (b) Each of the Borrowers and their Restricted Subsidiaries owns, or is licensed, or otherwise
has the right, to use, all patents, trademarks, service marks, trade names, copyrights and other
intellectual property material to its business as currently conducted, and the use thereof by the
Borrowers and their Restricted Subsidiaries does not infringe in any material respect on the rights
of any other Person, in each case, other than to the extent that the failure to obtain any such
rights or any such infringement could not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect.



          (c) The properties of the Borrowers and their Restricted Subsidiaries are insured with
financially sound and reputable insurance companies which are not Affiliates of the Borrowers, in
such amounts with such deductibles and covering such risks as are customarily carried by companies
engaged in similar businesses and owning similar properties in localities where either Borrower or
any applicable Restricted Subsidiary operates.



          Section 4.14. Disclosure.



          As of the Closing Date, the Borrowers have disclosed to the Lenders all agreements,
instruments, and corporate or other restrictions to which the Borrowers or any of their Restricted
Subsidiaries is subject, and all other matters known to any of them, that,



51









 




individually or in the aggregate, could reasonably be expected to result in a Material Adverse
Effect. None of the reports (including without limitation all reports that the Borrowers are
required to file with the Securities and Exchange Commission or that any Regulated Insurance
Company is required to filed with any Applicable Insurance Regulatory Authority), financial
statements, certificates or other written information furnished by or on behalf of the Borrowers to
the Administrative Agent or any Lender in connection with the negotiation or syndication of this
Agreement or any other Loan Document or delivered hereunder or thereunder (as modified or
supplemented by any other information so furnished), when taken as a whole, contains any material
misstatement of fact or omits to state any material fact necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading; provided that, with
respect to projected financial information, the Borrowers represent only that such information was
prepared in good faith based upon assumptions believed to be reasonable at the time (it being
understood that such projections are not to be viewed as facts and that actual results during the
period or periods covered thereby may differ from the projected results and that such differences
may be material).




          Section 4.15. Labor Relations.



          There are no strikes, lockouts or other material labor disputes or grievances against the
Borrowers or any of their Restricted Subsidiaries, or, to the Borrowers’ knowledge, threatened
against or affecting the Borrowers or any of their Restricted Subsidiaries, and no significant
unfair labor practice, charges or grievances are pending against the Borrowers or any of their
Restricted Subsidiaries, or to either Borrower’s knowledge, threatened against any of them before
any Governmental Authority. All payments due from the Borrowers or any of their Restricted
Subsidiaries pursuant to the provisions of any collective bargaining agreement have been paid or
accrued as a liability on the books of the Borrowers or any such Restricted Subsidiary, except
where the failure to do so could not reasonably be expected to have a Material Adverse Effect.



          Section 4.16. Subsidiaries.



          Schedule 4.16 sets forth the name of, the ownership interest of the Borrowers in, the
jurisdiction of incorporation or organization of, and the type of, each Subsidiary and identifies
each Subsidiary that is a Subsidiary Loan Party and/or a Regulated Insurance Company, in each case
as of the Closing Date.



          Section 4.17. Insolvency.



          After giving effect to the execution and delivery of the Loan Documents, the making of the
Loans under this Agreement, and the repayment of the Refinanced Indebtedness, none of the Borrowers
nor their Material Subsidiaries will be “insolvent,” within the meaning of such term as defined in
§ 101 of Title 11 of the United States Code, as amended from time to time, or be unable to pay its
debts generally as such debts become due, or have an unreasonably small capital to engage in any
business or transaction, whether current or contemplated.



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          Section 4.18. Subordination of Subordinated Debt.



          This Agreement, together with each of the other Loan Documents and all amendments,
modifications, extensions, renewals, refinancings and refundings hereof and thereof, constitute
“Senior Loan Documents” within the meaning the Subordinated Debenture Purchase Agreement; and the
Revolving Loans and all other Obligations of the Borrowers to the Lenders and the Administrative
Agent under this Agreement, the Notes and all other Loan Documents, and all amendments,
modifications, extensions, renewals, refundings or refinancings of any of the foregoing constitute
“Senior Debt” of the Borrowers within the meaning of the Subordinated Debenture Purchase Agreement,
and the holders thereof from time to time shall be entitled to all of the rights of a holder of
“Senior Debt” pursuant to the Subordinated Debenture Purchase Agreement.



          Section 4.19. OFAC.



          None of the Borrowers, any Subsidiary of the Borrowers or any Affiliate of the Borrowers or
any Subsidiary Loan Party (i) is a Sanctioned Person, (ii) has more than 15% of its assets in
Sanctioned Countries, or (iii) derives more than 15% of its operating income from investments in,
or transactions with Sanctioned Persons or Sanctioned Countries. No part of the proceeds of any
Loans hereunder will be used directly or indirectly to fund any operations in, finance any
investments or activities in or make any payments to, a Sanctioned Person or a Sanctioned Country
or for any payments to any governmental official or employee, political party, official of a
political party, candidate for political office, or anyone else acting in an official capacity, in
order to obtain, retain or direct business or obtain any improper advantage, in violation of the
United States Foreign Corrupt Practices Act of 1977, as amended.



          Section 4.20. Patriot Act.



          Neither any Loan Party nor any of its Subsidiaries is an “enemy” or an “ally of the enemy”
within the meaning of Section 2 of the Trading with the Enemy Act of the United States of America
(50 U.S.C. App. §§ 1 et seq.), as amended or any enabling legislation or executive order relating
thereto. Neither any Loan Party nor any or its Subsidiaries is in violation of (a) the Trading with
the Enemy Act, as amended, (b) any of the foreign assets control regulations of the United States
Treasury Department (31 CFR, Subtitle B, Chapter V, as amended) or any enabling legislation or
executive order relating thereto or (c) the Patriot Act. None of the Loan Parties (i) is a blocked
person described in section 1 of Executive Order 13224, signed by President George W. Bush on
September 24, 2001 or (ii) to the best of its knowledge, engages in any dealings or transactions,
or is otherwise associated, with any such blocked person.



          Section 4.21. Security Documents.



          (a) The Security Agreement, upon execution and delivery thereof by the parties thereto, will
create in favor of the Administrative Agent, for the ratable benefit of the Lenders, a legal, valid
and enforceable security interest in the Collateral (as defined in the Security Agreement) and the
proceeds thereof (except as enforceability may be limited by applicable bankruptcy, insolvency,
fraudulent transfer, reorganization, receivership, moratorium, or similar laws affecting the
enforcement of creditors’ rights generally and by general principles



53









 




of equity), in which a security interest may be created under the New York Uniform Commercial
Code as in effect from time to time, and the Lien created under the Security Agreement is (or will
be, upon the filing of appropriate financing statements with appropriate offices, the filings of
grants of security in Intellectual Property with the United States Patent and Trademark Office, the
execution of appropriate control agreements and the delivery of certificated securities and
instruments to the Administrative Agent) a fully perfected Lien on, and security interest in, all
right, title and interest of the Loan Parties in such Collateral, in each case prior and superior
in right to any other Person, other than with respect to Permitted Liens specified in clauses (b)
and (d) of Section 7.2.




          (b) The Pledge Agreement, upon execution and delivery thereof by the parties thereto, will
create in favor of the Administrative Agent, for the ratable benefit of the Lenders, a legal, valid
and enforceable security interest in the Pledged Collateral (as defined in the Pledge Agreement)
and the proceeds thereof (except as enforceability may be limited by applicable bankruptcy,
insolvency, fraudulent transfer, reorganization, receivership, moratorium, or similar laws
affecting the enforcement of creditors’ rights generally and by general principles of equity), and,
when such Collateral is delivered to the Administrative Agent, together with stock powers duly
executed in blank, the Pledge Agreement shall constitute a fully perfected Lien on, and security
interest in, all right, title and interest of the pledgor thereunder in such Collateral, in each
case prior and superior in right to any other Person.



          (c) Schedule 4.21 lists completely and correctly as of the Closing Date all real
property owned by the Borrowers and their Restricted Subsidiaries and the addresses thereof.



          (d) Schedule 4.21 lists completely and correctly as of the Closing Date all real
property leased by the Borrowers and their Restricted Subsidiaries and the addresses thereof.



          Section 4.22. Material Agreements.



          Attached hereto as Schedule 4.22 is a correct and complete list, as of the date of
this Agreement, of each Material Agreement. None of the Borrowers, nor any Restricted Subsidiary,
nor, to the knowledge of the Borrowers, any other party thereto is in material default under any
Material Agreement.



ARTICLE V




AFFIRMATIVE COVENANTS



          The Borrowers covenant and agree that so long as any Lender has a Revolving Commitment
hereunder or any Loan Obligation remains unpaid or outstanding (other than any contingent
obligations for which no claim has been asserted):



          Section 5.1. Financial Statements and Other Information.



          The Borrowers will deliver to the Administrative Agent (who will distribute to each Lender):



54









 





          (a) as soon as available and in any event within 90 days after the end of each Fiscal Year of
the Borrowers, a copy of the annual audited report for such Fiscal Year for the Borrowers and their
Subsidiaries, containing a consolidated balance sheet of the Borrowers and their Subsidiaries as of
the end of such Fiscal Year and the related consolidated statements of income, stockholders’ equity
and cash flows (together with all footnotes thereto) of the Borrowers and their Subsidiaries for
such Fiscal Year, setting forth in each case in comparative form the figures for the previous
Fiscal Year, all in reasonable detail and reported on by PricewaterhouseCoopers, LLP or other
independent public accountants of nationally recognized standing (without a “going concern” or like
qualification, exception or explanation and without any qualification or exception as to scope of
such audit) to the effect that such financial statements present fairly in all material respects
the financial condition and the results of operations of the Borrowers and their Subsidiaries for
such Fiscal Year on a consolidated basis in accordance with GAAP consistently applied and that the
examination by such accountants in connection with such consolidated financial statements has been
made in accordance with generally accepted auditing standards;



          (b) as soon as available (i) and in any event within 120 days after the end of each Fiscal
Year of each Regulated Insurance Company, the Annual Statement of such Regulated Insurance Company
for such Fiscal Year as filed with the Applicable Insurance Regulatory Authority in such Regulated
Insurance Company’s state of domicile, together with the signature of the Chief Financial Officer
of the Borrowers certifying that such Annual Statement presents the financial condition and results
of operations of such Regulated Insurance Company in accordance with SAP, and (ii) the opinion of
an independent public accountant firm of nationally recognized standing who has audited the Annual
Statement referenced in clause (i) immediately above (without a “going concern” or like
qualification, exception or explanation and without any qualification or exception as to scope of
audit), but only to the extent such Regulated Insurance Company is required by applicable law to
obtain, or otherwise elects to obtain, such an audit and opinion;



          (c) as soon as available and in any event within 45 days after the end of each Fiscal Quarter
of the Borrowers, an unaudited consolidated balance sheet of the Borrowers and their Subsidiaries
as of the end of such Fiscal Quarter and the related unaudited consolidated statements of income
and cash flows of the Borrowers and their Subsidiaries for such Fiscal Quarter and the then elapsed
portion of such Fiscal Year, setting forth in each case in comparative form the figures for the
corresponding quarter and the corresponding portion of Borrowers’ previous Fiscal Year and in each
case prepared in accordance with GAAP consistently applied;



          (d) as soon as available and in any event within 60 days after the end of each Fiscal Quarter
of each Regulated Insurance Company, quarterly financial statements of such Regulated Insurance
Company for such Fiscal Quarter and as filed with the Applicable Insurance Regulatory Authority in
such Regulated Insurance Company’s state of domicile, together with the signature of the Chief
Financial Officer of the Borrowers certifying that such Annual Statement presents the financial
condition and results of operations of such Regulated Insurance Company in accordance with SAP;



55









 





          (e) as soon as available, and in any event no more than 60 days after the end of each Fiscal
Year of the Borrowers, an annual business plan and budget of the Borrower and its Subsidiaries on a
consolidated basis, including forecasts prepared by management of the Borrowers of consolidated
balance sheets, statements of income or operations and cash flows, in each case in form and
substance satisfactory to the Administrative Agent, of the Borrowers and their Subsidiaries on a
quarterly basis for the immediately succeeding Fiscal Year;



          (f) concurrently with the delivery of the financial statements referred to in clauses (a) and
(c) above, a Compliance Certificate substantially in the form of Exhibit 5.1(f) signed by a
Responsible Officer of the Borrowers, (i) certifying as to whether there exists a Default or Event
of Default on the date of such certificate, and if a Default or an Event of Default then exists,
specifying the details thereof and the action which the Borrowers have taken or proposes to take
with respect thereto, (ii) setting forth in reasonable detail calculations demonstrating compliance
with the financial covenants set forth in ARTICLE VI, and (iii) stating whether any change
in GAAP or the application thereof has occurred since the date of the latest delivery of the
Borrowers’ audited financial statements referred to in clause (a) above and, if any change has
occurred, specifying the effect of such change on the financial statements accompanying such
certificate; provided, however, that no action shall be required by the Borrowers under this clause
(iii) to the extent any such change in GAAP or the application thereof does not affect or apply to
the Borrowers and their Subsidiaries, including the presentation by the Borrowers of their
financial statements;



          (g) concurrently with the delivery of the financial statements referred to in clause (a)
above, a list of all sales or other dispositions of assets made pursuant to Section 7.6(i)
of this Agreement by the Borrowers and their Restricted Subsidiaries during the Fiscal Year most
recently ended and for which the proceeds of such sales or dispositions are used to replace assets,
including a description of the type of replacement assets and amount and type of other proceeds, if
any, received from such sales or other dispositions;



          (h) promptly following any request therefor, such other information regarding the results of
operations, business affairs and financial condition of the Borrowers or any Restricted Subsidiary
as the Administrative Agent or any Lender may reasonably request.



          In the event that any financial statement delivered pursuant to clauses (a) or (c) immediately
above or any Compliance Certificate is shown to be inaccurate during the term of this Agreement,
and such inaccuracy, if corrected, would have led to the application of a higher Applicable Margin
for any period (an “Applicable Period”) than the Applicable Margin applied for such
Applicable Period, then (i) the Borrowers shall immediately deliver to the Administrative Agent a
corrected Compliance Certificate for such Applicable Period, (ii) the Applicable Margin for such
Applicable Period shall be determined in accordance with the corrected Compliance Certificate, and
(iii) the Borrowers shall immediately pay to the Administrative Agent the accrued additional
interest owing as a result of such increased Applicable Margin for such Applicable Period, which
payment shall be promptly applied by the Administrative Agent to the Obligations. This Section
5.1 shall not limit the rights of the Administrative Agent or the Lenders with respect to
Section 2.11(b) and ARTICLE VIII.



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          Section 5.2. Notices of Material Events.



          The Borrowers will furnish to the Administrative Agent and each Lender prompt (and, in any
event, not later than three (3) Business Days after a Responsible Officer becomes aware thereof)
written notice of the following:



          (a) the occurrence of any Default or Event of Default;



          (b) notwithstanding the lead-in to this Section 5.2, not later than five (5) Business Days
after a Responsible Officer becomes aware thereof, written notice of the filing or commencement of
any action, suit or proceeding by or before any arbitrator or Applicable Insurance Regulatory
Authority or other Governmental Authority against or, to the knowledge of either Borrower,
affecting either Borrower or any Restricted Subsidiary which, if adversely determined, could
reasonably be expected to result in a Material Adverse Effect and any written notice received from
an Applicable Issuance Regulatory Authority or other Governmental Authority threatening any such
action, suit or proceeding;



          (c) the occurrence of any event or any other development by which the Borrowers or any of
their Subsidiaries (i) fails to comply with any Environmental Law or to obtain, maintain or comply
with any permit, license or other approval required under any Environmental Law, (ii) becomes
subject to any Environmental Liability, (iii) receives notice of any claim with respect to any
Environmental Liability, or (iv) becomes aware of any basis for any Environmental Liability and in
each of the preceding clauses, which individually or in the aggregate, could reasonably be expected
to result in a Material Adverse Effect;



          (d) notwithstanding the lead-in to this Section 5.2, not later than five (5) Business Days
after a Responsible Officer becomes aware thereof, written notice of the occurrence of any ERISA
Event that alone, or together with any other ERISA Events that have occurred, could reasonably be
expected to result in liability of the Borrowers and their Subsidiaries in an aggregate amount
exceeding $2,500,000;



          (e) the occurrence of any event of default, or the receipt by Borrowers or any of their
Subsidiaries of any written notice of an alleged event of default, with respect to any Material
Indebtedness of the Borrowers or any of their Subsidiaries;



          (f) the early termination or material breach by any Person of a Material Agreement (and, with
respect to any Person other than a Loan Party, to the extent the Borrowers have knowledge of such
termination or breach);



          (g) any litigation, investigation or proceeding of or before any arbitrators or Governmental
Authorities bending against, or to the knowledge of the Borrowers, threatened against or affecting
the Unrestricted Subsidiary as to which could reasonably be expected to have, either individually
or in the aggregate, a Material Adverse Effect with respect to the Unrestricted Subsidiary;



          (h) notwithstanding the time period set forth in lead-in to this Section 5.2, not later than
14 days following the date that a Responsible Officer becomes aware thereof, written notice of the
Unrestricted Subsidiary’s failure to comply with any Environmental law or to



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obtain, maintain or comply with any permit, license or with approval required under any
Environmental Law, (ii) the Unrestricted Subsidiary’s should become subject to any Environmental
Liability, (iii) the Unrestricted Subsidiary has received notice of any claim with respect to any
Environmental Liability or (iv) the Unrestricted Subsidiary knows of any basis for any
Environmental Liability; and




          (i) any other development that results in, or could reasonably be expected to result in, a
Material Adverse Effect.


Each notice delivered under this Section 5.2 shall be accompanied by a written statement of
a Responsible Officer setting forth the details of the event or development requiring such notice
and any action taken or proposed to be taken with respect thereto.




          Section 5.3. Existence; Conduct of Business.



          The Borrowers will, and will cause each of their Restricted Subsidiaries to, do or cause to be
done all things necessary to preserve, renew and maintain in full force and effect its legal
existence and its respective rights, licenses, permits, privileges, franchises, patents,
copyrights, trademarks and trade names material to the conduct of its business and will continue to
engage in the same business as presently conducted or such other businesses that are similar,
substantially related, incidental, ancillary or complementary thereto, including, without
limitation, to do all things necessary to renew, extend and continue all Licenses material to their
business which may at any time and from time to time be necessary for any Regulated Insurance
Company to operate its business in compliance with all applicable laws and regulations, except, in
each case above, to the extent that any failure to so comply could not reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect; provided, that nothing
in this Section 5.3 shall prohibit any merger, consolidation, liquidation or dissolution
permitted under Section 7.3.



          Section 5.4. Compliance with Laws, Etc.



          The Borrowers will, and will cause each of their Restricted Subsidiaries to, comply with all
laws, rules, regulations and requirements of any Governmental Authority applicable to its business
and properties, including without limitation, all Environmental Laws, ERISA and OSHA, except where
the failure to do so, either individually or in the aggregate, could not reasonably be expected to
result in a Material Adverse Effect.



          Section 5.5. Payment of Obligations.



          The Borrowers will, and will cause each of their Restricted Subsidiaries to, pay and discharge
all of its obligations and liabilities (including without limitation all taxes, assessments and
other government charges, levies and all other claims that could result in a statutory Lien but
excluding all obligations and liabilities with respect to Indebtedness) before the same shall
become delinquent or in default, except where (a)(i) the validity or amount thereof is being
contested in good faith by appropriate proceedings and (ii) such Borrower or such Restricted
Subsidiary has set aside on its books adequate reserves with respect thereto in accordance with
GAAP or (b) the failure to make payment pending such contest could not reasonably be expected to
result in a Material Adverse Effect.



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          Section 5.6. Books and Records.



          The Borrowers will, and will cause each of their Restricted Subsidiaries to, keep books of
record and account in which complete entries shall be made of all dealings and transactions in
relation to its business and activities to the extent necessary to prepare the consolidated
financial statements of the Borrowers in conformity with GAAP and SAP. The principal records and
books of account, including those concerning the Collateral, shall be kept at the chief executive
office of the Borrowers. The Borrowers will not (x) move such records and books of account or
change the name under which it does business without (i) giving the Administrative Agent at least
10 days’ prior written notice (or such shorter period to which the Administrative Agent agrees),
and (ii) authorizing the filing by the Administrative Agent of financing statements reasonably
satisfactory to the Administrative Agent prior to such move or change or (y) change its chief
executive office without (i) giving the Administrative Agent written notice thereof within 30 days
after such change (or such longer period to which the Administrative Agent agrees) and (ii)
authorizing the filing by the Administrative Agent of financing statements reasonably satisfactory
to the Administrative Agent prior to such change.



          Section 5.7. Visitation, Inspection, Etc.



          The Borrowers will, and will cause each of their Restricted Subsidiaries to, permit any
representative of the Administrative Agent or any Lender, during normal business hours and after
reasonable prior notice (a) to visit and inspect its properties, to examine its books and records
and to make copies and take extracts therefrom, and (b) to discuss its affairs, finances and
accounts with any of its officers and with its independent certified public accountants (provided
that the Administrative Agent shall give the Borrower an opportunity to participate in any
discussions with its accountants); provided that in the absence of the existence of an Event of
Default, the Administrative Agent shall not exercise its rights under the foregoing clause (a) of
this Section 5.7 more often than two times during any fiscal year and only one such time shall be
at the Borrowers’ expense; provided, further, that when an Event of Default exists, the
Administrative Agent or any Lender and their respective designees may do any of the foregoing at
the expense of the Borrowers at any time upon reasonable prior notice.



          Section 5.8. Maintenance of Properties; Insurance.



          The Borrowers will, and will cause each of their Restricted Subsidiaries to, (a) keep and
maintain all property material to the conduct of its business in good working order and condition,
ordinary wear and tear excepted, including, without limitation, Intellectual Property, (b) maintain
with financially sound and reputable insurance companies, insurance with respect to its properties
and business, and the properties and business of their Restricted Subsidiaries, against loss or
damage of the kinds customarily insured against by companies in the same or similar businesses
operating in the same or similar locations, and (c) at all times shall name Administrative Agent as
additional insured on all liability policies of the Borrowers and their Restricted Subsidiaries and
as lender loss payee with respect to property and casualty policies.



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          Section 5.9. Use of Proceeds.



          The Borrowers will use the proceeds of all Loans (a) on the Closing Date to refinance
Indebtedness owed to the Existing Lender and (b), on and after the Closing Date, to finance working
capital needs, Permitted Acquisitions, capital expenditures and for other general corporate
purposes of the Borrowers and their Restricted Subsidiaries. No part of the proceeds of any Loan
will be used, whether directly or indirectly, for any purpose that would violate any rule or
regulation of the Board of Governors of the Federal Reserve System, including Regulations T, U or
X.



          Section 5.10. Additional Subsidiaries.



          If any Material Domestic Subsidiary (other than an Excluded Subsidiary) is acquired or formed
after the Closing Date, the Borrowers will promptly notify the Administrative Agent and the Lenders
thereof and, within ten (10) Business Days after any such Material Domestic Subsidiary is acquired
or formed (or such longer period to which the Administrative Agent may agree), will cause such
Material Domestic Subsidiary to become a Subsidiary Loan Party. A Material Domestic Subsidiary
(other than an Excluded Subsidiary) shall become an additional Subsidiary Loan Party by executing
and delivering to the Administrative Agent a Subsidiary Guaranty Supplement, a Security Agreement
and such other Security Documents as are required by Section 5.11, accompanied by (i) all
other Loan Documents related thereto, (ii) certified copies of certificates or articles of
incorporation or organization, by-laws, membership operating agreements, and other organizational
documents, appropriate authorizing resolutions of the board of directors of such Material Domestic
Subsidiary and (iii) opinions of counsel comparable to those delivered pursuant to Section 3.1(b)
and such other documents, in each case, as the Administrative Agent may reasonably request. No
Subsidiary that becomes a Subsidiary Loan Party shall thereafter cease to be a Subsidiary Loan
Party or be entitled to be released or discharged from its obligations under the Subsidiary
Guaranty Agreement or its respective Security Agreement, except as provided expressly in this
Agreement. No Loan Party shall form or acquire a Foreign Subsidiary after the date hereof without
giving prior written notice to the Administrative Agent.



          Section 5.11. Further Assurances.



          (a) The Borrowers will, and will cause each Subsidiary Loan Party to, execute any and all
further documents, financing statements, agreements and instruments, and take all further action
(including filing Uniform Commercial Code and other financing statements, mortgages and deeds of
trust) that may be required under applicable law, or that the Required Lenders or the
Administrative Agent may reasonably request, in order to effectuate the transactions contemplated
by the Loan Documents and in order to grant, preserve, protect and perfect the validity and first
priority (subject to Permitted Liens) of the security interests created or intended to be created
by the Security Documents. In addition, with respect to any assets acquired by any Loan Party
after the Closing Date of the type constituting Collateral and as to which the Administrative Agent
does not have a perfected security interest, the Borrowers will, at their cost and expense,
promptly secure the Obligations by pledging or creating, or causing to be pledged or created,
perfected security interests with respect to such of its assets and properties as the
Administrative Agent or the Required Lenders shall designate). Such security interests



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and Liens will be created under the Security Documents and other security agreements,
mortgages, deeds of trust and other instruments and documents in form and substance reasonably
satisfactory to the Administrative Agent, and the Borrowers shall deliver or cause to be delivered
to the Administrative Agent all such instruments and documents (including legal opinions, title
insurance policies and lien searches) as the Administrative Agent shall reasonably request to
evidence compliance with this Section. The Borrowers agree to provide such evidence as the
Administrative Agent shall reasonably request as to the perfection and priority status of each such
security interest and Lien. Notwithstanding anything herein to the contrary, at the request of the
Administrative Agent if an Event of Default shall have occurred and be continuing, (x) neither the
Borrowers nor the Guarantors will be required to provide Collateral or to perfect a security
interest in any Collateral to the extent the burden or cost of obtaining or perfecting a security
interest therein outweighs the benefit of the security afforded thereby as determined by both the
Borrowers and the Administrative Agent or if the granting of a security interest in such Collateral
would be prohibited by enforceable anti-assignment provisions of contracts or applicable law (after
giving effect to relevant provisions of the Uniform Commercial Code) and (y) no foreign law
security or pledge agreements shall be required.




          (b) The Borrowers will give prompt notice to the Administrative Agent of the acquisition by
the Borrowers or any of the Subsidiary Loan Parties of any fee interest in real property having a
fair market value equal to or greater than $2,000,000 and, simultaneously with such acquisition.
If the Borrowers or any of the Subsidiary Loan Parties shall acquire any fee-owned real property
after the Closing Date with a fair market value equal to or greater than $2,000,000, then
substantially simultaneously with such acquisition (or such later date to which the Administrative
Agent may agree), the Borrowers shall deliver, or shall cause to be delivered, to the
Administrative Agent a mortgage with respect thereto, in form and substance reasonably satisfactory
to the Administrative Agent. The Borrowers shall pay, or shall cause to be paid, all costs
associated with the recording of the any mortgage, together with any subsequent amendments thereto,
with the appropriate authorities, and shall take all other actions reasonably requested by the
Administrative Agent in order to vest in Administrative Agent, for the benefit of the Lenders, a
perfected lien on the interest in each such parcel of real property described therein, subject to
no other liens, claims or encumbrances, except for Permitted Encumbrances. At the time the
Borrowers deliver, or cause to be delivered, the mortgage referenced in the immediately preceding
sentence, the Borrowers shall deliver, or shall cause to be delivered, to the Administrative Agent
a recent appraisal, survey and policy of title insurance, insuring the Administrative Agent’s
mortgagee’s interest in such fee-owned real property and a Phase I environmental audit, all of
which shall be in form and substance reasonably satisfactory to the Administrative Agent. Any
policy of title insurance shall be in an amount reasonably satisfactory to the Administrative Agent
and shall insure that such mortgage is a valid and enforceable first priority Lien on such
property, free and clear of all defects, encumbrances and Liens, other than Permitted Encumbrances.
The Administrative Agent shall have the right to request such title insurance commitment updates
upon (i) any material modifications or amendments of this Agreement or the other Loan Documents or
(ii) modifications of, or improvements to, or change of ownership in, the underlying real property,
and shall have the right to instruct the issuer of the title insurance commitment to set forth as
added requirements such things as would be necessary to eliminate added exceptions to coverage.



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ARTICLE VI




FINANCIAL COVENANTS



          The Borrowers covenant and agree that so long as any Lender has a Revolving Commitment
hereunder or any Loan Obligation remains unpaid or outstanding (other than any contingent
obligation for which no claim has been asserted), commencing with the fiscal quarter ending
September 30, 2010:



          Section 6.1. Total Leverage Ratio.



          The Borrowers will maintain, as of the end of each Fiscal Quarter, a Total Leverage Ratio of
not greater than 3.50:1.00.



          Section 6.2. Senior Leverage Ratio.



          The Borrowers will maintain, as of the end of each Fiscal Quarter, a Senior Leverage Ratio of
not greater than 2.50:1.00.



          Section 6.3. Fixed Charge Coverage Ratio.



          The Borrowers will maintain, as of the end of each Fiscal Quarter, a Fixed Charge Coverage
Ratio of not less than 1.25:1.00.



          Section 6.4. Reinsurance Ratio.



          The Borrowers will maintain, as of the end of each Fiscal Quarter, a Reinsurance Ratio of not
less than 60%.



ARTICLE VII




NEGATIVE COVENANTS



          The Borrowers covenant and agree that so long as any Lender has a Revolving Commitment
hereunder or any Loan Obligation remains outstanding (other than any contingent obligations for
which no claim has been asserted):



          Section 7.1. Indebtedness and Preferred Equity.



          The Borrowers will not, and will not permit any of its Restricted Subsidiaries to, create,
incur, assume or suffer to exist any Indebtedness, except:



          (a) the Obligations;



          (b) Indebtedness of the Borrowers and their Restricted Subsidiaries existing on the date
hereof and set forth on Schedule 7.1 and extensions, refinancings, renewals and
replacements of any such Indebtedness that do not increase the outstanding principal amount



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thereof (immediately prior to giving effect to such extension, refinancing renewal or
replacement) or shorten the maturity or the weighted average life thereof;




          (c) Indebtedness of a Borrower or any Restricted Subsidiary incurred to finance the
acquisition, construction or improvement of any fixed or capital assets, including Capital Lease
Obligations, and any Indebtedness assumed in connection with the acquisition of any such assets or
secured by a Lien on any such assets prior to the acquisition thereof; provided, that such
Indebtedness is incurred prior to or within 90 days after such acquisition or the completion of
such construction or improvements, and extensions, renewals, and replacements of any such
Indebtedness that do not increase the outstanding principal amount thereof (immediately prior to
giving effect to such extension, renewal or replacement) or shorten the maturity or the weighted
average life thereof; provided further, that the aggregate principal amount of such Indebtedness
does not exceed $5,000,000 at any time outstanding;



          (d) Indebtedness among the Borrowers and their Restricted Subsidiaries; provided, that
(i) any such Indebtedness that is owed by a Borrower or a Subsidiary Loan Party to a Restricted
Subsidiary that is not a Subsidiary Loan Party is expressly subordinated in right of payment to the
Obligations (it being understood that so long as no Default or Event of Default then exists, the
Borrowers or such Subsidiary Loan Party may repay such Indebtedness) and (ii) any such Indebtedness
owed by any Restricted Subsidiary that is not a Loan Party to a Loan Party shall be subject to
Section 7.4;



          (e) Guarantees by a Borrower of Indebtedness of any Restricted Subsidiary and by any
Restricted Subsidiary of Indebtedness of a Borrower or any other Restricted Subsidiary and the
Guarantee by Fortegra of the Indebtedness of the Unrestricted Subsidiary pursuant to the terms of
that certain General Continuing Guaranty dated as of June 10, 2010 (the “South Bay
Guaranty”); provided, that Guarantees by any Loan Party of Indebtedness of any
Restricted Subsidiary that is not a Subsidiary Loan Party shall be subject to Section 7.4;



          (f) Indebtedness of any Person which becomes a Subsidiary after the date of this Agreement;
provided, (i) that such Indebtedness exists at the time that such Person becomes a
Subsidiary and is not created in contemplation of or in connection with such Person becoming a
Subsidiary and (ii) immediately after such Person becomes a Subsidiary on a Pro Forma Basis, the
Borrowers would be in compliance with the financial covenants in ARTICLE VI and the Administrative
Agent shall have received a Compliance Certificate evidencing such compliance on a Pro Forma Basis;



          (g) Permitted Subordinated Debt;



          (h) Indebtedness in respect of Hedging Obligations permitted by Section 7.10;



          (i) Indebtedness of Borrower or any of their Restricted Subsidiaries (i) assumed in connection
with any Permitted Acquisition, provided that such Indebtedness is not incurred in contemplation of
such Permitted Acquisition, or (ii) owed to the seller of any property acquired in a Permitted
Acquisition on an unsecured subordinated (relative to the Obligations) basis, which subordination
shall be on terms satisfactory to the Administrative Agent, or (iii) obligations incurred in
connection with a Permitted Acquisition or a disposition of



63









 




assets permitted by Section 7.6, in each case under agreements providing for earn-outs,
purchase price adjustments or similar adjustments that, in the case of the foregoing, are unsecured
and, in the case of obligations for (x) earn-outs or (y) purchase price adjustments that may be
exercisable or effective more than one year after the applicable Permitted Acquisition, are
subordinated to the Obligations on terms satisfactory to the Administrative Agent, in the cases of
clauses (i) through (iii) immediately above, so long as both immediately prior and after giving
effect thereto, (1) no Default or Event of Default shall exist or result therefrom, and (2)
Borrower and its Subsidiaries will be in compliance with Article VI on a Pro Forma Basis after
giving effect to such Permitted Acquisition and the incurrence or issuance of such Indebtedness and
the Administrative Agent shall have received a Compliance Certificate evidencing such compliance on
a Pro Forma Basis, and any extension, refinancing renewal or replacement thereof so long as such
extension, refinancing, renewal or replacement does not increase the outstanding principal amount
thereof or shorten the maturity or the weighted average life thereof;




          (j) Indebtedness representing deferred compensation and other similar arrangements (i) to
employees of the Borrowers and their Restricted Subsidiaries incurred in the ordinary course of
business and (ii) incurred in connection with any Permitted Acquisition;



          (k) Indebtedness incurred by Borrowers or any of their Restricted Subsidiaries constituting
reimbursement obligations in an amount not to exceed $10,000,000 at any time outstanding with
respect to letters of credit issued in respect of such Person’s obligations with respect to
reinsurance treaties or similar obligations, in each case entered into in the ordinary course of
business;



          (l) Indebtedness incurred in connection with installment payments in respect of the Borrowers’
or their Restricted Subsidiaries’ insurance premiums in the ordinary course of business;



          (m) Promissory notes issued by any Loan Party to the current or former officers, directors,
employees or consultants (or one or more Persons which are, or are beneficially owned or controlled
by, the any of the foregoing and/or any of heirs or immediate family members of any of the
foregoing) of the Borrowers or any Subsidiary thereof to purchase or redeem Capital Stock,
equity-related incentives, options, equity appreciation rights or similar incentive compensation
thereof; provided that any such promissory note is subordinated to the Obligations under this
Agreement on terms and conditions satisfactory to the Administrative Agent;



          (n) Indebtedness (other than for borrowed money) subject to Liens permitted by Section 7.2;



          (o) Paid-in-kind interest in respect of Indebtedness permitted by this Section 7.1;



          (p) other unsecured Indebtedness of the Borrowers and/or their Restricted Subsidiaries in an
aggregate principal amount not to exceed $5,000,000 at any time outstanding; and



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          (q) Indebtedness (i) in respect of netting services, employee credit card programs and similar
arrangements, in each case in connection with cash management or deposit accounts and (ii) with
respect to overdraft protections, in the cases of clauses (i) and (ii) immediately above, incurred
in the ordinary course of business.


The Borrowers will not, and will not permit any Restricted Subsidiary to, issue any preferred stock
or any other preferred equity interest of the type described in clause (ix) of the definition of
“Indebtedness” unless permitted by clauses (b) or (p) of this Section 7.1.




          Section 7.2. Liens.



          The Borrowers will not, and will not permit any of their Restricted Subsidiaries to, create,
incur, assume or suffer to exist any Lien on any of its assets or property now owned or hereafter
acquired, except for the following (collectively, “Permitted Liens”):



          (a) Liens securing the Obligations, provided, however, that no Liens may
secure Hedging Obligations without securing all other Obligations on a basis at least pari passu
with such Hedging Obligations and subject to the priority of payments set forth in Section
2.19 or Section 8.2;



          (b) Permitted Encumbrances;



          (c) any Liens on any property or asset of a Borrower or any Restricted Subsidiary existing on
the Closing Date set forth on Schedule 7.2; provided, that such Lien shall not
apply to any other property or asset of a Borrower or any Restricted Subsidiary;



          (d) purchase money Liens upon or in any fixed or capital assets to secure the purchase price
or the cost of construction or improvement of such fixed or capital assets or to secure
Indebtedness incurred solely for the purpose of financing the acquisition, construction or
improvement of such fixed or capital assets (including Liens securing any Capital Lease
Obligations); provided, that (i) such Lien secures Indebtedness permitted by Section
7.1(c), (ii) such Lien attaches to such asset concurrently or within 90 days after the
acquisition, improvement or completion of the construction thereof; (iii) such Lien does not extend
to any other asset; and (iv) the Indebtedness secured thereby does not exceed the cost of
acquiring, constructing or improving such fixed or capital assets;



          (e) [Intentionally Deleted.]



          (f) [Intentionally Deleted.]



          (g) Liens on property at the time of its acquisition or existing on the property of a Person
existing at the time such assets are acquired by any Loan Party, which Person is merged into or
consolidated with any Borrower or any Restricted Subsidiary or becomes a Restricted Subsidiary;
provided that (i) such Liens were not created in contemplation of such acquisition, merger,
consolidation or investment and do not extend to any assets other than the asset encumbered by such
Lien (other than the proceeds or products thereof and provided that Liens incurred pursuant to
multiple equipment leases that are provided by a single lessor that are otherwise permitted to be
secured hereunder may be cross-collateralized so long as the Liens



65









 




securing such multiple equipment leases only attach to the assets leased under such multiple
equipment leases); (ii) in the case of Liens securing Indebtedness other than purchase money
Indebtedness or Capital Lease Obligations, such Liens do not extend to the property of any Person
other than the Person acquired or formed to make such acquisition and the subsidiaries of such
Person and (iii) the Indebtedness secured thereby (or, as applicable, any modifications,
replacements, renewals or extensions thereof) is permitted under Section 7.1;




          (h) Liens arising out of conditional sale, title retention, consignment or similar
arrangements for sale of goods entered into by the Borrowers or any of its Restricted Subsidiaries
in the ordinary course of business;



          (i) Liens on (i) cash earnest money deposits made by the Borrowers or any of its Restricted
Subsidiaries in connection with any letter of intent or purchase agreement and (ii) advances of
cash or Cash Equivalents in favor of the seller of any property to be acquired in an Investment
permitted pursuant to Section 7.4 to be applied against the purchase price for such Investment;



          (j) Liens evidenced by the filing of precautionary UCC financing statements (or similar
filings under applicable law) relating solely to operating leases of personal property entered into
the ordinary course of business;



          (k) Liens on cash collateral to secure Indebtedness permitted under Section 7.1(k);



          (l) Liens (i) of a collecting bank arising under Section 4-210 of the Uniform Commercial Code
on items in the course of collection, (ii) attaching to commodity trading accounts or other
brokerage accounts incurred in the ordinary course of business and (iii) in favor of a banking
institution arising as a matter of law or contract encumbering deposits (including the right of
set-off), which are within the general parameters customary in the banking industry and which do
not secure Indebtedness;



          (m) Liens in favor of the Borrowers or any of their Restricted Subsidiaries securing
Indebtedness permitted under Section 7.1 or other obligations (other than Indebtedness) owed by any
Restricted Subsidiary to another Subsidiary;



          (n) extensions, renewals, or replacements of any Lien referred to in paragraphs (a) through
(m) of this Section 7.2; provided, that the principal amount of the Indebtedness secured
thereby is not increased and that any such extension, renewal or replacement is limited to the
assets originally encumbered thereby; provided, further, that Liens incurred
pursuant to multiple equipment leases that are provided by a single lessor that are otherwise
permitted to be secured hereunder may be cross-collateralized so long as the Liens securing such
multiple equipment leases only attach to the assets leased under such equipment leases; and



          (o) other Liens to secure obligations in an aggregate principal amount not to exceed
$1,000,000 so long as the same does not secure Indebtedness for borrowed money.



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          Section 7.3. Fundamental Changes.



          (a) The Borrowers will not, and will not permit any Restricted Subsidiary to, merge into or
consolidate into any other Person, or permit any other Person to merge into or consolidate with it
or liquidate or dissolve; provided, that if at the time thereof and immediately after
giving effect thereto, no Default or Event of Default shall have occurred and be continuing (i) the
Borrowers or any Restricted Subsidiary may merge with a Person if the applicable Borrower (or such
Restricted Subsidiary if a Borrower is not a party to such merger) is the surviving Person, (ii)
any Restricted Subsidiary may merge into another Restricted Subsidiary; provided, that if
any party to such merger is a Subsidiary Loan Party, the Subsidiary Loan Party shall be the
surviving Person and (iii) and (iv) any Restricted Subsidiary (other than a Subsidiary Loan Party)
may liquidate or dissolve if the Borrowers determine in good faith that such liquidation or
dissolution is in the best interests of the Borrowers and is not materially disadvantageous to the
Lenders; provided, that any such merger involving a Person that is not a wholly-owned
Subsidiary immediately prior to such merger shall not be permitted unless also permitted by
Section 7.4.



          (b) The Borrowers will not, and will not permit any of their Restricted Subsidiaries to,
engage in any business other than such business or line of business that is in the same or a
similar, substantially related, ancillary, incidental or a complementary line of business as the
business of the Borrowers and their Restricted Subsidiaries on the date hereof.



          Section 7.4. Investments, Loans, Acquisitions, Etc.



          The Borrowers will not, and will not permit any of their Restricted Subsidiaries to, purchase,
hold or acquire (including pursuant to any merger with any Person that was not a wholly-owned
Subsidiary prior to such merger), any Capital Stock, evidence of indebtedness or other securities
(including any option, warrant, or other right to acquire any of the foregoing) of, make or permit
to exist any loans or advances to, Guarantee any obligations of, or make or permit to exist any
investment or any other interest in, any other Person, or purchase or otherwise acquire (in one
transaction or a series of transactions) all or substantially all of the assets or Capital Stock of
a Person, or any assets of any other Person that constitute a business unit or division of any
other Person, or create or form any Subsidiary (all of the foregoing being collectively called
“Investments”), except:



          (a) Investments (other than Permitted Investments) existing on the date hereof and set forth
on Schedule 7.4 (including Investments in Subsidiaries);



          (b) Permitted Investments;



          (c) Guarantees constituting Indebtedness permitted by Section 7.1; provided,
that the aggregate principal amount of Indebtedness of Restricted Subsidiaries that are not
Subsidiary Loan Parties that is Guaranteed by any Loan Party shall be subject to the limitation set
forth in clause (d) hereof;



          (d) (i) Investments made by the Borrowers in or to any Restricted Subsidiary and by any
Restricted Subsidiary to the Borrowers or in or to another Restricted Subsidiary; provided,
that the aggregate amount of Investments by Loan Parties in or to, and Guarantees by



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Loan Parties of Indebtedness of any Restricted Subsidiary that is not a Subsidiary Loan Party
(including all such Investments and Guarantees existing on the Closing Date) shall not exceed
$7,500,000 (or such greater amount agreed to by the Administrative Agent) at any time outstanding;




               (ii) (x) the South Bay Guaranty and (y) Investments made by a Borrower or a Restricted
Subsidiary in or to the Unrestricted Subsidiary so long as the aggregate amount of Investments by
the Borrowers or any Restricted Subsidiary in the Unrestricted Subsidiary under this clause (y)
shall not exceed $8,000,000 at any time outstanding (the “South Bay Investment”);



          (e) loans or advances to employees, officers or directors of the Borrowers or any Restricted
Subsidiary in the ordinary course of business for travel, relocation and related expenses and
advances of payroll payments; provided, however, that the aggregate amount of all such loans and
advances does not exceed $1,000,000 at any time;



          (f) Investments (including debt obligations and equity interests) received in connection with
the bankruptcy or reorganization of any Person and in settlement of obligations of, or other
disputes with, any Person arising in the ordinary course of business and upon foreclosure with
respect to any secured Investment or other transfer of title with respect to any secured
Investment;



          (g) Hedging Transactions permitted by Section 7.10;



          (h) Permitted Acquisitions;



          (i) Customary and reasonable indemnity obligations entered into in connection with any
Permitted Acquisition or any disposition permitted by Section 7.6, to the extent permitted by
Section 7.1(i);



          (j) Investments consisting of Liens, Indebtedness, fundamental changes or dispositions
otherwise expressly permitted by Section 7.1, Section 7.2, Section 7.3 and Section 7.6;



          (k) Investments consisting of Guarantees of the obligations of others so long as (i) such
Guarantees do not constitute Guarantees of Indebtedness for borrowed money and (ii) such Guarantees
are entered into in the ordinary course of business; and



          (l) other Investments in an aggregate amount not to exceed $2,500,000 in any Fiscal Year.



          Section 7.5. Restricted Payments.



          The Borrowers will not, and will not permit their Restricted Subsidiaries to, declare or make,
or agree to pay or make, directly or indirectly, any dividend or distribution on any class of its
Capital Stock, or make any payment on account of, or set apart assets for a sinking or other
analogous fund for, the purchase, redemption, retirement, defeasance or other acquisition of, any
shares of Capital Stock or Indebtedness subordinated to the Obligations of the



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Borrowers or any Guarantee thereof or any options, warrants, or other rights to purchase such
Capital Stock or such Indebtedness, whether now or hereafter outstanding (each, a “Restricted
Payment”), except that any Borrower or Restricted Subsidiary may:




          (a) make dividends payable by the Borrowers solely in shares of any class of its common stock;



          (b) make Restricted Payments payable by any Restricted Subsidiary to the Borrowers or to
another Restricted Subsidiary, on at least a pro rata basis with any other shareholders if such
Restricted Subsidiary is not wholly owned by the Borrowers and other wholly owned Restricted
Subsidiaries;



          (c) distribute cash dividends and other distributions paid on the common stock of the
Borrowers; provided, for the purpose of this clause (c) that no Default or Event of Default has
occurred and is continuing at the time such dividend or distribution is paid or redemption is made;



          (d) deemed repurchases of equity interests, to the extent such repurchases occur as a result
of the “cashless exercise” of stock options or warrants by the holders thereof;



          (e) repay, prepay or redeem the Fortegra Preferred Stock and/or the Indebtedness outstanding
under the Subordinated Debenture Purchase Agreement with proceeds from the issuance of equity
securities by a Borrower or a direct or indirect parent entity; and



          (f) pay quarterly interest payments in respect of, and as required by, the Fortegra Preferred
Stock.



          Section 7.6. Sale of Assets.



          The Borrowers will not, and will not permit any of their Restricted Subsidiaries to, convey,
sell, lease, assign, transfer or otherwise dispose of, any of its assets, business or property,
whether now owned or hereafter acquired, or, in the case of any Restricted Subsidiary, issue or
sell any shares of such Subsidiary’s Capital Stock to any Person other than the Borrowers or any
wholly-owned Subsidiary of the Borrowers (or to qualify directors if required by applicable law),
except:



          (a) the sale or other disposition for fair market value of obsolete or worn out property or
other property not necessary for operations or otherwise no longer useful or used in its business
disposed of in the ordinary course of business;



          (b) a true lease or sublease of real property not constituting Indebtedness and not entered
into as part of a sale and leaseback transaction;



          (c) sale of inventory in the ordinary course of business;



          (d) licenses and sublicenses of intellectual property in the ordinary course of business
(including in connection with franchising activities) and which do not materially interfere with
the business of the Borrowers and its Subsidiaries;



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          (e) transfers of property subject to casualty events upon receipt of the cash proceeds of such
casualty event;



          (f) dispositions in the ordinary course of business consisting of the abandonment of
Intellectual Property which, in the reasonable good faith determination of the Borrowers, are not
material to the conduct of the business of the Borrowers and the Restricted Subsidiaries;



          (g) the sale of Permitted Investments in the ordinary course of business;



          (h) (i) discount the face amount of accounts receivable in connection with the collection of
such accounts receivable by Borrowers or their Restricted Subsidiaries and (ii) sell accounts
receivable to collection agencies, in each case in the ordinary course of business and consistent
with the past practices of the Person discounting or selling such accounts receivable; and



          (i) the sale or other disposition of such assets in an aggregate amount (based on the book
value of such assets) not to exceed 25% in any Fiscal Year of the book value of all of the assets
of the Borrowers and their Restricted Subsidiaries determined as of the end of the immediately
preceding Fiscal Year.



          Section 7.7. Transactions with Affiliates.



          The Borrowers will not, and will not permit any of their Restricted Subsidiaries to, sell,
lease or otherwise transfer any property or assets to, or purchase, lease or otherwise acquire any
property or assets from, or otherwise engage in any other transactions with, any of its Affiliates,
except (a) in the ordinary course of business at prices and on terms and conditions not less
favorable to the Borrowers or such Restricted Subsidiary than could be obtained on an arm’s-length
basis from unrelated third parties, (b) transactions between or among the Borrowers and any
Subsidiary Loan Party not involving any other Affiliates, (c) any Restricted Payment permitted by
Section 7.5, (d) the Fortegra Preferred Stock and the Indebtedness under the Subordinated
Debenture Purchase Agreement, (e) the South Bay Guaranty and the South Bay Investment, (f)
issuances by the Borrowers and their Restricted Subsidiaries of equity interests not prohibited
under this Agreement, (g) reasonable and customary fees payable to any directors of the Borrowers
and their Restricted Subsidiaries (or any direct or indirect parent of the Borrowers) and
reimbursement of reasonable out-of-pocket costs of the directors of the Borrowers and their
Restricted Subsidiaries (or any direct or indirect parent of the Borrowers) in the ordinary course
of business (in the case of any direct or indirect parent to the extent attributable to the
operations of the Borrowers and their Restricted Subsidiaries), (h) expense reimbursement and
employment, severance and compensation arrangements entered into by the Borrowers and their
Restricted Subsidiaries (or any direct or indirect parent of the Borrowers to the extent
attributable to the operations of the Borrowers and their Restricted Subsidiaries) with their
directors, officers, employees, in the ordinary course of business, (i) payments by the Borrowers
and their Restricted Subsidiaries to each other pursuant to tax sharing agreements or arrangements
on reasonable and customary terms, (j) the payment of reasonable and customary indemnities to
directors, officers, employees, members of management and consultants of the Borrowers and their
Restricted Subsidiaries (or any direct or indirect parent of the Borrowers) in



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the ordinary course of business (in the case of any direct or indirect parent to the extent
attributable to the operations of the Borrowers and their Restricted Subsidiaries), to the extent
the same is not covered by applicable director’s and officer’s insurance or other liability
insurance, (k) transactions pursuant to permitted agreements in existence on the Closing Date set
forth on Schedule 7.7 and any amendment thereto to the extent such an amendment is not adverse to
the interests of the Lenders in any material respect, (l) loans and other transactions among the
Borrowers and their Restricted Subsidiaries to the extent permitted under Section 7.1;
provided that any Indebtedness of any Loan Party owed to a Restricted Subsidiary that is
not a Loan Party shall be subordinated as provided in Section 7.1(d), (m) the existence of,
or the performance by the Borrowers or any of their Restricted Subsidiaries of their obligations
under the terms of any stockholders agreement, principal investors agreement (including any
registration rights agreement or purchase agreement related thereto) to which it is a party as of
the Closing Date and set forth on Schedule 7.7 and any similar agreements which it may enter into
thereafter; provided, however, that the existence of, or the performance by the
Borrowers or any of their Restricted Subsidiaries of obligations under any future amendment to any
such existing agreement or under any similar agreement entered into after the Closing Date shall
only be permitted by this clause (m) to the extent that the terms of any such amendment or
new agreement are not adverse to the interests of the Lenders in any material respect, (o) payments
or loans (or cancellation of loans) to directors, officers, employees, members of management or
consultants of the Borrowers, any of their direct or indirect parent companies or any of their
Restricted Subsidiaries which are approved by a majority of the board of directors of the Borrowers
in good faith and that are permitted under Section 7.4, and (p) Investments permitted by
Section 7.4(k).




          Section 7.8. Restrictive Agreements.



          The Borrowers will not, and will not permit any Restricted Subsidiary to, directly or
indirectly, enter into, incur or permit to exist any agreement that prohibits, restricts or imposes
any condition upon (a) the ability of the Borrowers or any Restricted Subsidiary to create, incur
or permit any Lien upon any of its assets or properties, whether now owned or hereafter acquired,
or (b) the ability of any Restricted Subsidiary to pay dividends or other distributions with
respect to its Capital Stock, to make or repay loans or advances to the Borrowers or any other
Restricted Subsidiary, to Guarantee Indebtedness of the Borrowers or any other Restricted
Subsidiary or to transfer any of its property or assets to the Borrowers or any Restricted
Subsidiary of the Borrowers; provided, that (i) the foregoing shall not apply to (A)
restrictions or conditions imposed by law or by this Agreement or any other Loan Document, (B)
customary restrictions and conditions contained in agreements relating to the sale of a Restricted
Subsidiary pending such sale, provided such restrictions and conditions apply only to the
Restricted Subsidiary that is sold and such sale is permitted hereunder, (C) restrictions or
conditions imposed by any agreement relating to secured Indebtedness permitted by this Agreement if
such restrictions and conditions apply only to the property or assets securing such Indebtedness,
(D) contractual obligations binding on a Restricted Subsidiary at the time such Restricted
Subsidiary first becomes a Restricted Subsidiary, so long as such contractual obligations were not
entered into solely in contemplation of such Person becoming a Restricted Subsidiary so long as
such contractual obligations do not prohibit such Restricted Subsidiary from granting Liens in its
assets to secure the Obligations or from Guaranteeing the Obligations, (E) restrictions on cash,
other deposits or net worth imposed by customers under contracts entered into in the ordinary



71









 




course of business, (F) restrictions and conditions which exist on the date hereof and set
forth on Schedule 7.8 and (G) any encumbrances or restrictions imposed by any amendments,
modifications, restatements, renewals, increases, supplements, refundings, replacements or
refinancings of the contracts, instruments or obligations referred to in clauses (A) through (F)
above; provided that such amendments, modifications, restatements, renewals, increases,
supplements, refundings, replacements or refinancings are, in the good faith judgment of the
Borrowers, no more restrictive with respect to such encumbrance and other restrictions than those
prior to such amendment, modification, restatement, renewal, increase, supplement, refunding,
replacement or refinancing and (ii) clause (a) shall not apply to customary provisions in
leases restricting the assignment thereof.




          Section 7.9. Sale and Leaseback Transactions.



          The Borrowers will not, and will not permit any of their Restricted Subsidiaries to, enter
into any arrangement, directly or indirectly, whereby it shall sell or transfer any property, real
or personal, used or useful in its business, whether now owned or hereinafter acquired, and
thereafter rent or lease such property or other property that it intends to use for substantially
the same purpose or purposes as the property sold or transferred.



          Section 7.10. Hedging Transactions.



          The Borrowers will not, and will not permit any of their Restricted Subsidiaries to, enter
into any Hedging Transaction, other than Hedging Transactions entered into in the ordinary course
of business to hedge or mitigate risks to which the Borrowers or any Restricted Subsidiary is
exposed in the conduct of its business or the management of its liabilities. Solely for the
avoidance of doubt, the Borrowers acknowledge that a Hedging Transaction entered into for
speculative purposes or of a speculative nature (which shall be deemed to include any Hedging
Transaction under which the Borrowers or any of their Restricted Subsidiaries is or may become
obliged to make any payment (i) in connection with the purchase by any third party of any Capital
Stock or any Indebtedness or (ii) as a result of changes in the market value of any Capital Stock
or any Indebtedness) is not a Hedging Transaction entered into in the ordinary course of business
to hedge or mitigate risks.



          Section 7.11. Amendment to Material Documents.



          The Borrowers will not, and will not permit any of their Restricted Subsidiaries to, amend,
modify or waive any of its rights in any manner that is adverse in any material respect to the
interests of the Lenders under (a) such Person’s certificate of incorporation, bylaws or other
organizational documents or (b) Material Agreements.



          Section 7.12. Permitted Subordinated Indebtedness.



          (a) The Borrowers will not, and will not permit any of their Restricted Subsidiaries to make
any principal, interest or other payments on any Permitted Subordinated Debt that is not expressly
permitted by the subordination provisions of the Subordinated Debt Documents.



72









 





          (b) The Borrowers will not, and will not permit any of their Restricted Subsidiaries to, agree
to or permit any amendment, modification or waiver of any provision of any Subordinated Debt
Document if the effect of such amendment, modification or waiver is to (i) increase the interest
rate on such Permitted Subordinated Debt or change (to a date earlier than six months after the
Maturity Date) the dates upon which principal payments are due thereon; (ii) alter the redemption,
prepayment or subordination provisions thereof; (iii) alter the covenants and events of default in
a manner that would make such provisions more onerous or restrictive to the Borrowers or any such
Restricted Subsidiary than is customary for senior subordinated debt securities of comparable
issuers issued in the capital markets at such time and placed by nationally recognized investment
banks; or (iv) otherwise increase the obligations of the Borrowers or any Restricted Subsidiary in
respect of such Permitted Subordinated Debt or confer additional rights upon the holders thereof
which individually or in the aggregate would be materially adverse to the Administrative Agent or
the Lenders.



          Section 7.13. Accounting Changes.



          The Borrowers will not, and will not permit any of their Restricted Subsidiaries to, make any
significant change in accounting treatment or reporting practices, except for changes required by
GAAP, SAP or any requirement of law or changes otherwise in accordance with GAAP, SAP or any
requirement of law, or change the Fiscal Year of the Borrowers or of any of their Restricted
Subsidiaries, except to change the Fiscal Year of a Restricted Subsidiary to conform its fiscal
year to that of the Borrowers.



          Section 7.14. Lease Obligations.



          The Borrowers will not, and will not permit any Restricted Subsidiary to, create or suffer to
exist any obligations for the payment under operating leases or agreements to lease (but excluding
any obligations under leases required to be classified as capital leases under GAAP) which would
cause the present value of the direct or contingent liabilities of the Borrowers and their
Restricted Subsidiaries (considered on a consolidated basis under GAAP) under such leases or
agreements to lease to exceed $7,500,000 (or such greater amount agreed to by the Administrative
Agent) in the aggregate in any Fiscal Year.



          Section 7.15. Government Regulation.



          None of the Borrowers or any of their Restricted Subsidiaries will (a) be or become subject at
any time to any law, regulation, or list of any Governmental Authority of the United States
(including, without limitation, the U.S. Office of Foreign Asset Control list) that prohibits or
limits the Lenders or the Administrative Agent from making any advance or extension of credit to
the Borrowers or from otherwise conducting business with the Loan Parties, or (b) fail to provide
documentary and other evidence of the identity of the Loan Parties as may be requested by the
Lenders or the Administrative Agent at any time to enable the Lenders or the Administrative Agent
to verify the identity of the Loan Parties or to comply with any applicable law or regulation,
including, without limitation, Section 326 of the Patriot Act.



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          Section 7.16. ERISA.



          The Borrowers will not and will not cause or permit any ERISA Affiliate to cause or permit to
occur an ERISA Event to the extent such ERISA Event could reasonably be expected to have a Material
Adverse Effect.



ARTICLE VIII




EVENTS OF DEFAULT



          Section 8.1. Events of Default.



          If any of the following events (each an “Event of Default”) shall occur:



          (a) the Borrowers shall fail to pay any principal of any Loan when and as the same shall
become due and payable, whether at the due date thereof or at a date fixed for prepayment or
otherwise; or



          (b) the Borrowers shall fail to pay any interest on any Loan or any fee or any other amount
(other than an amount payable under clause (a) of this Section 8.1) payable under this
Agreement or any other Loan Document, when and as the same shall become due and payable, and such
failure shall continue unremedied for a period of five (5) Business Days; or



          (c) any representation or warranty made or deemed made by or on behalf of the Borrowers or any
Restricted Subsidiary in or in connection with this Agreement or any other Loan Document (including
the Schedules attached thereto) and any amendments or modifications hereof or waivers hereunder, or
in any certificate, report, financial statement or other document submitted to the Administrative
Agent or the Lenders by any Loan Party or any representative of any Loan Party pursuant to or in
connection with this Agreement or any other Loan Document shall prove to be incorrect in any
material respect as of the date made or deemed made or submitted; or



          (d) the Borrowers shall fail to deliver the documents or instruments, or to take or cause to
be taken such actions as required by, and within the timeframes set forth on Schedule 3.1, or the
Borrowers shall fail to observe or perform any covenant or agreement contained in Section 5.2, or
Section 5.3 (with respect to the Borrowers’ or any Loan Party’s existence) or ARTICLE VI or
ARTICLE VII; or



          (e) any Loan Party shall fail to observe or perform any covenant or agreement contained in
this Agreement (other than those referred to in clauses (a), (b) and (d) above) or any other Loan
Document, and such failure shall remain unremedied for 30 days after the earlier of (i) any
Responsible Officer of the Borrowers becomes aware of such failure, or (ii) written notice thereof
shall have been given to the Borrowers by the Administrative Agent; or



          (f) any Obligations fail to constitute “Senior Indebtedness” for purposes of the Subordinated
Debenture Purchase Agreement, or any event of default (after giving effect to any grace period)
shall have occurred and be continuing under the Subordinated Debt Documents that enables or permits
the holder or holders thereof to cause such Permitted



74









 




Subordinated Debt to become due, or to require the prepayment or redemption thereof, in each
case prior to the stated maturity thereof; or




          (g) the Borrowers or any Restricted Subsidiary (whether as primary obligor or as guarantor or
other surety) shall fail to pay any principal of, or premium or interest on, any Material
Indebtedness that is outstanding, when and as the same shall become due and payable (whether at
scheduled maturity, required prepayment, acceleration, demand or otherwise), and such failure shall
continue after the applicable grace period, if any, specified in the agreement or instrument
evidencing or governing such Material Indebtedness; or any other event shall occur or condition
shall exist under any agreement or instrument relating to such Material Indebtedness and shall
continue after the applicable grace period, if any, specified in such agreement or instrument, if
the effect of such event or condition is to accelerate, or permit the acceleration of, the maturity
of such Material Indebtedness; or any such Material Indebtedness shall be declared to be due and
payable, or required to be prepaid or redeemed (other than by a regularly scheduled required
prepayment or redemption), purchased or defeased, or any offer to prepay, redeem, purchase or
defease such Material Indebtedness shall be required to be made, in each case prior to the stated
maturity thereof; or



          (h) the Borrowers or any Restricted Subsidiary shall (i) commence a voluntary case or other
proceeding or file any petition seeking liquidation, reorganization or other relief under any
federal, state or foreign bankruptcy, insolvency or other similar law now or hereafter in effect or
seeking the appointment of a custodian, trustee, receiver, liquidator or other similar official of
it or any substantial part of its property, (ii) consent to the institution of, or fail to contest
in a timely and appropriate manner, any proceeding or petition described in clause (i) of this
Section 8.1, (iii) apply for or consent to the appointment of a custodian, trustee,
receiver, liquidator or other similar official for the Borrowers or any such Restricted Subsidiary
or for a substantial part of its assets, (iv) file an answer admitting the material allegations of
a petition filed against it in any such proceeding, (v) make a general assignment for the benefit
of creditors, or (vi) take any action for the purpose of effecting any of the foregoing; or



          (i) an involuntary proceeding shall be commenced or an involuntary petition shall be filed
seeking (i) liquidation, reorganization or other relief in respect of the Borrowers or any
Restricted Subsidiary or its debts, or any substantial part of its assets, under any federal, state
or foreign bankruptcy, insolvency or other similar law now or hereafter in effect or (ii) the
appointment of a custodian, trustee, receiver, liquidator or other similar official for the
Borrowers or any Restricted Subsidiary or for a substantial part of its assets, and in any such
case, such proceeding or petition shall remain undismissed for a period of 60 days or an order or
decree approving or ordering any of the foregoing shall be entered; or



          (j) the Borrowers or any Restricted Subsidiary shall become unable to pay, shall admit in
writing its inability to pay, or shall fail to pay, its debts as they become due; or



          (k) an ERISA Event shall have occurred that, in the opinion of the Required Lenders, when
taken together with other ERISA Events that have occurred, could reasonably be expected to result
in liability to the Borrowers and the Subsidiaries in an aggregate amount exceeding $5,000,000; or



75









 





          (l) any judgment or order for the payment of money in excess of $5,000,000 (to the extent not
covered by insurance and, if covered by insurance, as to which the applicable insurance carrier has
not denied coverage) in the aggregate shall be rendered against the Borrowers or any Restricted
Subsidiary, and either (i) enforcement proceedings shall have been commenced by any creditor upon
such judgment or order or (ii) there shall be a period of 30 consecutive days during which a stay
of enforcement of such judgment or order, by reason of a pending appeal or otherwise, shall not be
in effect; or



          (m) any non-monetary judgment or order shall be rendered against the Borrowers or any
Restricted Subsidiary that could reasonably be expected to have a Material Adverse Effect, and
there shall be a period of 30 consecutive days during which a stay of enforcement of such judgment
or order, by reason of a pending appeal or otherwise, shall not be in effect; or



          (n) a Change in Control shall occur or exist; or



          (o) the Borrowers or any of their Restricted Subsidiaries shall be enjoined, restrained or in
any way prevented by the order of any Governmental Authority from conducting the business of the
Borrowers and their Restricted Subsidiaries or from restricting the Borrowers and their Restricted
Subsidiaries from making Restricted Payment and, in each case, such order shall continue in effect
for more than thirty (30) days and such injunction or prevention could reasonably be expected to
result in a Material Adverse Effect; or



          (p) the loss, suspension or revocation of, or failure to renew, any license, permit or
authorization now held or hereafter acquired by the Borrowers or any of their Restricted
Subsidiaries, or any other action shall be taken by any Governmental Authority in response to any
alleged failure by the Borrowers or any of their Restricted Subsidiaries to be in compliance with
applicable law if such loss, suspension, revocation or failure to renew or other action,
individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect;
or



          (q) any provision of any Loan Document shall for any reason cease to be valid and binding on,
or enforceable against, the Loan Party party thereto (other than in accordance with its terms), or
any Loan Party shall so state in writing, or any Loan Party shall seek to terminate the Loan
Document to which it is a party; or



          (r) any security interest purported to be created by any Security Document shall cease to be,
or shall be asserted by the Borrowers or any other Loan Party not to be, a valid, perfected, first
priority (except for Permitted Liens or as otherwise expressly provided in this Agreement or such
Security Document) security interest in the securities, assets or properties covered thereby,
except to the extent that any such loss results solely from the actions or the failure to act of
the Administrative Agent; or



          (s) Fortegra shall have actual liability (as opposed to contingent) under the South Bay
Guaranty in an amount exceeding $5,000,000;


then, and in every such event (other than an event with respect to the Borrowers described in
clause (h) or (i) of this Section 8.1) and at any time thereafter during the continuance of
such






76









 







event, the Administrative Agent may, and upon the written request of the Required Lenders shall, by
notice to the Borrowers, take any or all of the following actions, at the same or different times:
(i) terminate the Revolving Commitments, whereupon the Revolving Commitment of each Lender shall
terminate immediately, (ii) declare the principal of and any accrued interest on the Loans, and all
other Obligations owing hereunder, to be, whereupon the same shall become, due and payable
immediately, without presentment, demand, protest or other notice of any kind, all of which are
hereby waived by the Borrowers, (iii) exercise all remedies contained in any other Loan Document,
and (iv) exercise any other remedies available at law or in equity; and that, if an Event of
Default specified in either clause (h) or (i) shall occur, the Revolving Commitments shall
automatically terminate and the principal of the Loans then outstanding, together with accrued
interest thereon, and all fees, and all other Obligations shall automatically become due and
payable, without presentment, demand, protest or other notice of any kind, all of which are hereby
waived by the Borrowers.




          Section 8.2. Application of Proceeds from Collateral.



          All proceeds from each sale of, or other realization upon, all or any part of the Collateral
by the Administrative Agent or any of the Lenders during the existence of an Event of Default shall
be applied as follows:



          (a) first, to the reimbursable expenses of the Administrative Agent incurred in
connection with such sale or other realization upon the Collateral, until the same shall have been
paid in full;



          (b) second, to the fees and other reimbursable expenses of the Administrative Agent
then due and payable pursuant to any of the Loan Documents, until the same shall have been paid in
full;



          (c) third, to all reimbursable expenses, if any, of the Lenders then due and payable
pursuant to any of the Loan Documents, until the same shall have been paid in full;



          (d) fourth, to the fees due and payable under clauses (b) and (c) of Section
2.12 of this Agreement and interest then due and payable under the terms of this Agreement,
until the same shall have been paid in full;



          (e) fifth, to the aggregate outstanding principal amount of the Loans and, to the
extent secured by Liens, the Net Mark-to-Market Exposure of the Borrowers and the Subsidiary Loan
Parties, until the same shall have been paid in full, allocated pro rata among the Lenders and any
Affiliates of Lenders that hold Net Mark-to-Market Exposure based on their respective pro rata
shares of the aggregate amount of such Loans and Net Mark-to-Market Exposure;



          (f) sixth, to all other Obligations until the same shall have been paid in full; and



          (g) seventh, to the extent any proceeds remain, to the Borrowers or other parties
lawfully entitled thereto.



77









 




All amounts allocated pursuant to the foregoing clauses second through seventh to
the Lenders as a result of amounts owed to the Lenders under the Loan Documents shall be allocated
among, and distributed to, the Lenders pro rata based on their respective Pro Rata Shares.




ARTICLE IX




THE ADMINISTRATIVE AGENT



          Section 9.1. Appointment of Administrative Agent.



          Each Lender irrevocably appoints SunTrust Bank as the Administrative Agent and authorizes it
to take such actions on its behalf and to exercise such powers as are delegated to the
Administrative Agent under this Agreement and the other Loan Documents, together with all such
actions and powers that are reasonably incidental thereto. The Administrative Agent may perform
any of its duties hereunder or under the other Loan Documents by or through any one or more
sub-agents or attorneys-in-fact appointed by the Administrative Agent. The Administrative Agent
and any such sub-agent or attorney-in-fact may perform any and all of its duties and exercise its
rights and powers through their respective Related Parties. The exculpatory provisions set forth
in this Article shall apply to any such sub-agent or attorney-in-fact and the Related Parties of
the Administrative Agent, any such sub-agent and any such attorney-in-fact and shall apply to their
respective activities in connection with the syndication of the credit facilities provided for
herein as well as activities as Administrative Agent.



          Section 9.2. Nature of Duties of Administrative Agent.



          The Administrative Agent shall not have any duties or obligations except those expressly set
forth in this Agreement and the other Loan Documents. Without limiting the generality of the
foregoing, (a) the Administrative Agent shall not be subject to any fiduciary or other implied
duties, regardless of whether a Default or an Event of Default has occurred and is continuing, (b)
the Administrative Agent shall not have any duty to take any discretionary action or exercise any
discretionary powers, except those discretionary rights and powers expressly contemplated by the
Loan Documents that the Administrative Agent is required to exercise in writing by the Required
Lenders (or such other number or percentage of the Lenders as shall be necessary under the
circumstances as provided in Section 10.2), and (c) except as expressly set forth in the
Loan Documents, the Administrative Agent shall not have any duty to disclose, and shall not be
liable for the failure to disclose, any information relating to the Borrowers or any of their
Subsidiaries that is communicated to or obtained by the Administrative Agent or any of its
Affiliates in any capacity. The Administrative Agent shall not be liable for any action taken or
not taken by it, its sub-agents or attorneys-in-fact with the consent or at the request of the
Required Lenders (or such other number or percentage of the Lenders as shall be necessary under the
circumstances as provided in Section 10.2) or in the absence of its own gross negligence or
willful misconduct as determined by a final, non-appealable judgment by a court of competent
jurisdiction. The Administrative Agent shall not be responsible for the negligence or misconduct
of any sub-agents or attorneys-in-fact selected by it with reasonable care. The Administrative
Agent shall not be deemed to have knowledge of any Default or Event of Default unless and until
written notice thereof (which notice shall include an express reference to such event being a
“Default” or “Event of Default” hereunder) is given to the Administrative Agent



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by the Borrowers or any Lender, and the Administrative Agent shall not be responsible for or
have any duty to ascertain or inquire into (i) any statement, warranty or representation made in or
in connection with any Loan Document, (ii) the contents of any certificate, report or other
document delivered hereunder or thereunder or in connection herewith or therewith, (iii) the
performance or observance of any of the covenants, agreements, or other terms and conditions set
forth in any Loan Document, (iv) the validity, enforceability, effectiveness or genuineness of any
Loan Document or any other agreement, instrument or document, or (v) the satisfaction of any
condition set forth in ARTICLE III or elsewhere in any Loan Document, other than to confirm
receipt of items expressly required to be delivered to the Administrative Agent. The
Administrative Agent may consult with legal counsel (including counsel for the Borrowers)
concerning all matters pertaining to such duties.




          Section 9.3. Lack of Reliance on the Administrative Agent.



          Each of the Lenders acknowledges that it has, independently and without reliance upon the
Administrative Agent or any other Lender and based on such documents and information as it has
deemed appropriate, made its own credit analysis and decision to enter into this Agreement. Each
of the Lenders also acknowledges that it will, independently and without reliance upon the
Administrative Agent or any other Lender and based on such documents and information as it has
deemed appropriate, continue to make its own decisions in taking or not taking of any action under
or based on this Agreement, any related agreement or any document furnished hereunder or
thereunder. Each of the Lenders acknowledges and agrees that outside legal counsel to the
Administrative Agent in connection with the preparation, negotiation, execution, delivery and
administration (including any amendments, waivers and consents) of this Agreement and the other
Loan Documents is acting solely as counsel to the Administrative Agent and is not acting as counsel
to any Lender (other than the Administrative Agent and its Affiliates) in connection with this
Agreement, the other Loan Documents or any of the transactions contemplated hereby or thereby.



          Section 9.4. Certain Rights of the Administrative Agent.



          If the Administrative Agent shall request instructions from the Required Lenders with respect
to any action or actions (including the failure to act) in connection with this Agreement, the
Administrative Agent shall be entitled to refrain from such act or taking such act, unless and
until it shall have received instructions from such Lenders, and the Administrative Agent shall not
incur liability to any Person by reason of so refraining. Without limiting the foregoing, no
Lender shall have any right of action whatsoever against the Administrative Agent as a result of
the Administrative Agent acting or refraining from acting hereunder in accordance with the
instructions of the Required Lenders where required by the terms of this Agreement.



          Section 9.5. Reliance by Administrative Agent.



          The Administrative Agent shall be entitled to rely upon, and shall not incur any liability for
relying upon, any notice, request, certificate, consent, statement, instrument, document or other
writing (including any electronic message, posting or other distribution) believed by it to be
genuine and to have been signed, sent or made by the proper Person. The Administrative Agent may
also rely upon any statement made to it orally or by telephone and



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believed by it to be made by the proper Person and shall not incur any liability for relying
thereon. The Administrative Agent may consult with legal counsel (including counsel for the
Borrowers), independent public accountants and other experts selected by it and shall not be liable
for any action taken or not taken by it in accordance with the advice of such counsel, accountants
or experts.




          Section 9.6. The Administrative Agent in its Individual Capacity.



          The bank serving as the Administrative Agent shall have the same rights and powers under this
Agreement and any other Loan Document in its capacity as a Lender as any other Lender and may
exercise or refrain from exercising the same as though it were not the Administrative Agent; and
the terms “Lenders”, “Required Lenders”, “holders of Notes”, or any similar terms shall, unless the
context clearly otherwise indicates, include the Administrative Agent in its individual capacity.
The bank acting as the Administrative Agent and its Affiliates may accept deposits from, lend money
to, and generally engage in any kind of business with the Borrowers or any Subsidiary or Affiliate
of the Borrowers as if it were not the Administrative Agent hereunder.



          Section 9.7. Successor Administrative Agent.



          (a) The Administrative Agent may resign at any time by giving notice thereof to the Lenders
and the Borrowers. Upon any such resignation, the Required Lenders shall have the right to appoint
a successor Administrative Agent, subject to the approval by the Borrowers provided that no Default
or Event of Default shall exist at such time. If no successor Administrative Agent shall have been
so appointed, and shall have accepted such appointment within 30 days after the retiring
Administrative Agent gives notice of resignation, then the retiring Administrative Agent may, on
behalf of the Lenders, appoint a successor Administrative Agent, which shall be a commercial bank
organized under the laws of the United States of America or any state thereof or a bank which
maintains an office in the United States, having a combined capital and surplus of at least
$500,000,000.



          (b) Upon the acceptance of its appointment as the Administrative Agent hereunder by a
successor, such successor Administrative Agent shall thereupon succeed to and become vested with
all the rights, powers, privileges and duties of the retiring Administrative Agent, and the
retiring Administrative Agent shall be discharged from its duties and obligations under this
Agreement and the other Loan Documents. If within 45 days after written notice is given of the
retiring Administrative Agent’s resignation under this Section 9.7 no successor
Administrative Agent shall have been appointed and shall have accepted such appointment, then on
such 45th day (i) the retiring Administrative Agent’s resignation shall become
effective, (ii) the retiring Administrative Agent shall thereupon be discharged from its duties and
obligations under the Loan Documents and (iii) the Required Lenders shall thereafter perform all
duties of the retiring Administrative Agent under the Loan Documents until such time as the
Required Lenders appoint a successor Administrative Agent as provided above. After any retiring
Administrative Agent’s resignation hereunder, the provisions of this Article shall continue in
effect for the benefit of such retiring Administrative Agent and its representatives and agents in
respect of any actions taken or not taken by any of them while it was serving as the Administrative
Agent.



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          Section 9.8. Authorization to Execute other Loan Documents; Collateral.



          (a) Each Lender authorizes the Administrative Agent to enter into each of the Loan Documents
to which it is a party and to take all action contemplated by such Loan Documents. Each Lender
agrees (except to the extent provided in Section 9.7(b) following the resignation of the
Administrative Agent) that no Lender, other than the Administrative Agent acting on behalf of all
Lenders, shall have the right individually to seek to realize upon the security granted by any Loan
Document, it being understood and agreed that such rights and remedies may be exercised solely by
the Administrative Agent for the benefit of the Lenders, upon the terms of the Loan Documents.



          (b) In the event that any Collateral is pledged by any Person as collateral security for the
Obligations, the Administrative Agent is hereby authorized to execute and deliver on behalf of the
Lenders any Loan Documents necessary or appropriate to grant and perfect a Lien on such Collateral
in favor of the Administrative Agent on behalf of the Lenders.



          (c) The Lenders hereby authorize the Administrative Agent, at its option and in its
discretion, to release any Lien granted to or held by the Administrative Agent upon any Collateral
(i) upon termination of the Revolving Commitments and payment and satisfaction of all of the
Obligations or the transactions contemplated hereby; (ii) as permitted by, but only in accordance
with, the terms of the applicable Loan Document; (iii) if approved, authorized or ratified in
writing by the Required Lenders, unless such release is required to be approved by all of the
Lenders hereunder; (iv) upon the release of a Subsidiary Loan Guaranty made or Lien granted by a
Subsidiary in the case of the sale of the Subsidiary permitted by the terms of this Agreement; or
(v) upon the release of any Lien on any assets which are transferred or disposed of in accordance
with the terms of this Agreement. Upon request by the Administrative Agent at any time, the
Lenders will confirm in writing the Administrative Agent’s authority to release particular types or
items of Collateral pursuant to this clause.



          (d) Upon any sale or transfer of assets constituting Collateral which is expressly permitted
pursuant to the terms of any Loan Documents, or consented to in writing by the Required Lenders,
and upon at least ten (10) Business Days’ prior written request by the Borrowers, the
Administrative Agent shall (and is hereby irrevocably authorized by the Lenders to) execute such
documents as may be necessary to evidence the release of the Liens granted to the Administrative
Agent for the benefit of the Lenders, upon the Collateral that was sold or transferred;
provided, however, that (i) the Administrative Agent shall not be required to
execute any such document on terms which, in the Administrative Agent’s opinion, would expose the
Administrative Agent to liability or create any obligation or entail any consequence other than the
release of such Liens without recourse or warranty, and (ii) such release shall not in any manner
discharge, affect or impair the Obligations or any Liens upon (or obligations of the Borrowers or
any Guarantor) in respect of all interests retained by the Borrowers or any Guarantor, including
(without limitation) the proceeds of the sale, all of which shall continue to constitute part of
the Collateral.



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          Section 9.9. No Other Duties, etc.



          Each Lender and the Borrowers (for themselves and the other Loan Parties) hereby agrees that
the Arranger, in its capacity as such, shall not have any duties or obligations under any Loan
Documents to the Borrowers, any Lender or any Loan Party.



          Section 9.10. Withholding Tax.



          To the extent required by any applicable law, the Administrative Agent may withhold from any
interest payment to any Lender an amount equivalent to any applicable withholding tax. If the
Internal Revenue Service or any authority of the United States or other jurisdiction asserts a
claim that the Administrative Agent did not properly withhold tax from amounts paid to or for the
account of any Lender (because the appropriate form was not delivered, was not properly executed,
or because such Lender failed to notify the Administrative Agent of a change in circumstances that
rendered the exemption from, or reduction of, withholding tax ineffective, or for any other
reason), such Lender shall indemnify the Administrative Agent (to the extent that the
Administrative Agent has not already been reimbursed by the Borrowers and without limiting the
obligation of the Borrowers to do so) fully for all amounts paid, directly or indirectly, by the
Administrative Agent as tax or otherwise, including penalties and interest, together with all
expenses incurred, including legal expenses, allocated staff costs and any out of pocket expenses.



          Section 9.11. Administrative Agent May File Proofs of Claim.



          (a) In case of the pendency of any receivership, insolvency, liquidation, bankruptcy,
reorganization, arrangement, adjustment, composition or other judicial proceeding relative to any
Loan Party, the Administrative Agent (irrespective of whether the principal of any Loan or any
Revolving Credit Exposure shall then be due and payable as herein expressed or by declaration or
otherwise and irrespective of whether the Administrative Agent shall have made any demand on the
Borrowers) shall be entitled and empowered, by intervention in such proceeding or otherwise:




     (i) to file and prove a claim for the whole amount of the principal and interest owing
and unpaid in respect of the Loans or Revolving Credit Exposure and all other Obligations
that are owing and unpaid and to file such other documents as may be necessary or advisable
in order to have the claims of the Lenders and the Administrative Agent (including any claim
for the reasonable compensation, expenses, disbursements and advances of the Lenders and the
Administrative Agent and its agents and counsel and all other amounts due the Lenders and
the Administrative Agent under Section 10.3) allowed in such judicial proceeding;
and




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



          (b) Any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar
official in any such judicial proceeding is hereby authorized by each Lender to make such payments
to the Administrative Agent and, if the Administrative Agent shall consent to the making of such
payments directly to the Lenders to pay to the Administrative Agent any amount



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due for the reasonable compensation, expenses, disbursements and advances of the
Administrative Agent and its agents and counsel, and any other amounts due the Administrative Agent
under Section 10.3.



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




ARTICLE X




MISCELLANEOUS



          Section 10.1. Notices.



          (a) Except in the case of notices and other communications expressly permitted to be given by
telephone, all notices and other communications to any party herein to be effective shall be in
writing and shall be delivered by hand or overnight courier service, mailed by certified or
registered mail or sent by telecopy, as follows:



	 	 	 
	To the Borrowers:

	 	Fortegra Financial Corporation

LOTS Intermediate Co.

100 West Bay Street

Jacksonville, Florida 32202

Attention: John Short

Phone Number: (904) 350-9660

Telecopy Number: (904) 354-4525
	 
	 	 
	With a copy to (which shall not constitute notice):

	 	Weil, Gotshal & Manges LLP

200 Crescent Court, Suite 300

Dallas, Texas 75201

Attention: Kelly M. Dybala

Phone Number: (214) 746-7898

Telecopy Number: (214) 746-7777
	 
	 	 
	
	To the Administrative Agent:

	 	SunTrust Bank
303 Peachtree Street, N. E.

Atlanta, Georgia 30308

Attention: W. Bradley Hamilton

Phone Number: (404) 588-8719

Telecopy Number: (404) 581-1775






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	With a copy to:

	 	SunTrust Bank

Agency Services

303 Peachtree Street, N. E./ 25th Floor

Atlanta, Georgia 30308

Attention: Ms. Wanda Gregory

Phone Number: (404) 588-8970

Telecopy Number: (404) 724-3879
	 
	 	 
	To any other Lender:

	 	the address set forth in the Administrative
Questionnaire or the Assignment and Acceptance Agreement executed by such
Lender
	 
	 	 
	Any party hereto may change its address or telecopy number for notices and other
communications hereunder by notice to the other parties hereto. All such notices and
other communications shall, when transmitted by overnight delivery, or faxed, be
effective when delivered for overnight (next-day) delivery, or transmitted in legible
form by facsimile machine, respectively, or if mailed, upon the third Business Day after
the date deposited into the mail or if delivered, upon delivery; provided, that notices
delivered to the Administrative Agent shall not be effective until actually received by
the Administrative Agent at its address specified in this Section 10.1.






          (b) Any agreement of the Administrative Agent and the Lenders herein to receive certain
notices by telephone, facsimile or other electronic transmission is solely for the convenience and
at the request of the Borrowers. The Administrative Agent and the Lenders shall be entitled to
rely on the authority of any Person purporting to be a Person authorized by the Borrowers to give
such notice and the Administrative Agent and the Lenders shall not have any liability to the
Borrowers or other Person on account of any action taken or not taken by the Administrative Agent
and the Lenders in reliance upon such telephonic or facsimile notice. The obligation of the
Borrowers to repay the Loans and all other Obligations hereunder shall not be affected in any way
or to any extent by any failure of the Administrative Agent and the Lenders to receive written
confirmation of any telephonic or facsimile notice or the receipt by the Administrative Agent and
the Lenders of a confirmation which is at variance with the terms understood by the Administrative
Agent and the Lenders to be contained in any such telephonic or facsimile notice.



          (c) Notices and other communications to the Lenders hereunder may be delivered or furnished by
electronic communication (including e-mail and Internet or intranet websites) pursuant to
procedures approved by Administrative Agent, provided that the foregoing shall not apply to
notices to any Lender pursuant to ARTICLE II unless such Lender and Administrative Agent
have agreed to receive notices under such Section by electronic communication and have agreed to
the procedures governing such communications. The Administrative Agent or Borrowers may, in their
discretion, agree to accept notices and other communications to it hereunder by electronic
communications pursuant to procedures approved by it; provided that approval of such
procedures may be limited to particular notices or communications.



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          (d) Unless the Administrative Agent otherwise prescribes, (i) notices and other communications
sent to an e-mail address shall be deemed received upon the sender’s receipt of an acknowledgement
from the intended recipient (such as by the “return receipt requested” function, as available,
return e-mail or other written acknowledgement); provided that if such notice or other
communication is not sent during the normal business hours of the recipient, such notice or
communication shall be deemed to have been sent at the opening of business on the next Business Day
for the recipient, and (ii) notices or communications posted to an Internet or intranet website
shall be deemed received upon the deemed receipt by the intended recipient at its e-mail address as
described in the foregoing clause (i) of notification that such notice or communication is
available and identifying the website address therefor.



          Section 10.2. Waiver; Amendments.



          (a) No failure or delay by the Administrative Agent or any Lender in exercising any right or
power hereunder or any other Loan Document, and no course of dealing between the Borrowers and the
Administrative Agent or any Lender, shall operate as a waiver thereof, nor shall any single or
partial exercise of any such right or power or any abandonment or discontinuance of steps to
enforce such right or power, preclude any other or further exercise thereof or the exercise of any
other right or power hereunder or thereunder. The rights and remedies of the Administrative Agent
and the Lenders hereunder and under the other Loan Documents are cumulative and are not exclusive
of any rights or remedies provided by law. No waiver of any provision of this Agreement or any
other Loan Document or consent to any departure by the Borrowers therefrom shall in any event be
effective unless the same shall be permitted by paragraph (b) of this Section 10.2, and
then such waiver or consent shall be effective only in the specific instance and for the purpose
for which given. Without limiting the generality of the foregoing, the making of a Loan shall not
be construed as a waiver of any Default or Event of Default, regardless of whether the
Administrative Agent or any Lender may have had notice or knowledge of such Default or Event of
Default at the time.



          (b) No amendment or waiver of any provision of this Agreement or the other Loan Documents, nor
consent to any departure by the Borrowers therefrom, shall in any event be effective unless the
same shall be in writing and signed by the Borrowers and the Required Lenders or the Borrowers and
the Administrative Agent with the consent of the Required Lenders and then such waiver or consent
shall be effective only in the specific instance and for the specific purpose for which given;
provided, that no amendment or waiver shall: (i) increase the Revolving Commitment of any
Lender without the written consent of such Lender, (ii) reduce the principal amount of any Loan or
reduce the rate of interest thereon, or reduce any fees payable hereunder, without the written
consent of each Lender affected thereby, (iii) postpone the date fixed for any payment of any
principal (excluding any mandatory prepayment) of, or interest on, any Loan or interest thereon or
any fees hereunder or reduce the amount of, waive or excuse any such payment, or postpone the
scheduled date for the termination or reduction of any Revolving Commitment, without the written
consent of each Lender affected thereby, (iv) change Section 2.19(b) or Section
2.19(c) in a manner that would alter the pro rata sharing of payments required thereby, without
the written consent of each Lender, (v) change any of the provisions of this Section 10.2
or the definition of “Required Lenders” or any other provision hereof specifying the number or
percentage of Lenders which are required to waive, amend or modify any rights hereunder or make any
determination or grant



85









 




any consent hereunder, without the consent of each Lender; (vi) release the Borrowers or any guarantor or limit the liability
of the Borrowers under the Loan Documents or any such guarantor under any guaranty agreement,
without the written consent of each Lender except as otherwise permitted by Section 9.8(c);
(vii) release all or substantially all Collateral securing any of the Obligations, without the
written consent of each Lender; or (viii) subordinate the Loans to any other Indebtedness without
the consent of all Lenders, provided further, that no such agreement shall amend, modify or
otherwise affect the rights, duties or obligations of the Administrative Agent without the prior
written consent of the Administrative Agent. Notwithstanding anything contained herein to the
contrary, (x) no Defaulting Lender shall have any right to approve or disapprove any amendment,
waiver or consent hereunder, except that the Revolving Commitment of such Defaulting Lender may not
be increased or extended without the consent of such Lender and (y) this Agreement may be amended
and restated without the consent of any Lender (but with the consent of the Borrowers and the
Administrative Agent) if, upon giving effect to such amendment and restatement, such Lender shall
no longer be a party to this Agreement (as so amended and restated), the Revolving Commitments of
such Lender shall have terminated (but such Lender shall continue to be entitled to the benefits of
Section 2.16, Section 2.17, Section 2.18 and Section 10.3), such
Lender shall have no other commitment or other obligation hereunder and shall have been paid in
full all principal, interest and other amounts owing to it or accrued for its account under this
Agreement. Notwithstanding anything herein or otherwise to the contrary, any Event of Default
occurring hereunder shall continue to exist (and shall be deemed to be continuing) until such time
as such Event of Default is waived in writing in accordance with the terms of this Section
notwithstanding (i) any attempted cure or other action taken by the Borrowers or any other Person
subsequent to the occurrence of such Event of Default or (ii) any action taken or omitted to be
taken by the Administrative Agent or any Lender prior to or subsequent to the occurrence of such
Event of Default (other than the granting of a waiver in writing in accordance with the terms of
this Section).




          Section 10.3. Expenses; Indemnification.



          (a) The Borrowers shall pay (i) all reasonable and documented out-of-pocket costs and expenses
of the Administrative Agent and its Affiliates, including the reasonable and documented
out-of-pocket fees, charges and disbursements of counsel for the Administrative Agent and its
Affiliates, in connection with the syndication of the credit facilities provided for herein, the
preparation and administration of the Loan Documents and any amendments, modifications or waivers
thereof (provided, that reimbursement of legal expenses shall be limited to the expenses of one
counsel to the Administrative Agent and its Affiliates taken as a whole and, if reasonably
necessary, one local counsel in any relevant and material jurisdiction), and (ii) all out-of-pocket
costs and expenses (including, without limitation, the fees, charges and disbursements of outside
counsel (provided, that reimbursement of legal expenses shall be limited to the expenses of one
counsel to the Administrative Agent and the Lenders taken as a whole and, if reasonably necessary,
one local counsel in any relevant and material jurisdiction)) incurred by the Administrative Agent
or any Lender in connection with the enforcement or protection of its rights in connection with
this Agreement and the other Loan Documents, including its rights under this Section 10.3,
or in connection with the Loans made hereunder, including all such out-of-pocket expenses incurred
during any workout, restructuring or negotiations in respect of such Loans.



86









 





          (b) The Borrowers shall indemnify the Administrative Agent (and any sub-agent thereof), each
Lender, and each Related Party of any of the foregoing Persons (each such Person being called an
“Indemnitee”) against, and hold each Indemnitee harmless from, any and all losses, claims,
damages, liabilities and related expenses (including the reasonable fees, charges and disbursements
of any counsel for any Indemnitee (provided, that reimbursement of legal expenses shall be limited
to the expenses of one counsel to the Indemnitees taken as a whole, and, solely in the case of a
conflict of interest, one additional counsel to the affected Indemnitees taken as a whole, and, if
reasonably necessary, one local counsel in any relevant and material jurisdiction)), incurred by
any Indemnitee or asserted against any Indemnitee by any third party or by the Borrowers or any
other Loan Party arising out of, in connection with, or as a result of (i) the execution or
delivery of this Agreement, any other Loan Document or any agreement or instrument contemplated
hereby or thereby, the performance by the parties hereto of their respective obligations hereunder
or thereunder or the consummation of the transactions contemplated hereby or thereby, (ii) any Loan
or the use or proposed use of the proceeds therefrom, (iii) the use by any Person of any
information or materials obtained by or through SyndTrak or other internet web sites, (iv) any
actual or alleged presence or Release of Hazardous Materials on or from any property owned or
operated by the Borrowers or any of their Subsidiaries, or any Environmental Liability of the
Borrowers or any of their Subsidiaries, or (iv) any actual or prospective claim, litigation,
investigation or proceeding relating to any of the foregoing, whether based on contract, tort or
any other theory, whether brought by a third party or by the Borrowers or any other Loan Party, and
regardless of whether any Indemnitee is a party thereto, provided that such indemnity shall
not, as to any Indemnitee, be available to the extent that such losses, claims, damages,
liabilities or related expenses (x) are determined by a court of competent jurisdiction by final
and nonappealable judgment to have resulted from the gross negligence or willful misconduct of such
Indemnitee, (y) result from a claim brought by the Borrowers or any other Loan Party against an
Indemnitee for breach in bad faith of such Indemnitee’s obligations hereunder or under any other
Loan Document, if the Borrowers or such Loan Party has obtained a final and nonappealable judgment
in its favor on such claim as determined by a court of competent jurisdiction or (z) relate to the
presence or Release of Hazardous Materials or any violation of Environmental Laws that first occurs
at any property after such property is transferred to an Indemnitee by means of foreclosure,
deed-in-lieu of foreclosure or similar transfer, and is not an Environmental Liability of the
Borrowers or any of their Subsidiaries.



          (c) The Borrowers shall pay, and hold the Administrative Agent and each of the Lenders
harmless from and against, any and all present and future stamp, documentary, and other similar
taxes with respect to this Agreement and any other Loan Documents, any collateral described
therein, or any payments due thereunder, and save the Administrative Agent and each Lender harmless
from and against any and all liabilities with respect to or resulting from any delay or omission to
pay such taxes.



          (d) To the extent that the Borrowers fail to pay any amount required to be paid to the
Administrative Agent under clauses (a), (b) or (c) hereof, each Lender severally agrees to pay to
the Administrative Agent, such Lender’s Pro Rata Share (determined as of the time that the
unreimbursed expense or indemnity payment is sought) of such unpaid amount; provided, that
the unreimbursed expense or indemnified payment, claim, damage, liability or related



87









 




expense, as the case may be, was incurred by or asserted against the Administrative Agent in
its capacity as such.




          (e) To the extent permitted by applicable law, no party hereto shall assert, and each party
hereto hereby waives, any claim against any Indemnitee, on any theory of liability, for special,
indirect, consequential or punitive damages (as opposed to actual or direct damages) arising out
of, in connection with or as a result of, this Agreement, any other Loan Document or any agreement
or instrument contemplated hereby or thereby, the transactions contemplated herein or therein, any
Loan or the use of proceeds thereof. No Indemnitee referred to in paragraph (b) above shall be
liable for any damages arising from the use by unintended recipients of any information or other
materials distributed by it through telecommunications, electronic or other information
transmission systems in connection with this Agreement or the other Loan Documents or the
transactions contemplated hereby or thereby.



          (f) All amounts due under this Section 10.3 shall be payable promptly after written
demand therefor.



          Section 10.4. Successors and Assigns.



          (a) The provisions of this Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns permitted hereby, except that the
Borrowers may not assign or otherwise transfer any of its rights or obligations hereunder without
the prior written consent of the Administrative Agent and each Lender, and no Lender may assign or
otherwise transfer any of its rights or obligations hereunder except (i) to an assignee in
accordance with the provisions of paragraph (b) of this Section, (ii) by way of participation in
accordance with the provisions of paragraph (d) of this Section or (iii) by way of pledge or
assignment of a security interest subject to the restrictions of paragraph (g) of this Section (and
any other attempted assignment or transfer by any party hereto shall be null and void). Nothing in
this Agreement, expressed or implied, shall be construed to confer upon any Person (other than the
parties hereto, their respective successors and assigns permitted hereby, Participants to the
extent provided in paragraph (d) of this Section and, to the extent expressly contemplated hereby,
the Related Parties of each of the Administrative Agent and the Lenders) any legal or equitable
right, remedy or claim under or by reason of this Agreement.



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



          (i) Minimum Amounts.




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




     (B) in any case not described in paragraph Section 10.4(b)(i)(A) of this
Section, the aggregate amount of the Revolving Commitment (which for this



88









 







purpose includes Loans and Revolving Credit Exposure outstanding thereunder)
or, if the applicable Revolving Commitment is not then in effect, the principal
outstanding balance of the Loans and Revolving Credit Exposure of the assigning
Lender subject to each such assignment (determined as of the date the Assignment
and Acceptance with respect to such assignment is delivered to the Administrative
Agent or, if “Trade Date” is specified in the Assignment and Acceptance, as of the
Trade Date) shall not be less than $1,000,000 and shall be in increments of
$500,000 in excess thereof, unless each of the Administrative Agent and, so long
as no Event of Default has occurred and is continuing, the Borrowers otherwise
consent (each such consent not to be unreasonably withheld or delayed); provided
that the Borrowers shall be deemed to have consented to any such lower amount
unless it shall object thereto by written notice to the Administrative Agent
within 10 Business Days after having received written notice thereof.




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




     (iii) Required Consents. No consent shall be required for any assignment
except to the extent required by paragraph Section 10.4(b)(i)(B) of this Section and, in
addition:




     (A) the consent of the Borrowers (such consent not to be unreasonably
withheld or delayed) shall be required unless (x) an Event of Default has occurred
and is continuing at the time of such assignment or (y) such assignment is to a
Lender, an Affiliate of a Lender or an Approved Fund; provided that the Borrowers
shall be deemed to have consented to any such assignment unless it shall object
thereto by written notice to the Administrative Agent within 10 Business Days
after having received written notice thereof; and




     (B) the consent of the Administrative Agent (such consent not to be
unreasonably withheld or delayed) shall be required for assignments to a Person
that is not a Lender with a Revolving Commitment.




     (iv) Assignment and Acceptance. The parties to each assignment shall deliver
to the Administrative Agent (A) a duly executed Assignment and Acceptance, (B) a processing
and recordation fee of $3,500 (C) an Administrative Questionnaire unless the assignee is
already a Lender and (D) the documents required under Section 2.18.




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




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



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Subject to acceptance and recording thereof by the Administrative Agent pursuant to paragraph (c)
of this Section 10.4, from and after the effective date specified in each Assignment and
Acceptance, the assignee thereunder shall be a party to this Agreement and, to the extent of the
interest assigned by such Assignment and Acceptance, have the rights and obligations of a Lender
under this Agreement, and the assigning Lender thereunder shall, to the extent of the interest
assigned by such Assignment and Acceptance, be released from its obligations under this Agreement
(and, in the case of an Assignment and Acceptance covering all of the assigning Lender’s rights and
obligations under this Agreement, such Lender shall cease to be a party hereto) but shall continue
to be entitled to the benefits of Section 2.16, Section 2.17, Section 2.18
and Section 10.3 with respect to facts and circumstances occurring prior to the effective
date of such assignment. Any assignment or transfer by a Lender of rights or obligations under
this Agreement that does not comply with this paragraph shall be treated for purposes of this
Agreement as a sale by such Lender of a participation in such rights and obligations in accordance
with paragraph (d) of this Section 10.4. If the consent of the Borrowers to an assignment
is required hereunder (including a consent to an assignment which does not meet the minimum
assignment thresholds specified above), the Borrowers shall be deemed to have given its consent
five Business Days after the date written notice thereof has actually been delivered by the
assigning Lender (through the Administrative Agent) to the Borrowers, unless such consent is
expressly refused by the Borrowers prior to such tenth Business Day.




          (c) The Administrative Agent, acting solely for this purpose as an agent of the Borrowers,
shall maintain at one of its offices in Atlanta, Georgia a copy of each Assignment and Acceptance
delivered to it and a register for the recordation of the names and addresses of the Lenders, and
the Revolving Commitments of, and principal amount (and stated interest thereon) of the Loans and
Revolving Credit Exposure owing to, each Lender pursuant to the terms hereof from time to time (the
“Register”). Information contained in the Register with respect to any Lender shall be
available for inspection by such Lender at any reasonable time and from time to time upon
reasonable prior notice; information contained in the Register shall also be available for
inspection by the Borrowers at any reasonable time and from time to time upon reasonable prior
notice. In establishing and maintaining the Register, the Administrative Agent shall serve as the
Borrowers’ agent solely for tax purposes and solely with respect to the actions described in this
Section, and the Borrowers hereby agree that, to the extent SunTrust Bank serves in such capacity,
SunTrust Bank and its officers, directors, employees, agents, sub-agents and affiliates shall
constitute “Indemnitees.”



          (d) Any Lender may at any time, without the consent of, or notice to, the Borrowers the
Administrative Agent, sell participations to any Person (other than a natural person, the Borrowers
or any of the Borrowers’ Affiliates or Subsidiaries) (each, a “Participant”) in all or a
portion of such Lender’s rights and/or obligations under this Agreement (including all or a portion
of its Revolving Commitment and/or the Loans owing to it); provided that (i) such Lender’s
obligations under this Agreement shall remain unchanged, (ii) such Lender shall remain solely
responsible to the other parties hereto for the performance of such obligations and (iii) the
Borrowers, the Administrative Agent and the Lenders shall continue to deal solely and directly with
such Lender in connection with such Lender’s rights and obligations under this Agreement. A Lender
who sells a participation shall (acting solely for this purpose as an agent of the Borrowers)
maintain at one of its offices a copy of each agreement or instrument effecting such



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sale and the participation so transferred on a register substantially similar to the Register
(the “Participant Register”).




          (e) Any agreement or instrument pursuant to which a Lender sells such a participation shall
provide that such Lender shall retain the sole right to enforce this Agreement and to approve any
amendment, modification or waiver of any provision of this Agreement; provided that such
agreement or instrument may provide that such Lender will not, without the consent of the
Participant, agree to any amendment, modification or waiver with respect to the following to the
extent affecting such Participant: (i) increase the Revolving Commitment of such Lender, (ii)
reduce the principal amount of any Loan or reduce the rate of interest thereon, or reduce any fees
payable hereunder, (iii) postpone the date fixed for any payment of any principal of, or interest
on, any Loan or interest thereon or any fees hereunder or reduce the amount of, waive or excuse any
such payment, or postpone the scheduled date for the termination or reduction of any Revolving
Commitment, (iv) change Section 2.19(b) or Section 2.19(c) in a manner that would
alter the pro rata sharing of payments required thereby, (v) change any of the provisions of this
Section 10.4 or the definition of “Required Lenders” or any other provision hereof
specifying the number or percentage of Lenders which are required to waive, amend or modify any
rights hereunder or make any determination or grant any consent hereunder, (vi) release any
guarantor or limit the liability of any guarantor under any guaranty agreement except to the extent
such release is expressly provided under the terms of the Subsidiary Guaranty Agreement, or (vii)
release all or substantially all collateral (if any) securing any of the Obligations. Subject to
paragraph (f) of this Section 10.4, the Borrowers agree that each Participant shall be
entitled to the benefits of Section 2.16, Section 2.17, and Section 2.18 to
the same extent as if it were a Lender and had acquired its interest by assignment pursuant to
paragraph (b) of this Section 10.4. To the extent permitted by law, each Participant also
shall be entitled to the benefits of Section 10.7 as though it were a Lender, provided such
Participant agrees to be subject to Section 2.19 as though it were a Lender.



          (f) A Participant shall not be entitled to receive any greater payment under Section
2.17 and Section 2.18 than the applicable Lender would have been entitled to receive
with respect to the participation sold to such Participant, unless the sale of the participation to
such Participant is made with the Borrowers’ prior written consent. A Participant shall not be
entitled to the benefits of Section 2.18 unless the Borrowers are notified of the
participation sold to such Participant and such Participant agrees, for the benefit of the
Borrowers, to comply with Section 2.18(e) as though it were a Lender.



          (g) Any Lender may at any time pledge or assign a security interest in all or any portion of
its rights under this Agreement to secure obligations of such Lender, including without limitation
any pledge or assignment to secure obligations to a Federal Reserve Bank; provided that no
such pledge or assignment shall release such Lender from any of its obligations hereunder or
substitute any such pledgee or assignee for such Lender as a party hereto.



          Section 10.5. Governing Law; Jurisdiction; Consent to Service of Process.



          (a) This Agreement and the other Loan Documents shall be construed in accordance with and be
governed by the law (without giving effect to the conflict of law principles thereof) of the State
of New York. EACH LOAN DOCUMENT (OTHER THAN AS



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OTHERWISE EXPRESSLY SET FORTH IN A LOAN DOCUMENT) WILL BE DEEMED TO BE A CONTRACT MADE UNDER
AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK (INCLUDING FOR SUCH PURPOSES SECTIONS 5-1401 AND
5-1402 OF THE NEW YORK GENERAL OBLIGATIONS LAW BUT EXCLUDING ALL OTHER CHOICE OF LAW AND CONFLICT
OF LAW RULES).




          (b) The parties hereto hereby irrevocably and unconditionally submit, for themselves and their
property, to the non-exclusive jurisdiction of the United States District Court of the Southern
District of New York, and of any state court of the State of Supreme Court of the State of New York
sitting in New York county and any appellate court from any thereof, in any action or proceeding
arising out of or relating to this Agreement or any other Loan Document or the transactions
contemplated hereby or thereby, or for recognition or enforcement of any judgment, and each of the
parties hereto hereby irrevocably and unconditionally agrees that all claims in respect of any such
action or proceeding may be heard and determined in such New York state court or, to the extent
permitted by applicable law, such Federal court. Each of the parties hereto agrees that a final
judgment in any such action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law. Nothing in this
Agreement or any other Loan Document shall affect any right that the Administrative Agent or any
Lender may otherwise have to bring any action or proceeding relating to this Agreement or any other
Loan Document against the Borrowers or their properties in the courts of any jurisdiction.



          (c) The parties hereto irrevocably and unconditionally waive any objection which they may now
or hereafter have to the laying of venue of any such suit, action or proceeding described in
paragraph (b) of this Section 10.5 and brought in any court referred to in paragraph (b) of
this Section 10.5. Each of the parties hereto irrevocably waives, to the fullest extent
permitted by applicable law, the defense of an inconvenient forum to the maintenance of such action
or proceeding in any such court.



          (d) Each party to this Agreement irrevocably consents to the service of process in the manner
provided for notices in Section 10.1. Nothing in this Agreement or in any other Loan
Document will affect the right of any party hereto to serve process in any other manner permitted
by law.



          Section 10.6. WAIVER OF JURY TRIAL.



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



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DOCUMENTS BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.




          Section 10.7. Right of Setoff.



          In addition to any rights now or hereafter granted under applicable law and not by way of
limitation of any such rights, each Lender shall have the right, at any time or from time to time
upon the occurrence and during the continuance of an Event of Default, without prior notice to the
Borrowers, any such notice being expressly waived by the Borrowers to the extent permitted by
applicable law, to set off and apply against all deposits (general or special, time or demand,
provisional or final) of the Borrowers at any time held or other obligations at any time owing by
such Lender to or for the credit or the account of the Borrowers against any and all Obligations
held by such Lender, irrespective of whether such Lender shall have made demand hereunder and
although such Obligations may be contingent or unmatured. Each Lender agrees promptly to notify
the Administrative Agent and the Borrowers after any such set-off and any application made by such
Lender; provided, that the failure to give such notice shall not affect the validity of
such set-off and application. Each Lender agrees to apply all amounts collected from any such
set-off to the Obligations before applying such amounts to any other Indebtedness or other
obligations owed by the Borrowers and any of their Restricted Subsidiaries to such Lender.



          Section 10.8. Counterparts; Integration.



          This Agreement may be executed by one or more of the parties to this Agreement on any number
of separate counterparts (including by telecopy or by email, in pdf format), and all of said
counterparts taken together shall be deemed to constitute one and the same instrument. This
Agreement, the Fee Letter, the other Loan Documents, and any separate letter agreement(s) relating
to any fees payable to the Administrative Agent constitute the entire agreement among the parties
hereto and thereto regarding the subject matters hereof and thereof and supersede all prior
agreements and understandings, oral or written, regarding such subject matters. Delivery of an
executed counterpart of a signature page of this Agreement and any other Loan Document by telecopy
or by email, in pdf format, shall be effective as delivery of a manually executed counterpart of
this Agreement or such other Loan Document.



          Section 10.9. Survival.



          All covenants, agreements, representations and warranties made by the Borrowers herein, in the
Loan Documents and in the certificates or other instruments delivered in connection with or
pursuant to this Agreement shall be considered to have been relied upon by the other parties hereto
and shall survive the execution and delivery of this Agreement and the making of any Loans,
regardless of any investigation made by any such other party or on its behalf and notwithstanding
that the Administrative Agent or any Lender may have had notice or knowledge of any Default or
incorrect representation or warranty at the time any credit is extended hereunder, and shall
continue in full force and effect as long as the principal of or any accrued interest on any Loan
or any fee or any other amount payable under this Agreement is outstanding and unpaid and so long
as the Revolving Commitments have not expired or terminated. The provisions of Section
2.16, Section 2.17, Section 2.18, and Section 10.3 and



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ARTICLE IX shall survive and remain in full force and effect regardless of the
consummation of the transactions contemplated hereby, the repayment of the Loans, the expiration or
termination the Revolving Commitments or the termination of this Agreement or any provision hereof.
All representations and warranties made herein, in the Loan Documents in the certificates,
reports, notices, and other documents delivered pursuant to this Agreement shall survive the
execution and delivery of this Agreement and the other Loan Documents, and the making of the Loans.




          Section 10.10. Severability.



          Any provision of this Agreement or any other Loan Document held to be illegal, invalid or
unenforceable in any jurisdiction, shall, as to such jurisdiction, be ineffective to the extent of
such illegality, invalidity or unenforceability without affecting the legality, validity or
enforceability of the remaining provisions hereof or thereof; and the illegality, invalidity or
unenforceability of a particular provision in a particular jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.



          Section 10.11. Confidentiality.



          Each of the Administrative Agent and the Lenders agrees to maintain the confidentiality of any
information relating to the Borrowers or any of their Subsidiaries or any of their respective
businesses, except to the extent expressly designated in writing as public information at the time
delivered to it by the Borrowers or any Subsidiary, other than any such information that is
available to the Administrative Agent or any Lender on a nonconfidential basis prior to disclosure
by the Borrowers or any of their Subsidiaries, except that such information may be disclosed (i) to
any Related Party of the Administrative Agent or any such Lender including without limitation
accountants, legal counsel and other advisors (it being understood that the Persons to whom such
disclosure is made will be informed of the confidential nature of such information by the Persons
who have agreed to keep such Information confidential), (ii) to the extent required by applicable
laws or regulations or by any subpoena or similar legal process (provided that the Person
disclosing any such information pursuant to this clause (ii) shall provide the Borrowers
with reasonably prompt notice of such disclosure provided that such Person shall not incur any
liability from its failure to do so), (iii) to the extent requested by any regulatory agency or
authority purporting to have jurisdiction over it (including any self-regulatory authority such as
the National Association of Insurance Commissioners), (iv) to the extent that such information
becomes publicly available other than as a result of a breach of this Section 10.11, or
which becomes available to the Administrative Agent, any Lender or any Related Party of any of the
foregoing on a non-confidential basis from a source other than the Borrowers, (v) in connection
with the exercise of any remedy hereunder or under any other Loan Documents or any suit, action or
proceeding relating to this Agreement or any other Loan Documents or the enforcement of rights
hereunder or thereunder, (vi) subject to an agreement containing provisions substantially the same
as those of this Section 10.11, to (A) any assignee of or Participant in, or any
prospective assignee of or Participant in, any of its rights or obligations under this Agreement,
or (B) any actual or prospective party (or its Related Parties) to any swap or derivative or
similar transaction under which payments are to be made by reference to the Borrowers and their
obligations, this Agreement or payments hereunder or (vii) with the consent of the Borrowers. Any
Person required to maintain the confidentiality of any information as provided for in this
Section 10.11 shall be considered to have complied with its



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obligation to do so if such Person has exercised the same degree of care to maintain the
confidentiality of such information as such Person would accord its own confidential information.




          Section 10.12. Interest Rate Limitation.



          Notwithstanding anything herein to the contrary, if at any time the interest rate applicable
to any Loan, together with all fees, charges and other amounts which may be treated as interest on
such Loan under applicable law (collectively, the “Charges”), shall exceed the maximum
lawful rate of interest (the “Maximum Rate”) which may be contracted for, charged, taken,
received or reserved by a Lender holding such Loan in accordance with applicable law, the rate of
interest payable in respect of such Loan hereunder, together with all Charges payable in respect
thereof, shall be limited to the Maximum Rate and, to the extent lawful, the interest and Charges
that would have been payable in respect of such Loan but were not payable as a result of the
operation of this Section 10.12 shall be cumulated and the interest and Charges payable to
such Lender in respect of other Loans or periods shall be increased (but not above the Maximum Rate
therefor) until such cumulated amount, together with interest thereon at the Federal Funds Rate to
the date of repayment, shall have been received by such Lender.



          Section 10.13. Waiver of Effect of Corporate Seal.



          The Borrowers represent and warrants that neither them nor any other Loan Party is required to
affix its corporate seal to this Agreement or any other Loan Document pursuant to any requirement
of law or regulation, agrees that this Agreement is delivered by Borrowers under seal and waives
any shortening of the statute of limitations that may result from not affixing the corporate seal
to this Agreement or such other Loan Documents.



          Section 10.14. Patriot Act.



          The Administrative Agent and each Lender hereby notifies the Loan Parties that pursuant to the
requirements of the USA PATRIOT Act (Title III of Pub. L. 107-56 (signed into law October 26,
2001)) (the “Patriot Act”), it is required to obtain, verify and record information that
identifies each Loan Party, which information includes the name and address of such Loan Party and
other information that will allow such Lender or the Administrative Agent, as applicable, to
identify such Loan Party in accordance with the Patriot Act. Each Loan Party shall, and shall
cause each of its Subsidiaries to, provide to the extent commercially reasonable, such information
and take such other actions as are reasonably requested by the Administrative Agent or any Lender
in order to assist the Administrative Agent and the Lenders in maintaining compliance with the
Patriot Act.



          Section 10.15. Independence of Covenants.



          All covenants hereunder shall be given independent effect so that if a particular action or
condition is not permitted by any of such covenants, the fact that it would be permitted by an
exception to, or would otherwise be within the limitations of, another covenant shall not avoid the
occurrence of a Default or an Event of Default if such action is taken or condition exists.



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          Section 10.16. All Obligations to Constitute Joint and Several Obligations.



          All Obligations shall constitute joint and several obligations of the Borrowers and shall be
secured by the Administrative Agent’s Lien upon all of the Collateral, and by all other Liens
heretofore, now or at any time hereafter granted by each Borrower to the Administrative Agent, for
the benefit of the Lenders, to the extent provided in the Loan Documents under which such Lien
arises. The Borrowers expressly represent and acknowledge that they are part of a common
enterprise with each other and that any financial accommodations by the Lenders to either Borrower
hereunder and under the other Loan Documents are and will be of direct and indirect interest,
benefit and advantage to the other. Each Borrower acknowledges and agrees that each Borrower shall
be liable, on a joint and several basis, for all of the Loans and other Obligations, regardless of
which Borrower actually may have received the proceeds of any of the Loans or other extensions of
credit or the amount of such Loans received or the manner in which the Administrative Agent or any
Lender accounts between the Borrowers for such Loans or other extensions of credit on its books and
records, and further acknowledges and agrees that Loans and other extensions of credit to either
Borrower inure to the mutual benefit of both Borrowers and that the Administrative Agent and the
Lenders are relying on the joint and several liability of the Borrowers in extending the Loans and
other financial accommodations hereunder.



(remainder of page left intentionally blank)




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



	 	 	 	 	 
	 	FORTEGRA FINANCIAL CORPORATION 

LOTS INTERMEDIATE CO., as Borrowers

 	 
	 	By 	 /s/ Michael Vrban
 	 
	 	 	Name:  	Michael Vrban 	 
	 	 	Title:  	Executive Vice President, Acting Chief
Financial Officer and Treasurer 	 
	 



[SEAL]



[Signatures Continued on Following Page]






 









 








[Signature Page to Revolving Credit Agreement with

Fortegra Financial Corporation and LOTS Intermediate Co.]




	 	 	 	 	 
	 	SUNTRUST BANK

as Administrative Agent and as a Lender

 	 
	 	By  	/s/ W. Bradley Hamilton
 	 
	 	 	Name:  	W. Bradley Hamilton 	 
	 	 	Title:  	Director