exv10w1






EXHIBIT 10.1




EXECUTION VERSION




      




Published CUSIP Number: 89177QAA0




CREDIT AGREEMENT



Dated as of May 14, 2010



among



TOWER GROUP, INC.,

as the Borrower,



BANK OF AMERICA, N.A.,

as Administrative Agent,

Fronting Bank and L/C Administrator,



JPMORGAN CHASE BANK, N.A. and KEYBANK NATIONAL ASSOCIATION,

as Co-Syndication Agents,



PNC BANK, NATIONAL ASSOCIATION,

as Documentation Agent



and



The Other Lenders Party Hereto



J.P. MORGAN SECURITIES INC.

and

BANC OF AMERICA SECURITIES LLC,

as

Joint Lead Arrangers and Joint Book Managers



      




 









 





TABLE OF CONTENTS




	 	 	 	 	 
	Section	 	Page	 
	ARTICLE I. DEFINITIONS AND ACCOUNTING TERMS
	 	 	1	 
	 
	 	 	 	 
	1.01 Defined Terms
	 	 	1	 
	1.02 Other Interpretive Provisions
	 	 	20	 
	1.03 Accounting Terms
	 	 	21	 
	1.04 Rounding
	 	 	21	 
	1.05 Times of Day
	 	 	21	 
	1.06 Letter of Credit Amounts
	 	 	21	 
	 
	 	 	 	 
	ARTICLE II. THE COMMITMENTS AND CREDIT EXTENSIONS
	 	 	21	 
	 
	 	 	 	 
	2.01 Loans
	 	 	22	 
	2.02 Borrowings, Conversions and Continuations of Loans
	 	 	22	 
	2.03 Letters of Credit
	 	 	23	 
	2.04 Prepayments
	 	 	33	 
	2.05 Termination or Reduction of Commitments
	 	 	33	 
	2.06 Repayment of Loans
	 	 	34	 
	2.07 Interest
	 	 	34	 
	2.08 Fees
	 	 	35	 
	2.09 Computation of Interest and Fees
	 	 	35	 
	2.10 Evidence of Debt
	 	 	35	 
	2.11 Payments Generally; Administrative Agent’s Clawback
	 	 	36	 
	2.12 Sharing of Payments by Lenders
	 	 	38	 
	2.13 Increase in Commitments
	 	 	38	 
	2.14 Cash Collateral
	 	 	39	 
	2.15 Defaulting Lenders
	 	 	41	 
	 
	 	 	 	 
	ARTICLE III. TAXES, YIELD PROTECTION AND ILLEGALITY
	 	 	43	 
	 
	 	 	 	 
	3.01 Taxes
	 	 	43	 
	3.02 Illegality
	 	 	46	 
	3.03 Inability to Determine Rates
	 	 	47	 
	3.04 Increased Costs; Reserves on Eurodollar Rate Loans
	 	 	47	 
	3.05 Compensation for Losses
	 	 	49	 
	3.06 Mitigation Obligations; Replacement of Lenders
	 	 	49	 
	3.07 Survival
	 	 	50	 
	 
	 	 	 	 
	ARTICLE IV. CONDITIONS PRECEDENT TO CREDIT EXTENSIONS
	 	 	50	 
	 
	 	 	 	 
	4.01 Conditions of Initial Credit Extension
	 	 	50	 
	4.02 Conditions to all Credit Extensions
	 	 	52	 
	 
	 	 	 	 
	ARTICLE V. REPRESENTATIONS AND WARRANTIES
	 	 	53	 
	 
	 	 	 	 
	5.01 Existence, Qualification and Power
	 	 	53	 
	5.02 Authorization; No Contravention
	 	 	53	 
	5.03 Governmental Authorization; Other Consents
	 	 	53	 






i









 






	 	 	 	 	 
	Section	 	Page	 
	5.04 Binding Effect
	 	 	53	 
	5.05 Financial Statements; No Material Adverse Effect
	 	 	53	 
	5.06 Litigation
	 	 	54	 
	5.07 No Default
	 	 	54	 
	5.08 Ownership of Property; Liens
	 	 	54	 
	5.09 Insurance
	 	 	54	 
	5.10 Taxes
	 	 	55	 
	5.11 ERISA Compliance
	 	 	55	 
	5.12 Subsidiaries; Equity Interests
	 	 	56	 
	5.13 Margin Regulations; Investment Company Act
	 	 	56	 
	5.14 Disclosure
	 	 	56	 
	5.15 Compliance with Laws
	 	 	56	 
	5.16 Taxpayer Identification Number
	 	 	57	 
	5.17 Solvency
	 	 	57	 
	 
	 	 	 	 
	ARTICLE VI. AFFIRMATIVE COVENANTS
	 	 	57	 
	 
	 	 	 	 
	6.01 Financial Statements
	 	 	57	 
	6.02 Certificates; Other Information
	 	 	58	 
	6.03 Notices
	 	 	60	 
	6.04 Payment of Obligations
	 	 	60	 
	6.05 Preservation of Existence, Etc
	 	 	61	 
	6.06 Maintenance of Properties
	 	 	61	 
	6.07 Maintenance of Insurance
	 	 	61	 
	6.08 Compliance with Laws
	 	 	61	 
	6.09 Books and Records
	 	 	61	 
	6.10 Inspection Rights
	 	 	61	 
	6.11 Use of Proceeds
	 	 	62	 
	 
	 	 	 	 
	ARTICLE VII. NEGATIVE COVENANTS
	 	 	62	 
	 
	 	 	 	 
	7.01 Liens
	 	 	62	 
	7.02 Indebtedness
	 	 	63	 
	7.03 Fundamental Changes
	 	 	64	 
	7.04 Dispositions
	 	 	64	 
	7.05 Restricted Payments
	 	 	65	 
	7.06 Change in Nature of Business; Hedging
	 	 	65	 
	7.07 Transactions with Affiliates
	 	 	65	 
	7.08 Burdensome Agreements
	 	 	66	 
	7.09 Use of Proceeds
	 	 	66	 
	7.10 Financial Covenants
	 	 	66	 
	7.11 Investments in Reciprocal Insurers
	 	 	67	 
	 
	 	 	 	 
	ARTICLE
VIII. EVENTS OF DEFAULT AND REMEDIES
	 	 	67	 
	 
	 	 	 	 
	8.01 Events of Default
	 	 	67	 
	8.02 Remedies Upon Event of Default
	 	 	69	 
	8.03 Application of Funds
	 	 	70	 
	 
	 	 	 	 
	ARTICLE IX. ADMINISTRATIVE AGENT
	 	 	70	 






ii









 






	 	 	 	 	 
	Section	 	Page	 
	9.01 Appointment and Authority
	 	 	70	 
	9.02 Rights as a Lender
	 	 	71	 
	9.03 Exculpatory Provisions
	 	 	71	 
	9.04 Reliance by Administrative Agent
	 	 	72	 
	9.05 Delegation of Duties
	 	 	72	 
	9.06 Resignation of Administrative Agent
	 	 	72	 
	9.07 Non-Reliance on Administrative Agent and Other Lenders
	 	 	73	 
	9.08 No Other Duties, Etc
	 	 	73	 
	9.09 Administrative Agent May File Proofs of Claim
	 	 	74	 
	 
	 	 	 	 
	ARTICLE X. MISCELLANEOUS
	 	 	74	 
	 
	 	 	 	 
	10.01 Amendments, Etc
	 	 	74	 
	10.02 Notices; Effectiveness; Electronic Communication
	 	 	76	 
	10.03 No Waiver; Cumulative Remedies; Enforcement
	 	 	78	 
	10.04 Expenses; Indemnity; Damage Waiver
	 	 	78	 
	10.05 Payments Set Aside
	 	 	80	 
	10.06 Successors and Assigns
	 	 	81	 
	10.07 Treatment of Certain Information; Confidentiality
	 	 	85	 
	10.08 Right of Setoff
	 	 	86	 
	10.09 Interest Rate Limitation
	 	 	86	 
	10.10 Counterparts; Integration; Effectiveness
	 	 	87	 
	10.11 Survival of Representations and Warranties
	 	 	87	 
	10.12 Severability
	 	 	87	 
	10.13 Replacement of Lenders
	 	 	87	 
	10.14 Governing Law; Jurisdiction; Etc
	 	 	88	 
	10.15 Waiver of Jury Trial
	 	 	89	 
	10.16 No Advisory or Fiduciary Responsibility
	 	 	89	 
	10.17 Electronic Execution of Assignments and Certain Other Documents
	 	 	90	 
	10.18 USA PATRIOT Act
	 	 	90	 
	10.19 ENTIRE AGREEMENT
	 	 	90	 






iii









 






	 	 	 
	SCHEDULES	 	 
	2.01

	 	Commitments and Applicable Percentages
	5.05

	 	Statutory Financial Statements
	5.06

	 	Litigation
	5.10

	 	Tax Sharing Agreements
	5.12

	 	Subsidiaries; Other Equity Investments
	7.01

	 	Existing Liens
	7.02

	 	Existing Indebtedness
	7.10

	 	Material Subsidiary Minimum Statutory Surplus
	10.02

	 	Administrative Agent’s Office; Certain Addresses for Notices





EXHIBITS




	 	 	 
	 	 	Form of
	 
	A

	 	Loan Notice
	B

	 	Note
	C

	 	Compliance Certificate
	D-1

	 	Assignment and Assumption
	D-2

	 	Administrative Questionnaire
	E

	 	Opinion Matters
	F

	 	Several Letter of Credit







iv











 





CREDIT AGREEMENT




     This CREDIT AGREEMENT (“Agreement”) is entered into as of May 14, 2010, among TOWER
GROUP, INC., a Delaware corporation (the “Borrower”), each lender from time to time party
hereto (collectively, the “Lenders” and individually, a “Lender”), and BANK OF
AMERICA, N.A., as Administrative Agent, Fronting Bank and L/C Administrator.



     The Borrower has requested that the Lenders provide a revolving credit and letter of credit
facility, and the Lenders are willing to do so on the terms and conditions set forth herein.



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



ARTICLE I. DEFINITIONS AND ACCOUNTING TERMS




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



     “Acquisition” means any transaction or series of related transactions, consummated on
or after the date hereof, by which the Borrower directly, or indirectly through one or more
Subsidiaries, (i) acquires any going business, division thereof or line of business, or all or
substantially all of the assets, of any Person, whether through purchase of assets, merger or
otherwise, or (ii) acquires securities or other ownership interests of any Person that, following
such Acquisition, will be deemed a Subsidiary of the Borrower.



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



     “Administrative Agent’s Office” means the Administrative Agent’s address and, as
appropriate, account as set forth on Schedule 10.02, or such other address or account as
the Administrative Agent may from time to time notify to the Borrower and the Lenders.



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



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



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



     “Agreement” means this Credit Agreement.



     “A.M. Best Company” means A.M. Best Company or any successor thereto.



     “Annual Statement” means the annual financial statement of an Insurance Subsidiary as
required to be filed with the Applicable Insurance Regulatory Authority of such Insurance



 









 




Subsidiary’s domicile, together with all exhibits or schedules filed therewith, prepared in
conformity with SAP.




     “Applicable Insurance Regulatory Authority” means, when used with respect to the
Borrower or any of its Subsidiaries, in each case to the extent authorized or licensed or admitted
to carry on or transact in one or more aspects of the business of selling, issuing or underwriting
insurance or reinsurance or other businesses reasonably related thereto, (x) the insurance
department or similar administrative authority or agency located in each state or jurisdiction
(foreign or domestic) in which the Borrower or such Subsidiary is domiciled or (y) to the extent
asserting regulatory jurisdiction over the Borrower or such Subsidiary, the insurance department,
authority or agency in each state or jurisdiction (foreign or domestic) in which the Borrower or
such Subsidiary is licensed, and shall include any Federal or national insurance regulatory
department, authority or agency that may be created and that asserts insurance regulatory
jurisdiction over the Borrower or such Subsidiary.



     “Applicable Issuing Party” means (a) in the case of Fronted Letters of Credit, the
Fronting Bank and (b) in the case of Several Letters of Credit, the L/C Administrator.



     “Applicable Percentage” means with respect to any Lender at any time, the percentage
(carried out to the ninth decimal place) of the Aggregate Commitments represented by such Lender’s
Commitment at such time, subject to adjustment as provided in Section 2.15. If the
commitment of each Lender to make Loans and issue Several Letters of Credit and the obligation of
the Fronting Bank to issue Fronted Letters of Credit have been terminated pursuant to Section
8.02 or if the Aggregate Commitments have expired, then the Applicable Percentage of each
Lender shall be determined based on the Applicable Percentage of such Lender most recently in
effect, giving effect to any subsequent assignments. The initial Applicable Percentage of each
Lender is set forth opposite the name of such Lender on Schedule 2.01 or in the Assignment
and Assumption pursuant to which such Lender becomes a party hereto, as applicable. The Applicable
Percentage “of” a particular amount may also refer to the value obtained by multiplying the
Applicable Percentage times such amount.



     “Applicable Rate” means, from time to time, the following percentages per annum, based
upon the Debt Rating as set forth below:



	 	 	 	 	 	 	 	 	 	 	 
	 	 	Debt to	 	 	 	Applicable Margin	 	 	 	 
	Pricing	 	Capitalization	 	Commitment	 	for Eurodollar	 	Letter of	 	Applicable Margin
	Level	 	Ratio	 	Fee	 	Loans	 	Credit Fees	 	for Base Rate Loans
	1
	 	≥ 25%
	 	0.625%
	 	3.25%
	 	3.25%
	 	2.25%
	2
	 	≥ 15% but < 25%
	 	0.500%
	 	2.75%
	 	2.75%
	 	1.75%
	3
	 	< 15%
	 	0.400%
	 	2.50%
	 	2.50%
	 	1.50%






     Initially, the Applicable Rate shall be Pricing Level 2. Thereafter, each change in the
Applicable Rate resulting from a change in the Leverage Ratio shall become effective as of the
first Business Day immediately following the date a Compliance Certificate is delivered pursuant to
Section 6.02(a) (commencing with the Compliance Certificate delivered with respect to the
fiscal quarter ending June 30, 2010) provided, however, that if a Compliance Certificate is not



2









 




delivered when due in accordance with such Section, then Pricing Level 1 shall apply as of the
first Business Day after the date on which such Compliance Certificate was required to have been
delivered and remain in effect until a Compliance Certificate is delivered reflecting a different
applicable Pricing Level.




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



     “Arrangers” means J.P. Morgan Securities Inc. and Banc of America Securities LLC in
their capacities as joint lead arrangers and joint book managers.



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



     “Assignment and Assumption” means an assignment and assumption entered into by a
Lender and an assignee (with the consent of any party whose consent is required by Section
10.06(b)), and accepted by the Administrative Agent, in substantially the form of Exhibit
D-1 or any other form approved by the Administrative Agent.



     “Audited Financial Statements” means the audited consolidated balance sheet of the
Borrower and its Subsidiaries for the fiscal year ended December 31, 2009, and the related
consolidated statements of income or operations, shareholders’ equity and cash flows for such
fiscal year of the Borrower and its Subsidiaries, including the notes thereto.



     “Availability Period” means the period from and including the Closing Date to the
earliest of (a) the Maturity Date, (b) the date of termination of the Aggregate Commitments
pursuant to Section 2.05, and (c) the date of termination of the commitment of each Lender
to make Loans and of the obligation of the L/C Issuer to make L/C Credit Extensions pursuant to
Section 8.02.



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



     “Base Rate“ means for any day a fluctuating rate per annum equal to the
highest of (a) the Federal Funds Rate plus 1/2 of 1%, (b) the rate of interest in effect for such
day as publicly announced from time to time by Bank of America as its “prime rate,” and (c) the
Eurodollar Rate plus 1.00%. The “prime rate” is a rate set by Bank of America based upon various
factors including Bank of America’s costs and desired return, general economic conditions and other
factors, and is used as a reference point for pricing some loans, which may be priced at, above, or
below such announced rate. Any change in such prime rate announced by Bank of America shall take
effect at the opening of business on the day specified in the public announcement of such change.



     “Base Rate Loan” means a Loan that bears interest based on the Base Rate.



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



     “Borrower L/C Collateral Account” has the meaning specified in Section
2.14(b).



3









 





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



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



     “Business Day” means any day other than a Saturday, Sunday or other day on which
commercial banks are authorized to close under the Laws of, or are in fact closed in, the state
where the Administrative Agent’s Office is located or the state of New York and, if such day
relates to any Eurodollar Rate Loan, means any such day that is also a London Banking Day.



     “Capital Lease Obligations” of any Person means the obligations of such Person to pay
rent or other amounts under any lease of (or other arrangement conveying the right to use) 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.



     “Cash Collateralize” means to pledge and deposit with or deliver to the Administrative
Agent, for the benefit of the Administrative Agent, the Fronting Bank and the Lenders, as
collateral for L/C Obligations or obligations of the Fronting Bank or Lenders to fund or fund
participations in respect of Letters of Credit, cash or deposit account balances or, if the
Fronting Bank shall agree in its sole discretion, other credit support, in each case pursuant to
documentation in form and substance satisfactory to (a) the Administrative Agent and (b) the
Fronting Bank. “Cash Collateral” shall have a meaning correlative to the foregoing and shall
include the proceeds of such cash collateral and other credit support.



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



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




     (a) any “person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934, but excluding any employee benefit plan of such person or
its subsidiaries, and any person or entity acting in its capacity as trustee, agent or other
fiduciary or administrator of any such plan) other than the Michael H. Lee Family becomes
the “beneficial owner” (as defined in Rules 13d-3 and 13d-5 under the Securities Exchange
Act of 1934, except that a person or group shall be deemed to have “beneficial ownership” of
all securities that such person or group has the right to acquire, whether such right is
exercisable immediately or only after the passage of time (such right, an “option
right”)), directly or indirectly, of 30% or more of the equity securities of the
Borrower entitled to vote for members of the board of directors or equivalent governing body
of the Borrower on a fully-diluted basis (and taking into account all such



4









 






securities that such person or group has the right to acquire pursuant to any option
right); or




     (b) the Borrower fails to own, directly or indirectly, 100% of the Equity Interests of
(i) Tower Insurance Company of New York, (ii) CastlePoint Reinsurance Company, Ltd. or (iii)
any Insurance Subsidiary of the Borrower whose Statutory Surplus as of the end of the most
recently completed fiscal quarter of the Borrower for which financial statements are
available, is greater than 20% of the consolidated Statutory Surplus of all Insurance
Subsidiaries of the Borrower taken together as of the end of such fiscal quarter.



     “Closing Date” means the first date all the conditions precedent in Section
4.01 are satisfied or waived in accordance with Section 10.01.



     “Code” means the Internal Revenue Code of 1986.



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



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



     “Consolidated Debt” means, as of any date of determination, the consolidated
Indebtedness of the Borrower and its Subsidiaries (including the Loans and the L/C Obligations).



     “Consolidated Net Income” means, for any fiscal quarter, for the Borrower and its
Subsidiaries, on a consolidated basis, the net income of the Borrower and its Subsidiaries for such
fiscal quarter.



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



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



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



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



5









 





     “Debt to Capitalization Ratio” means the ratio of (a) Consolidated Debt to (b) the sum
of Consolidated Net Worth plus Consolidated Debt.



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



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



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



     “Defaulting Lender” means, subject to Section 2.15(b), any Lender that, as
determined by the Administrative Agent, (a) has failed to perform any of its funding obligations
hereunder, including in respect of its Loans or participations in respect of Letters of Credit,
within three Business Days of the date required to be funded by it hereunder, (b) has notified the
Borrower, the Administrative Agent, the Fronting Bank or the L/C Administrator that it does not
intend to comply with its funding obligations or has made a public statement to that effect with
respect to its funding obligations hereunder or under other agreements in which it commits to
extend credit, (c) has failed, within three Business Days after request by the Administrative
Agent, to confirm in a manner satisfactory to the Administrative Agent that it will comply with its
funding obligations, or (d) has, or has a direct or indirect parent company that has, (i) become
the subject of a proceeding under any Debtor Relief Law, (ii) had a receiver, conservator, trustee,
administrator, assignee for the benefit of creditors or similar Person charged with reorganization
or liquidation of its business or a custodian appointed for it, or (iii) taken any action in
furtherance of, or indicated its consent to, approval of or acquiescence in any such proceeding or
appointment; provided that a Lender shall not be a Defaulting Lender solely by virtue of
the ownership or acquisition of any equity interest in that Lender or any direct or indirect parent
company thereof by a Governmental Authority.



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



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



6









 





     “Eligible Assignee” means any Person that meets the requirements to be an assignee
under Section 10.06(b)(iii), and (v) (subject to such consents, if any, as may be
required under Section 10.06(b)(iii) having been obtained).



     “Environmental Laws” means any and all applicable Federal, state, local, and foreign
statutes, laws, regulations, ordinances, rules, judgments, orders, decrees, permits, licenses,
agreements or governmental restrictions relating to pollution and the protection of the environment
or the Release of any Hazardous Materials into the environment or waste or public systems.



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



     “Equity Interests” means, with respect to any Person, all of the shares of capital
stock of (or other ownership or profit interests in) such Person, all of the warrants, options or
other rights for the purchase or acquisition from such Person of shares of capital stock of (or
other ownership or profit interests in) such Person, or warrants, rights or options for the
purchase or acquisition from such Person of such shares (or such other interests), and all of the
other ownership or profit interests in such Person (including partnership, member or trust
interests therein), whether voting or nonvoting.



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



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



     “ERISA Event” means (a) a Reportable Event with respect to a Pension Plan; (b) the
withdrawal of the Borrower or any ERISA Affiliate from a Pension Plan subject to Section 4063 of
ERISA during a plan year in which such entity was a “substantial employer” as defined in
Section 4001(a)(2) of ERISA or a cessation of operations that is treated as such a withdrawal under
Section 4062(e) of ERISA; (c) a complete or partial withdrawal by the Borrower or any ERISA
Affiliate from a Multiemployer Plan or notification that a Multiemployer Plan is in reorganization;
(d) the filing of a notice of intent to terminate, the treatment of a Pension Plan amendment as a
termination under Section 4041 or 4041A of ERISA; (e) the institution by the PBGC of proceedings to
terminate a Pension Plan; (f) any event or condition which constitutes grounds under Section 4042
of ERISA for the termination of, or the appointment of a trustee to administer, any Pension Plan;
(g) the determination that any Pension Plan is considered an at-risk plan or a plan in endangered
or critical status within the meaning of Sections 430, 431 and 432 of the Code or Sections 303, 304
and 305 of ERISA; or (h) the imposition of any liability under



7









 




Title IV of ERISA, other than for PBGC premiums due but not delinquent under Section 4007 of
ERISA, upon the Borrower or any ERISA Affiliate.




     “Eurodollar Rate” means:



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



     (b) for any interest calculation with respect to a Base Rate Loan on any date, the rate per
annum equal to (i) BBA LIBOR, at approximately 11:00 a.m., London time determined two London
Banking Days prior to such date for Dollar deposits being delivered in the London interbank market
for a term of one month commencing that day or (ii) if such published rate is not available at such
time for any reason, the rate per annum determined by the Administrative Agent to be the rate at
which deposits in Dollars for delivery on the date of determination in same day funds in the
approximate amount of the Base Rate Loan being made or maintained and with a term equal to one
month would be offered by Bank of America’s London Branch to major banks in the London interbank
Eurodollar market at their request at the date and time of determination.



     “Eurodollar Rate Loan” means a Loan that bears interest at a rate based on clause (a)
of the definition of “Eurodollar Rate.”



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



     “Excluded Taxes” means, with respect to the Administrative Agent, any Lender, the
Fronting Bank or any other recipient of any payment to be made by or on account of any Obligation
of the Borrower hereunder or under any Loan Document, (a) Taxes imposed on or measured by its net
income or gain (however denominated) and franchise Taxes imposed on it (in lieu of net income
taxes), in each case, imposed by the United States (or any state or locality thereof) or by the
jurisdiction (or any political subdivision thereof) under the Laws of which such recipient is
organized or in which its principal office is located or, in the case of any Lender, in which its
applicable Lending Office is located, (b) any branch profits taxes imposed by the United States or
any similar tax imposed by any other jurisdiction (i) in which the Borrower is located or (ii) is
described in clause (a) above, (c) any backup withholding tax that is required by the Code to be
withheld from amounts payable to a Lender that has failed to comply with Section 3.01(e)
and (d) in the case of a Non-U.S. Lender (other than an assignee pursuant to a request by



8









 




the Borrower under Section 10.13), any United States withholding tax that (i) is required to
be imposed on amounts payable to such Non-U.S. Lender pursuant to any Law in force at the time such
Non-U.S. Lender becomes a party hereto (or designates a new Lending Office), (ii) is attributable
to such Non-U.S. Lender’s failure or inability (other than as a result of a Change in Law occurring
after the date such Lender becomes a party to this Agreement or designates a new Lending Office) to
comply with Section 3.01(e) of this Agreement (including as a result of any inaccurate or
incomplete documentation), except to the extent that the assignor to such Lender was entitled, at
the time of the assignment of its rights under this Agreement, to receive additional amounts from
the Borrower with respect to such withholding tax pursuant to Section 3.01(a)(ii), or (iii)
is imposed with respect to the requirements of FATCA.




     “FASB ASC” means the Accounting Standards Codification of the Financial Accounting
Standards Board.



     “FATCA” means sections 1471 through 1474 of the Code and any regulations (whether
temporary or proposed) that are issued thereunder or official governmental interpretations thereof.



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



     “Fee Letters” means each of (a) the letter agreement, dated April 8, 2010, among the
Borrower, the Administrative Agent and the Arrangers and (b) the letter agreement, dated April 8,
2010, among the Borrower, Banc of America Securities LLC, and the Administrative Agent.



     “Financial Strength Rating” means the financial strength rating given to an Insurance
Subsidiary by A.M. Best Company.



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



     “Fronted Letter of Credit” means a Letter of Credit issued by the Fronting Bank in
which the Lenders purchase a risk participation pursuant to Section 2.03.



     “Fronting Bank” means Bank of America and any other Person that may become the issuer
of Fronted Letters of Credit hereunder pursuant to Section 10.06(g).



     “Fronting Exposure” means, at any time there is a Defaulting Lender, with respect to
the Fronting Bank, such Defaulting Lender’s Applicable Percentage of the outstanding L/C
Obligations with respect to Fronted Letters of Credit other than L/C Obligations as to which such



9









 




Defaulting Lender’s participation obligation has been reallocated to other Lenders or Cash
Collateralized in accordance with the terms hereof.




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



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



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



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



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



10









 





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




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




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




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




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




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




     (f) capital leases;




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




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



     For all purposes hereof, the Indebtedness of any Person shall include the Indebtedness of any
partnership or joint venture (other than a joint venture that is itself a corporation or limited
liability company) in which such Person is a general partner or a joint venturer, unless such
Indebtedness is expressly made non-recourse to such Person. The amount of any net obligation under
any Swap Contract on any date shall be deemed to be the Swap Termination Value thereof as of such
date. The amount of any capital lease as of any date shall be deemed to be the amount of Capital
Lease Obligations in respect thereof as of such date.



     “Indemnified Taxes” means Taxes other than Excluded Taxes.



     “Indemnitees” has the meaning specified in Section 10.04(b).



     “Information” has the meaning specified in Section 10.07.



     “Insurance Code” means, with respect to any Insurance Subsidiary, the “Insurance Code”
or Law of such Insurance Subsidiary’s domicile and any successor statute of similar import,



11









 




together with the regulations thereunder or otherwise modified and in effect from time to
time. References to sections of the Insurance Code shall be construed to also refer to successor
sections.




     “Insurance Subsidiary” means any Subsidiary of the Borrower which is licensed by any
Governmental Authority to engage in the insurance business.



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



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



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



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



     (iii) no Interest Period shall extend beyond the Maturity Date.



     “IRS” means the United States Internal Revenue Service.



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



     “Issuer Documents” means with respect to any Letter of Credit, the Letter of Credit
Application, and any other document, agreement and instrument entered into by the Applicable
Issuing Party and the Borrower (or any Subsidiary) in respect of such Letter of Credit.



     “L/C Administrator” means Bank of America’s Letter of Credit Operations located at One
Fleet Way, Scranton, PA 18507, as letter of credit administrator for the Lenders, together with any
replacement L/C Administrator arising under Section 10.06.



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




12











 





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



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



     “L/C Issuer” means (a) with respect to a Fronted Letter of Credit, the Fronting Bank
and (b) with respect to a Several Letter of Credit, each Lender.



     “L/C Obligations” means, at any time, the sum, without duplication, of (a) the
aggregate amount available to be drawn under all outstanding Letters of Credit, plus (b)
the aggregate unpaid amount of all Unreimbursed Amounts, including L/C Borrowings, after giving
effect to any L/C Credit Extension occurring on such date and any other changes in the aggregate
amount of the L/C Obligations as of such date, including as a result of any reimbursements by the
Borrower of Unreimbursed Amounts. For purposes of computing the amount available to be drawn under
any Letter of Credit, the amount of such Letter of Credit shall be determined in accordance with
Section 1.06. For all purposes of this Agreement, if on any date of determination a Letter
of Credit has expired by its terms but any amount may still be drawn thereunder by reason of the
operation of Rule 3.14 of the ISP or otherwise, such Letter of Credit shall be deemed to be
“outstanding” in the amount so remaining available to be drawn. For purposes of determining the
L/C Obligations held by any Lender, a Lender shall be deemed to hold an amount equal to the sum,
without duplication, of (i) the aggregate amount of each Lender’s direct obligation, in all
outstanding Several Letters of Credit, (ii) its risk participation in all outstanding Fronted
Letters of Credit, and (iii) its L/C Borrowings. The L/C Obligation of the Borrower shall be the
aggregate amount available to be drawn under all outstanding Letters of Credit issued for the
account of the Borrower plus the aggregate of all Unreimbursed Amounts owed by the
Borrower.



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



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



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



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



     “Letter of Credit Application” means an application and agreement for the issuance or
amendment of a Letter of Credit in the form from time to time in use by the Applicable Issuing
Party.



13









 





     “Letter of Credit Expiration Date” means May 14, 2014.



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



     “Letter of Credit Sublimit” means an amount equal to $25,000,000. The Letter of
Credit Sublimit is part of, and not in addition to, the Aggregate Commitments.



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



     “Loan” has the meaning specified in Section 2.01.



     “Loan Documents” means this Agreement, each Note, each Issuer Document, any agreement
creating or perfecting rights in Cash Collateral pursuant to the provisions of Section 2.14
of this Agreement and the Fee Letters.



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



     “London Banking Day” means any day on which dealings in Dollar deposits are conducted
by and between banks in the London interbank eurodollar market.



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



     “Material
Subsidiary” means each of (a) CastlePoint Reinsurance Company Ltd., (b)
Tower Insurance Company of New York, (c) CastlePoint National Insurance Company, (d) CastlePoint
Insurance Company, (e) Hermitage Insurance Company and (f) each other Insurance Subsidiary of the
Borrower whose Statutory Surplus as of the end of any fiscal quarter of the Borrower for which
financial statements are available, is greater than 10% of the consolidated Statutory Surplus of
all Insurance Subsidiaries of the Borrower taken together as of the end of such fiscal quarter.
For the avoidance of doubt, once a Subsidiary has become a Material Subsidiary, it will remain a
Material Subsidiary even if it would cease to be a Material Subsidiary based on Statutory Surplus.



     “Maturity Date” means May 14, 2013; provided, however, that if such
date is not a Business Day, the Maturity Date shall be the next preceding Business Day.



14









 





     “Michael H. Lee Family” means, collectively, Michael H. Lee; his spouse; any natural
person who is a lineal descendant of Michael H. Lee; the spouse, children, or grandchildren of any
such natural person; any trust of which any of the foregoing is or are the sole beneficiary or
beneficiaries; or the estate, executor, administrator, or legal guardian of any of the foregoing.



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



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



     “Multiple Employer Plan” means a Plan which has two or more contributing sponsors
(including the Borrower or any ERISA Affiliate) at least two of whom are not under common control,
as such a plan is described in Section 4064 of ERISA.



     “Non-U.S. Lender” shall have the meaning set forth in Section 3.01(e).



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



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



     “Organization Documents” means, (a) with respect to any corporation, the certificate
or articles of incorporation and the bylaws (or equivalent or comparable constitutive documents
with respect to any non-U.S. jurisdiction); (b) with respect to any limited liability company, the
certificate or articles of formation or organization and operating agreement; and (c) with respect
to any partnership, joint venture, trust or other form of business entity, the partnership, joint
venture or other applicable agreement of formation or organization and any agreement, instrument,
filing or notice with respect thereto filed in connection with its formation or organization with
the applicable Governmental Authority in the jurisdiction of its formation or organization and, if
applicable, any certificate or articles of formation or organization of such entity.



     “Other Taxes” means all present or future stamp or documentary taxes or any other
excise or property taxes, charges or similar levies (other than Excluded Taxes) arising from the
execution, delivery or enforcement of this Agreement or any other Loan Document.



     “Outstanding Amount” means (i) with respect to Loans on any date, the aggregate
outstanding principal amount thereof after giving effect to any borrowings and prepayments or
repayments of Loans, occurring on such date; and (ii) with respect to any L/C Obligations on any
date, the amount of such L/C Obligations on such date after giving effect to any L/C Credit



15









 




Extension occurring on such date and any other changes in the aggregate amount of the L/C
Obligations as of such date, including as a result of any reimbursements by the Borrower of
Unreimbursed Amounts.




     “Participant” has the meaning specified in Section 10.06(d).



     “PBGC” means the Pension Benefit Guaranty Corporation.



     “Pension Act” means the Pension Protection Act of 2006.



     “Pension Funding Rules” means the rules of the Code and ERISA regarding minimum
required contributions (including any installment payment thereof) to Pension Plans and set forth
in, with respect to plan years ending prior to the effective date of the Pension Act, Section 412
of the Code and Section 302 of ERISA, each as in effect prior to the Pension Act and, thereafter,
Section 412, 430, 431, 432 and 436 of the Code and Sections 302, 303, 304 and 305 of ERISA.



     “Pension Plan” means any employee pension benefit plan (including a Multiple Employer
Plan or a Multiemployer Plan) that is maintained or is contributed to by the Borrower and any ERISA
Affiliate and is either covered by Title IV of ERISA or is subject to the minimum funding standards
under Section 412 of the Code.



     “Permitted Investment” means, at any time:



     (a) any evidence of Debt issued or guaranteed by the United States Government or any agency
thereof;



     (b) commercial paper, maturing not more than one year from the date of issue, which is issued
by




     (i) a corporation (except an Affiliate of the Borrower) rated at least A-1 by S&P, P-1
by Moody’s or D-2 by FitchIBCA, or




     (ii) any Lender (or its holding company);



     (c) investments in money market funds that invest solely in Permitted Investments described in
clauses (a) and (b); and



     (d) investments in short-term asset management accounts offered by any Lender for the purpose
of investing in loans to any corporation (other than an Affiliate of the Borrower) organized under
the Laws of any state of the United States or of the District of Columbia and rated at least A-1 by
S&P or P-1 by Moody’s.



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



     “Plan” means any employee benefit plan within the meaning of Section 3(3) of ERISA
(including a Pension Plan), maintained for employees of the Borrower or any ERISA Affiliate or



16









 




any such Plan to which the Borrower or any ERISA Affiliate is required to contribute on behalf
of any of its employees.




     “Platform” has the meaning specified in Section 6.02.



     “Projections” means the financial projections delivered to the Lenders on or about
April 14, 2010, consisting of consolidated balance sheets and statements of income or operations
and cash flows of the Borrower and its Subsidiaries on a monthly basis for the 2011, 2012 and 2013
fiscal years.



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



     “Quarterly Statements” means the quarterly financial statements of an Insurance
Subsidiary as required to be filed with the Applicable Insurance Regulatory Authority of such
Insurance Subsidiary’s domicile, together with all exhibits or schedules filed therewith, prepared
in conformity with SAP.



     “Reciprocal Insurer” means Adirondack Insurance Exchange, New Jersey Skylands
Insurance Association and each other reciprocal insurance company which would be a Subsidiary
solely as a result of being managed by the Borrower or any of its Subsidiaries.



     “Register” has the meaning specified in Section 10.06(c).



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



     “Release” means any actual or threatened release, spilling, leaking, pumping, pouring,
emitting, emptying, discharging, injecting, escaping, leaching, dumping, abandonment, disposing or
allowing to escape or migrate into or through the environment.



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



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



     “Required Lenders” means, as of any date of determination, Lenders having more than
50% of the Aggregate Commitments or, if the commitment of each Lender to make Loans and to issue
Several Letters of Credit and the obligations of the Fronting Bank to issue Fronted Letters of
Credit have been terminated pursuant to Section 8.02, Lenders holding in the aggregate more
than 50% of the Total Outstandings (with the aggregate amount of each Lender’s risk participation
and funded participation in L/C Obligations being deemed “held” by such Lender for purposes of this
definition); provided that the Commitment of, and the portion of the Total Outstandings
held or deemed held by, any Defaulting Lender shall be excluded from Total Outstandings for
purposes of making a determination of Required Lenders.



17









 





     “Responsible Officer” means the chief executive officer, president, chief financial
officer, treasurer or controller of the Borrower, solely for purposes of the delivery of incumbency
certificates pursuant to Section 4.01, the secretary or any assistant secretary of the
Borrower and, solely for purposes of notices given pursuant to Article II, any other officer or
employee of the Borrower so designated by any of the foregoing officers in a notice to the
Administrative Agent. Any document delivered hereunder that is signed by a Responsible Officer of
the Borrower shall be conclusively presumed to have been authorized by all necessary corporate,
partnership and/or other action on the part of the Borrower and such Responsible Officer shall be
conclusively presumed to have acted on behalf of the Borrower.



     “Restricted Payment” means any dividend or other distribution (whether in cash,
securities or other property) with respect to any capital stock or other Equity Interest of the
Borrower or any Subsidiary, or any payment (whether in cash, securities or other property),
including any sinking fund or similar deposit, on account of the purchase, redemption, retirement,
acquisition, cancellation or termination of any such capital stock or other Equity Interest, or on
account of any return of capital to the Borrower’s stockholders, partners or members (or the
equivalent Person thereof).



     “Risk Based Capital Ratio” means the ratio of “Total Adjusted Capital” to “Company
Action Level Capital” calculated in accordance with SAP pursuant to the requirements of the New
York State Insurance Department.



     “SAP” means, with respect to any Insurance Subsidiary, the statutory accounting
practices prescribed or permitted by Applicable Insurance Regulatory Authority in the jurisdiction
in which such Person is domiciled for the preparation of annual statements and other financial
reports by insurance companies of the same type as such Person in effect from time to time, applied
in a manner consistent with those used in preparing the Statutory Financial Statements referred to
in Section 5.05(c).



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



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



     “Several Letter of Credit” means a Letter of Credit issued severally by or on behalf
of the Lenders pursuant to which the Lenders are severally liable to the beneficiary which shall be
substantially in the form of Exhibit F or in such other form as may be agreed by the
Borrower and the L/C Administrator.



     “Statutory Financial Statements” means, with respect to any Insurance Subsidiary, the
Annual Statements and, if applicable Quarterly Statements, required to be filed by such Insurance
Subsidiary.



     “Statutory Surplus” means, with respect to any Insurance Subsidiary at any time, the
statutory capital and surplus of such Insurance Subsidiary at such time, as determined in
accordance with SAP (“Liabilities, Surplus and Other Funds” statement, page 3, line 35 of the
Annual Statement or the Quarterly Statutory Statement, as applicable).



18









 





     “Subsidiary” of a Person means a corporation, partnership, joint venture, limited
liability company or other business entity of which a majority of the shares of securities or other
interests having ordinary voting power for the election of directors or other governing body (other
than securities or interests having such power only by reason of the happening of a contingency)
are at the time beneficially owned, or the management of which is otherwise controlled, directly,
or indirectly through one or more intermediaries, or both, by such Person. Unless otherwise
specified, all references herein to a “Subsidiary” or to “Subsidiaries” shall refer to a Subsidiary
or Subsidiaries of the Borrower. Unless otherwise specified, “Subsidiary” shall mean a Subsidiary
of the Borrower; provided, however, that Reciprocal Insurers shall not be deemed to
be a Subsidiary of the Borrower.



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



     “Swap Termination Value” means, in respect of any one or more Swap Contracts, after
taking into account the effect of any legally enforceable netting agreement relating to such Swap
Contracts, (a) for any date on or after the date such Swap Contracts have been closed out and
termination value(s) determined in accordance therewith, such termination value(s), and (b) for any
date prior to the date referenced in clause (a), the amount(s) determined as the mark-to-market
value(s) for such Swap Contracts, as determined based upon one or more mid-market or other readily
available quotations provided by any recognized dealer in such Swap Contracts (which may include a
Lender or any Affiliate of a Lender).



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



     “Threshold Amount” means $15,000,000.



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



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



19









 





     “UCP” means the rules of the Uniform Customs and Practice for Documentary Credits, as
most recently published by the International Chamber of Commerce at the time of issuance of a
Letter of Credit or, in the case of Letters of Credit issued to back Reinsurance Agreements, such
earlier version thereof as may be required by the applicable Governmental Authority or beneficiary.



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



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



     “Wholly-Owned Subsidiary” of a Person means (a) any Subsidiary all of the outstanding
Equity Interests of which shall at the time be owned or controlled, directly or indirectly, by such
Person or one or more Wholly-Owned Subsidiaries of such Person, or by such Person and one or more
Wholly-Owned Subsidiaries of such Person, or (b) any partnership, limited liability company,
association, joint venture or similar business organization 100% of the ownership interests
(whether voting or non-voting) of which shall at the time be so owned or controlled.



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



     (a) The definitions of terms herein shall apply equally to the singular and plural forms of
the terms defined. Whenever the context may require, any pronoun shall include the corresponding
masculine, feminine and neuter forms. The words “include,” “includes” and
“including” shall be deemed to be followed by the phrase “without limitation.” The word
“will” shall be construed to have the same meaning and effect as the word “shall.”
Unless the context requires otherwise, (i) any definition of or reference to any agreement,
instrument or other document (including any Organization Document) shall be construed as referring
to such agreement, instrument or other document as from time to time amended, supplemented or
otherwise modified (subject to any restrictions on such amendments, supplements or modifications
set forth herein or in any other Loan Document), (ii) any reference herein to any Person shall be
construed to include such Person’s successors and assigns, (iii) the words “hereto,”
“herein,” “hereof” and “hereunder,” and words of similar import when used
in any Loan Document, shall be construed to refer to such Loan Document in its entirety and not to
any particular provision thereof, (iv) all references in a Loan Document to Articles, Sections,
Exhibits and Schedules shall be construed to refer to Articles and Sections of, and Exhibits and
Schedules to, the Loan Document in which such references appear, (v) any reference to any law shall
include all statutory and regulatory provisions consolidating, amending, replacing or interpreting
such law and any reference to any law or regulation shall, unless otherwise specified, refer to
such law or regulation as amended, modified or supplemented from time to time, and (vi) the words
“asset” and “property” shall be construed to have the same meaning and effect and
to refer to any and all tangible and intangible assets and properties, including cash, securities,
accounts and contract rights.



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



20









 





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



     1.03 Accounting Terms. Generally. All accounting terms not specifically or completely
defined herein shall be construed in conformity with, and all financial data (including financial
ratios and other financial calculations) required to be submitted pursuant to this Agreement shall
be prepared in conformity with, GAAP applied on a consistent basis, as in effect from time to time,
applied in a manner consistent with that used in preparing the Audited Financial Statements,
except as otherwise specifically prescribed herein. Notwithstanding the foregoing, for
purposes of determining compliance with any covenant (including the computation of any financial
covenant) contained herein, Indebtedness of the Borrower and its Subsidiaries shall be deemed to be
carried at 100% of the outstanding principal amount thereof, and the effects of FASB ASC 825 and
FASB ASC 470-20 on financial liabilities shall be disregarded.



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



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



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



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



21









 





ARTICLE II. THE COMMITMENTS AND CREDIT EXTENSIONS




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



     2.02 Borrowings, Conversions and Continuations of Loans.



     (a) Each Borrowing, each conversion of Loans from one Type to the other, and each continuation
of Eurodollar Rate Loans shall be made upon the Borrower’s irrevocable notice to the Administrative
Agent, which may be given by telephone. Each such notice must be received by the Administrative
Agent not later than 11:00 a.m. (i) three Business Days prior to the requested date of any
Borrowing of, conversion to or continuation of Eurodollar Rate Loans or of any conversion of
Eurodollar Rate Loans to Base Rate Loans, and (ii) on the requested date of any Borrowing of Base
Rate Loans; provided, however, that if the Borrower wishes to request Eurodollar
Rate Loans having an Interest Period other than one, two or three months in duration as provided in
the definition of “Interest Period,” the applicable notice must be received by the Administrative
Agent not later than 11:00 a.m. four Business Days prior to the requested date of such Borrowing,
conversion or continuation, whereupon the Administrative Agent shall give prompt notice to the
Lenders of such request and determine whether the requested Interest Period is acceptable to all of
them. Not later than 11:00 a.m., three Business Days before the requested date of such Borrowing,
conversion or continuation, the Administrative Agent shall notify the Borrower (which notice may be
by telephone) whether or not the requested Interest Period has been consented to by all the
Lenders. Each telephonic notice by the Borrower pursuant to this Section 2.02(a) must be
confirmed promptly by delivery to the Administrative Agent of a written Loan Notice, appropriately
completed and signed by a Responsible Officer of the Borrower. Each Borrowing of, conversion to or
continuation of Eurodollar Rate Loans shall be in a principal amount of $5,000,000 or a whole
multiple of $1,000,000 in excess thereof. Except as provided in Section 2.03(c), each
Borrowing of or conversion to Base Rate Loans shall be in a principal amount of $500,000 or a whole
multiple of $100,000 in excess thereof. Each Loan Notice (whether telephonic or written) shall
specify (i) whether the Borrower is requesting a Borrowing, a conversion of Loans from one Type to
the other, or a continuation of Eurodollar Rate Loans, (ii) the requested date of the Borrowing,
conversion or continuation, as the case may be (which shall be a Business Day), (iii) the principal
amount of Loans to be borrowed, converted or continued, (iv) the Type of Loans to be borrowed or to
which existing Loans are to be converted, and (v) if applicable, the duration of the Interest
Period with respect thereto. If the Borrower fails to specify a Type of Loan in a Loan Notice or
if the Borrower fails to give a timely notice requesting a conversion or continuation, then the
applicable Loans shall be made as, or converted to, Base Rate Loans. Any such automatic conversion
to Base Rate Loans shall be effective as of the last day of the Interest Period then in effect with
respect to the applicable Eurodollar Rate Loans. If the Borrower requests a Borrowing of,
conversion to, or continuation



22









 




of Eurodollar Rate Loans in any such Loan Notice, but fails to specify an Interest Period, it
will be deemed to have specified an Interest Period of one month.




     (b) Following receipt of a Loan Notice, the Administrative Agent shall promptly notify each
Lender of the amount of its Applicable Percentage of the applicable Loans, and if no timely notice
of a conversion or continuation is provided by the Borrower, the Administrative Agent shall notify
each Lender of the details of any automatic conversion to Base Rate Loans described in the
preceding subsection. In the case of a Borrowing, each Lender shall make the amount of its Loan
available to the Administrative Agent in immediately available funds at the Administrative Agent’s
Office not later than 1:00 p.m. on the Business Day specified in the applicable Loan Notice. Upon
satisfaction of the applicable conditions set forth in Section 4.02 (and, if such Borrowing
is the initial Credit Extension, Section 4.01), the Administrative Agent shall make all
funds so received available to the Borrower in like funds as received by the Administrative Agent
either by (i) crediting the account of the Borrower on the books of Bank of America with the amount
of such funds or (ii) wire transfer of such funds, in each case in accordance with instructions
provided to (and reasonably acceptable to) the Administrative Agent by the Borrower;
provided, however, that if, on the date the Loan Notice with respect to such
Borrowing is given by the Borrower, there are L/C Borrowings outstanding, then the proceeds of such
Borrowing, first, shall be applied to the payment in full of any such L/C Borrowings, and
second, shall be made available to the Borrower as provided above.



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



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



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



     2.03 Letters of Credit.



     (a) The Letter of Credit Commitment.




     (i) Subject to the terms and conditions set forth herein, (A) the Fronting Bank agrees,
in reliance upon the agreements of the Lenders set forth in this Section 2.03, (1)
from time to time on any Business Day during the Availability Period, to issue Fronted
Letters of Credit for the account of the Borrower or its Subsidiaries, and to amend or
extend Fronted Letters of Credit previously issued by it, in accordance with subsection (b)
below, and (2) to honor drawings under the Fronted Letters of Credit; and the Lenders
severally agree to participate in Fronted Letters of Credit issued for the account of the



23









 






Borrower or its Subsidiaries and any drawings thereunder and (B) each Lender severally
agrees, (1) from time to time on any Business Day during the Availability Period, to issue,
extend and renew in such Lender’s Applicable Percentage, Several Letters of Credit at the
request of and for the account of the Borrower or its Subsidiaries, in accordance with
subsection (b) below, and (2) to honor its Applicable Percentage of drawings under the
Several Letters of Credit; provided that after giving effect to any L/C Credit
Extension with respect to any Letter of Credit, (x) the Total Outstandings shall not exceed
the Aggregate Commitments, (y) the aggregate Outstanding Amount of the Loans of any Lender,
plus such Lender’s Applicable Percentage of the Outstanding Amount of all L/C
Obligations shall not exceed such Lender’s Commitment, and (z) the Outstanding Amount of the
L/C Obligations shall not exceed the Letter of Credit Sublimit. Each request by the
Borrower for the issuance or amendment of a Letter of Credit shall be deemed to be a
representation by the Borrower that the L/C Credit Extension so requested complies with the
conditions set forth in the proviso to the preceding sentence. Within the foregoing limits,
and subject to the terms and conditions hereof, the Borrower’s ability to obtain Letters of
Credit shall be fully revolving, and accordingly the Borrower may, during the foregoing
period, obtain Letters of Credit to replace Letters of Credit that have expired or that have
been drawn upon and reimbursed. The Applicable Issuing Party shall not issue any Letter of
Credit, if:




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




     (B) the expiry date of the requested Letter of Credit would occur after the
Letter of Credit Expiration Date, unless all the Lenders have approved such expiry
date.




     (ii) The Applicable Issuing Party shall not be under any obligation to issue any Letter
of Credit if:




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




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



24









 






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




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




     (E) any Lender is at that time a Defaulting Lender, unless, in the case of a
Fronted Letter of Credit, the Fronting Bank has entered into arrangements, including
the delivery of Cash Collateral, satisfactory to the Fronting Bank (in its sole
discretion) with the Borrower or such Lender to eliminate the Fronting Bank’s actual
or potential Fronting Exposure (after giving effect to Section 2.15(a)(iv))
with respect to the Defaulting Lender arising from either the Fronted Letter of
Credit then proposed to be issued or that Fronted Letter of Credit and all other L/C
Obligations as to which the Fronting Bank has actual or potential Fronting Exposure,
as it may elect in its sole discretion; or




     (F) the Letter of Credit contains any provisions for automatic reinstatement of
the stated amount after any drawing thereunder.




     (iii) The Applicable Issuing Party shall not amend any Letter of Credit if the
Applicable Issuing Party would not be permitted at such time to issue the Letter of Credit
in its amended form under the terms hereof. The Applicable Issuing Party shall be under no
obligation to amend any Letter of Credit if (A) the Applicable Issuing Party would have no
obligation at such time to issue the Letter of Credit in its amended form under the terms
hereof, or (B) the beneficiary of the Letter of Credit does not accept the proposed
amendment to the Letter of Credit.




     (iv) The L/C Administrator is hereby authorized to execute and deliver each Several
Letter of Credit and each amendment to a Several Letter of Credit on behalf of each Lender
provided that, upon request of the Borrower, such Several Letter of Credit or amendment will
be executed by each Lender. The L/C Administrator shall use the Applicable Percentage of
each Lender as its “Commitment Share” under each Several Letter of Credit. The L/C
Administrator shall not amend any Several Letter of Credit to change the “Commitment Share”
of an L/C Issuer or add or delete an L/C Issuer liable thereunder unless such amendment is
done in connection with an assignment in accordance with Section 10.06, a change in
the Lenders and/or the Applicable Percentages as a result of any increase in the Aggregate
Commitments pursuant to Section 2.13 or any other addition or replacement of a
Lender in accordance with the terms of this Agreement. Each Lender hereby irrevocably
constitutes and appoints the L/C Administrator its true and lawful attorney-in-fact for and
on behalf of such Lender with full power of substitution and revocation in its own name or
in the name of the L/C Administrator to issue, execute and deliver, as the case may be, each
Several Letter of Credit and each amendment to a Several Letter of Credit and to carry out
the purposes of this Agreement with respect to Several Letters of Credit. Upon request,
each Lender shall execute such powers of attorney or other documents as any beneficiary of
any Several Letter of Credit may reasonably request to evidence the authority of the L/C



25









 






Administrator to execute and deliver such Several Letter of Credit and any amendment or
other modification thereto on behalf of the Lenders.




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



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




     (i) Each Letter of Credit shall be issued or amended, as the case may be, upon the
request of the Borrower delivered to (x) the Fronting Bank, in the case of Fronted Letters
of Credit and (y) the L/C Administrator, in the case of Several Letters of Credit (with a
copy in each case to the Administrative Agent) in the form of a Letter of Credit
Application, appropriately completed and signed by a Responsible Officer of the Borrower
and, if such Letter of Credit will be issued for the account of a Subsidiary, such
Subsidiary. Such Letter of Credit Application must be received by the Applicable Issuing
Party and the Administrative Agent not later than 11:00 a.m. at least two Business Days (or
such later date and time as the Administrative Agent and the Applicable Issuing Party may
agree in a particular instance in their sole discretion) prior to the proposed issuance date
or date of amendment, as the case may be. In the case of a request for an initial issuance
of a Letter of Credit, such Letter of Credit Application shall specify in form and detail
satisfactory to the Applicable Issuing Party: (A) the name of the account party, which shall
be the Borrower or a Subsidiary, (B) the proposed issuance date of the requested Letter of
Credit (which shall be a Business Day); (C) the amount thereof; (D) the expiry date thereof
(which shall be the earlier of the date which is twelve months from the date of issuance or
the Letter of Credit Expiration Date); (E) the name and address of the beneficiary thereof;
(F) the documents to be presented by such beneficiary in case of any drawing thereunder; (G)
the full text of any certificate to be presented by such beneficiary in case of any drawing
thereunder; (H) the purpose and nature of the requested Letter of Credit; (I) in the case of
Letters of Credit issued for the account of an Insurance Subsidiary, whether such Letter of
Credit is to be transferable in whole or in part; (J) whether such Letter of Credit shall be
an Auto-Extension Letter of Credit; (K) whether such Letter of Credit is to be a Fronted
Letter of Credit or a Several Letter of Credit; (L) whether such Letter of Credit shall be
issued under the rules of the ISP or the UCP; and (M) such other matters as the Applicable
Issuing Party may require. In the case of a request for an amendment of any outstanding
Letter of Credit, such Letter of Credit Application shall specify in form and detail
satisfactory to the Applicable Issuing Party (1) the Letter of Credit to be amended; (2) the
proposed date of amendment thereof (which shall be a Business Day); (3) the nature of the
proposed amendment; and (4) such



26









 






other matters as the Applicable Issuing Party may require. Additionally, the Borrower
shall furnish to the Applicable Issuing Party and the Administrative Agent such other
documents and information pertaining to such requested Letter of Credit issuance or
amendment, as the Applicable Issuing Party or the Administrative Agent may reasonably
require.




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




     (iii) If the Borrower so requests in any applicable Letter of Credit Application, the
Applicable Issuing Party may, in its sole discretion, agree to issue a Letter of Credit that
has automatic extension provisions (each, an “Auto-Extension Letter of Credit”);
provided that any such Auto-Extension Letter of Credit must permit the Applicable
Issuing Party to prevent any such extension at least once in each twelve-month period
(commencing with the date of issuance of such Letter of Credit) by giving prior notice to
the beneficiary thereof not later than a day (the “Non-Extension Notice Date”) in
each such twelve-month period to be agreed upon at the time such Letter of Credit is issued.
Unless otherwise directed by the Applicable Issuing Party, the Borrower shall not be
required to make a specific request to the Applicable Issuing Party for any such extension.
Once an Auto-Extension Letter of Credit has been issued, the Lenders shall be deemed to have
authorized (but may not require) the Applicable Issuing Party to permit the extension of
such Letter of Credit at any time to an expiry date not later than the Letter of Credit
Expiration Date; provided, however, that the Applicable Issuing Party shall
not permit any such extension if (A) the Applicable Issuing Party has determined that it
would not be permitted, or would have no obligation, at such time to issue such Letter of
Credit in its revised form (as extended) under the terms hereof (by reason of the provisions
of clause (ii) or (iii) of Section 2.03(a) or otherwise), or (B) it has received
notice (which may be by telephone or in writing) on or before the day that is seven Business
Days before the Non-Extension Notice Date (1) from the Administrative Agent that the
Required Lenders have elected not to permit such extension or (2) from the Administrative
Agent, any Lender or the Borrower that one or more of the applicable



27









 






conditions specified in Section 4.02 is not then satisfied, and in each such
case directing the Applicable Issuing Party not to permit such extension.




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



     (c) Drawings and Reimbursements; Funding of Participations.




     (i) Upon receipt from the beneficiary of any Letter of Credit of any notice of a
drawing under such Letter of Credit, the Applicable Issuing Party shall notify the Borrower
and the Administrative Agent thereof and of the date the Applicable Issuing Party will honor
such request (each such date, an “Honor Date”). Not later than 10:00 a.m. (New York
City time) on the Honor Date for a Letter of Credit, the Borrower shall reimburse the
Applicable Issuing Party through the Administrative Agent in an amount equal to the amount
of such drawing. If the Borrower fails to so reimburse the Applicable Issuing Party by such
time, the Administrative Agent shall promptly notify each Lender of the amount of the
unreimbursed drawing (the “Unreimbursed Amount”), and the amount of such Lender’s
Applicable Percentage thereof. In such event, the Borrower shall be deemed to have
requested a Borrowing of Base Rate Loans to be disbursed on the Honor Date in an amount
equal to the Unreimbursed Amount, without regard to the minimum and multiples specified in
Section 2.02 for the principal amount of Base Rate Loans, but subject to the amount
of the unutilized portion of the Aggregate Commitments and the conditions set forth in
Section 4.02 (other than the delivery of a Loan Notice). Any notice given by the
Applicable Issuing Party or the Administrative Agent pursuant to this Section
2.03(c)(i) may be given by telephone if immediately confirmed in writing; provided that
the lack of such an immediate confirmation shall not affect the conclusiveness or binding
effect of such notice. The proceeds of such Base Rate Loan shall be applied to payment of
the Unreimbursed Amount.




     (ii) Each Lender shall upon any notice pursuant to Section 2.03(c)(i) make
funds available (and the Administrative Agent may apply Cash Collateral provided for this
purpose) for the account of the Applicable Issuing Party at the Administrative Agent’s
Office in an amount equal to its Applicable Percentage of the Unreimbursed Amount not later
than 1:00 p.m. on the Business Day specified in such notice by the Administrative Agent,
whereupon, subject to the provisions of Section 2.03(c)(iii), each Lender that so
makes funds available shall be deemed to have made a Base Rate Loan to the Borrower in such
amount. The Administrative Agent shall remit the funds so received to the Applicable
Issuing Party. To the extent that the Administrative Agent has not received funds from a
Lender with respect to a Several Letter of Credit, the L/C Administrator shall only forward
the funds actually received to the beneficiary.




     (iii) With respect to any Unreimbursed Amount that is not fully refinanced by a
Borrowing of Base Rate Loans because the conditions set forth in Section 4.02 cannot



28









 






be satisfied or for any other reason, the Borrower shall be deemed to have incurred an
L/C Borrowing from (x) in the case of Fronted Letters of Credit, the Fronting Bank and (y)
in the case of Several Letters of Credit, from the Lenders to the extent that they have
provided funds with respect to such Several Letter of Credit pursuant to this Section
2.03 in the amount of the Unreimbursed Amount that is not so refinanced, which L/C
Borrowing shall be due and payable on demand (together with interest) and shall bear
interest at the Default Rate. In such event, each Lender’s payment to the Administrative
Agent for the account of the Applicable Issuing Party pursuant to Section
2.03(c)(ii) shall be deemed payment in respect of its participation in such L/C
Borrowing and shall constitute an L/C Advance from such Lender in satisfaction of its
funding or participation obligation under this Section 2.03.




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




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




     (vi) If any Lender fails to make available to the Administrative Agent for the account
of the Fronting Bank any amount required to be paid by such Lender pursuant to the foregoing
provisions of this Section 2.03(c) by the time specified in Section
2.03(c)(ii), then, without limiting the other provisions of this Agreement, the Fronting
Bank shall be entitled to recover from such Lender (acting through the Administrative
Agent), on demand, such amount with interest thereon for the period from the date such
payment is required to the date on which such payment is immediately available to the
Fronting Bank at a rate per annum equal to the greater of the Federal Funds Rate and a rate
determined by the Fronting Bank in accordance with banking industry rules on interbank
compensation, plus any administrative, processing or similar fees customarily charged by the
Fronting Bank in connection with the foregoing. If such Lender pays such amount with
respect to a Fronted Letter of Credit (with interest and fees as aforesaid) or pays its
Applicable Percentage of any Unreimbursed Amount with respect to a Several Letter of Credit,
the amount so paid shall constitute such Lender’s Base Rate Loan or L/C Advance in respect
of the relevant L/C Borrowing, as the case may be, with respect to



29









 






such drawn Letter of Credit. A certificate of the Fronting Bank submitted to any
Lender (through the Administrative Agent) with respect to any amounts owing under this
clause (vi) shall be conclusive absent manifest error.



     (d) Repayment of Participations.




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




     (ii) If any payment received by the Administrative Agent pursuant to Section
2.03(c)(i) is required to be returned under any of the circumstances described in
Section 10.05 (including pursuant to any settlement entered into by the Fronting
Bank or the L/C Administrator in its discretion), each Lender shall pay to the
Administrative Agent for the account of the Fronting Bank or L/C Administrator its
Applicable Percentage thereof on demand of the Administrative Agent, plus interest thereon
from the date of such demand to the date such amount is returned by such Lender, at a rate
per annum equal to the Federal Funds Rate from time to time in effect. The obligations of
the Lenders under this clause shall survive the payment in full of the Obligations and the
termination of this Agreement.



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




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




     (ii) the existence of any claim, counterclaim, setoff, defense or other right that the
Borrower or any Subsidiary may have at any time against any beneficiary or any transferee of
such Letter of Credit (or any Person for whom any such beneficiary or any such transferee
may be acting), the Applicable Issuing Party or L/C Issuer or any other Person, whether in
connection with this Agreement, the transactions contemplated hereby or by such Letter of
Credit or any agreement or instrument relating thereto, or any unrelated transaction;




     (iii) any draft, demand, certificate or other document presented under such Letter of
Credit proving to be forged, fraudulent, invalid or insufficient in any respect or any
statement therein being untrue or inaccurate in any respect; or any loss or delay in the
transmission or otherwise of any document required in order to make a drawing under such
Letter of Credit;



30









 






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




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



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



     (f) Role of Applicable Issuing Party. Each Lender and the Borrower agree that, in
paying any drawing under a Letter of Credit, the Applicable Issuing Party shall not have any
responsibility to obtain any document (other than any sight draft, certificates and documents
expressly required by the Letter of Credit) or to ascertain or inquire as to the validity or
accuracy of any such document or the authority of the Person executing or delivering any such
document. None of the Applicable Issuing Parties, the Lenders, the Administrative Agent, any of
their respective Related Parties nor any correspondent, participant or assignee of an Applicable
Issuing Party shall be liable to any Lender for (i) any action taken or omitted in connection
herewith at the request or with the approval of the Lenders or the Required Lenders, as applicable;
(ii) any action taken or omitted in the absence of gross negligence or willful misconduct; or (iii)
the due execution, effectiveness, validity or enforceability of any document or instrument related
to any Letter of Credit or Issuer Document. The Borrower hereby assumes all risks of the acts or
omissions of any beneficiary or transferee with respect to its use of any Letter of Credit;
provided, however, that this assumption is not intended to, and shall not, preclude
the Borrower’s pursuing such rights and remedies as it may have against the beneficiary or
transferee at law or under any other agreement. None of the Applicable Issuing Parties, the
Lenders, the Administrative Agent, any of their respective Related Parties nor any correspondent,
participant or assignee of an Applicable Issuing Party shall be liable or responsible for any of
the matters described in clauses (i) through (v) of Section 2.03(e); provided,
however, that anything in such clauses to the contrary notwithstanding, the Borrower may
have a claim against the Applicable Issuing Party and/or the Lenders, and the Applicable Issuing
Party and/or the Lenders may be liable to the Borrower, to the extent, but only to the extent, of
any direct, as opposed to consequential or exemplary, damages suffered by the Borrower which the
Borrower proves were caused by the Applicable Issuing Party’s and/or a Lender’s willful misconduct
or gross negligence or the Applicable Issuing Party’s and/or a Lender’s willful failure to pay
under any Letter of Credit after the presentation to it by the beneficiary of a sight draft and
certificate(s) strictly complying with the terms and conditions of



31









 




a Letter of Credit. In furtherance and not in limitation of the foregoing, the Applicable
Issuing Party may accept documents that appear on their face to be in order, without responsibility
for further investigation, regardless of any notice or information to the contrary, and neither the
Applicable Issuing Party nor any Lender shall be responsible for the validity or sufficiency of any
instrument transferring or assigning or purporting to transfer or assign a Letter of Credit or the
rights or benefits thereunder or proceeds thereof, in whole or in part, which may prove to be
invalid or ineffective for any reason.




     (g) Applicability of ISP and UCP. Unless otherwise expressly agreed by the Applicable
Issuing Party and the Borrower when a Letter of Credit is issued, the rules of the ISP shall apply
unless, for regulatory purposes, the rules of the UCP must apply.



     (h) Letter of Credit Fees. The Borrower shall pay to the Administrative Agent for the
account of each Lender in accordance with its Applicable Percentage a Letter of Credit fee (the
“Letter of Credit Fee”) for each Letter of Credit equal to the Applicable Rate
times the daily amount available to be drawn under such Letter of Credit; provided,
however, any Letter of Credit Fees otherwise payable for the account of a Defaulting Lender with
respect to any Letter of Credit as to which such Defaulting Lender has not provided Cash Collateral
satisfactory to the Fronting Bank pursuant to this Section 2.03 shall be payable, to the
maximum extent permitted by applicable Law, to the other Lenders in accordance with the upward
adjustments in their respective Applicable Percentages allocable to such Letter of Credit pursuant
to Section 2.15(a)(iv), with the balance of such fee, if any, payable to the Fronting Bank
for its own account. For purposes of computing the daily amount available to be drawn under any
Letter of Credit, the amount of such Letter of Credit shall be determined in accordance with
Section 1.06. Letter of Credit Fees shall be (i) due and payable on the first Business Day
after the end of each March, June, September and December, commencing with the first such date to
occur after the issuance of such Letter of Credit, on the Letter of Credit Expiration Date and
thereafter on demand and (ii) computed on a quarterly basis in arrears. If there is any change in
the Applicable Rate during any quarter, the daily amount available to be drawn under each Letter of
Credit shall be computed and multiplied by the Applicable Rate separately for each period during
such quarter that such Applicable Rate was in effect. Notwithstanding anything to the contrary
contained herein, upon the request of the Required Lenders, while any Event of Default exists, all
Letter of Credit Fees shall accrue at the Default Rate.



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



32









 




Issuing Party relating to letters of credit as from time to time in effect. Such customary
fees and standard costs and charges are due and payable on demand and are nonrefundable.




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



     (k) Letters of Credit Issued for Subsidiaries. Notwithstanding that a Letter of
Credit issued or outstanding hereunder is in support of any obligations of, or is for the account
of, a Subsidiary, the Borrower shall be obligated to reimburse the applicable L/C Issuer hereunder
for any and all drawings under such Letter of Credit. The Borrower hereby acknowledges that the
issuance of Letters of Credit for the account of Subsidiaries inures to the benefit of the
Borrower, and that the Borrower’s business derives substantial benefits from the businesses of such
Subsidiaries.



     2.04 Prepayments.



     (a) The Borrower may, upon notice to the Administrative Agent, at any time or from time to
time voluntarily prepay Loans in whole or in part without premium or penalty; provided that
(i) such notice must be received by the Administrative Agent not later than 11:00 a.m. (A) three
Business Days prior to any date of prepayment of Eurodollar Rate Loans and (B) on the date of
prepayment of Base Rate Loans; (ii) any prepayment of Eurodollar Rate Loans shall be in a principal
amount of $5,000,000 or a whole multiple of $1,000,000 in excess thereof; and (iii) any prepayment
of Base Rate Loans shall be in a principal amount of $500,000 or a whole multiple of $100,000 in
excess thereof or, in each case, if less, the entire principal amount thereof then outstanding.
Each such notice shall specify the date and amount of such prepayment and the Type(s) of Loans to
be prepaid and, if Eurodollar Rate Loans are to be prepaid, the Interest Period(s) of such Loans.
The Administrative Agent will promptly notify each Lender of its receipt of each such notice, and
of the amount of such Lender’s Applicable Percentage of such prepayment. If such notice is given
by the Borrower, the Borrower shall make such prepayment and the payment amount specified in such
notice shall be due and payable on the date specified therein. Any prepayment of a Eurodollar Rate
Loan shall be accompanied by all accrued interest on the amount prepaid, together with any
additional amounts required pursuant to Section 3.05. Subject to Section 2.15,
each such prepayment shall be applied to the Loans of the Lenders in accordance with their
respective Applicable Percentages.



     (b) If for any reason the Total Outstandings at any time exceed the Aggregate Commitments then
in effect, the Borrower shall immediately prepay Loans and/or Cash Collateralize the L/C
Obligations in an aggregate amount equal to such excess; provided, however, that
the Borrower shall not be required to Cash Collateralize the L/C Obligations pursuant to this
Section 2.04(b) unless after the prepayment in full of the Loans the Total Outstandings
exceed the Aggregate Commitments then in effect.



     2.05 Termination or Reduction of Commitments. The Borrower may, upon notice to the
Administrative Agent, terminate the Aggregate Commitments, or from time to time permanently reduce
the Aggregate Commitments; provided that (i) any such notice shall be received by the
Administrative Agent not later than 11:00 a.m. five Business Days prior to the date of termination
or reduction, (ii) any such partial reduction shall be in an aggregate amount



33









 




of $10,000,000 or any whole multiple of $1,000,000 in excess thereof, (iii) the Borrower shall
not terminate or reduce the Aggregate Commitments if, after giving effect thereto and to any
concurrent prepayments hereunder, the Total Outstandings would exceed the Aggregate Commitments,
and (iv) if, after giving effect to any reduction of the Aggregate Commitments, the Letter of
Credit Sublimit exceeds the amount of the Aggregate Commitments, such Sublimit shall be
automatically reduced by the amount of such excess. The Administrative Agent will promptly notify
the Lenders of any such notice of termination or reduction of the Aggregate Commitments. Any
reduction of the Aggregate Commitments shall be applied to the Commitment of each Lender according
to its Applicable Percentage. All fees accrued until the effective date of any termination of the
Aggregate Commitments shall be paid on the effective date of such termination.




     2.06 Repayment of Loans. The Borrower shall repay to the Lenders on the Maturity Date the
aggregate principal amount of Loans outstanding on such date.



     2.07 Interest.



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



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




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




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




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



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



34









 





     2.08 Fees. In addition to certain fees described in subsections (h) and (i) of Section
2.03:



     (a) Commitment Fee. The Borrower shall pay to the Administrative Agent for the
account of each Lender in accordance with its Applicable Percentage, a commitment fee equal to the
Applicable Rate times the actual daily amount by which the Aggregate Commitments exceed the
sum of (i) the Outstanding Amount of Loans and (ii) the Outstanding Amount of L/C Obligations,
subject to adjustment as provided in Section 2.15. The commitment fee shall accrue at all
times during the Availability Period, including at any time during which one or more of the
conditions in Article IV is not met, and shall be due and payable quarterly in arrears on
the last Business Day of each March, June, September and December, commencing with the first such
date to occur after the Closing Date, and on the last day of the Availability Period. The
commitment fee shall be calculated quarterly in arrears, and if there is any change in the
Applicable Rate during any quarter, the actual daily amount shall be computed and multiplied by the
Applicable Rate separately for each period during such quarter that such Applicable Rate was in
effect.



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




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



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



     2.10 Evidence of Debt.



     (a) The Credit Extensions made by each Lender shall be evidenced by one or more accounts or
records maintained by such Lender and by the Administrative Agent in the ordinary course of
business. The accounts or records maintained by the Administrative Agent and each Lender shall be
conclusive absent manifest error of the amount of the Credit Extensions made by the Lenders to the
Borrower and the interest and payments thereon. Any failure to so record or any error in doing so
shall not, however, limit or otherwise affect the obligation of the Borrower hereunder to pay any
amount owing with respect to the Obligations. In the event of any conflict



35









 




between the accounts and records maintained by any Lender and the accounts and records of the
Administrative Agent in respect of such matters, the accounts and records of the Administrative
Agent shall control in the absence of manifest error. Upon the request of any Lender made through
the Administrative Agent, the Borrower shall execute and deliver to such Lender (through the
Administrative Agent) a Note, which shall evidence such Lender’s Loans in addition to such accounts
or records. Each Lender may attach schedules to its Note and endorse thereon the date, Type (if
applicable), amount and maturity of its Loans and payments with respect thereto.




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



     2.11 Payments Generally; Administrative Agent’s Clawback.



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



     (b) (i) Funding by Lenders; Presumption by Administrative Agent. Unless the
Administrative Agent shall have received notice from a Lender prior to the proposed date of any
Borrowing of Eurodollar Rate Loans (or, in the case of any Borrowing of Base Rate Loans, prior to
12:00 noon on the date of such Borrowing) that such Lender will not make available to the
Administrative Agent such Lender’s share of such Borrowing, the Administrative Agent may assume
that such Lender has made such share available on such date in accordance with Section 2.02
(or, in the case of a Borrowing of Base Rate Loans, that such Lender has made such share available
in accordance with and at the time required by Section 2.02) and may, in reliance upon such
assumption, make available to the Borrower a corresponding amount. In such event, if a Lender has
not in fact made its share of the applicable Borrowing available to the Administrative Agent, then
the applicable Lender and the Borrower severally agree to pay to the Administrative Agent forthwith
on demand such corresponding amount in immediately available funds with interest thereon, for each
day from and including the date such amount is made available to the Borrower to but excluding the
date of payment to the Administrative Agent, at (A) in the case of



36









 




a payment to be made by such Lender, the greater of the Federal Funds Rate and a rate
determined by the Administrative Agent in accordance with banking industry rules on interbank
compensation, plus any administrative, processing or similar fees customarily charged by the
Administrative Agent in connection with the foregoing, and (B) in the case of a payment to be made
by the Borrower, the interest rate applicable to Base Rate Loans. If the Borrower and such Lender
shall pay such interest to the Administrative Agent for the same or an overlapping period, the
Administrative Agent shall promptly remit to the Borrower the amount of such interest paid by the
Borrower for such period. If such Lender pays its share of the applicable Borrowing to the
Administrative Agent, then the amount so paid shall constitute such Lender’s Loan included in such
Borrowing. Any payment by the Borrower shall be without prejudice to any claim the Borrower may
have against a Lender that shall have failed to make such payment to the Administrative Agent.





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



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



     (c) Failure to Satisfy Conditions Precedent. If any Lender makes available to the
Administrative Agent funds for any Loan to be made by such Lender as provided in the foregoing
provisions of this Article II, and such funds are not made available to the Borrower by the
Administrative Agent because the conditions to the applicable Credit Extension set forth in
Article IV are not satisfied or waived in accordance with the terms hereof, the
Administrative Agent shall return such funds (in like funds as received from such Lender) to such
Lender, without interest.



     (d) Obligations of Lenders Several. The obligations of the Lenders hereunder to make
Loans, to fund Several Letters of Credit, to purchase participations in Fronted Letters of Credit
and to make payments pursuant to Section 10.04(c) are several and not joint. The failure
of any Lender to make any Loan, to fund any Several Letter of Credit, to purchase a participation
in any Fronted Letter of Credit or to make any payment under Section 10.04(c) on any date
required hereunder shall not relieve any other Lender of its corresponding obligation to do so on
such date, and no Lender shall be responsible for the failure of any other Lender to so make its



37









 




Loan, to fund a Several Letter of Credit, to purchase its participation in a Fronted Letter of
Credit or make its payment under Section 10.04(c).




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



     2.12 Sharing of Payments by Lenders. If any Lender shall, by exercising any right of setoff
or counterclaim or otherwise, obtain payment in respect of any principal of or interest on any of
the Loans made by it, or in L/C Obligations held by it resulting in such Lender’s receiving payment
of a proportion of the aggregate amount of such Loans or L/C Obligations and accrued interest
thereon greater than its pro rata share thereof as provided herein, then the Lender receiving such
greater proportion shall (a) notify the Administrative Agent of such fact, and (b) purchase (for
cash at face value) participations in the Loans and participations or subparticipations in L/C
Obligations of the other Lenders, or make such other adjustments as shall be equitable, so that the
benefit of all such payments shall be shared by the Lenders ratably in accordance with the
aggregate amount of principal of and accrued interest on their respective Total Outstandings and
other amounts owing them, provided that:




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




     (ii) the provisions of this Section shall not be construed to apply to (x) any payment
made by or on behalf of the Borrower pursuant to and in accordance with the express terms of
this Agreement (including the application of funds arising from the existence of a
Defaulting Lender), (y) the application of Cash Collateral provided for in Section
2.14, or (z) any payment obtained by a Lender as consideration for the assignment of or
sale of a participation in any of its Loans or L/C Obligations to any assignee or
participant, other than an assignment to the Borrower or any Affiliate thereof (as to which
the provisions of this Section shall apply).



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



     2.13 Increase in Commitments.



     (a) Request for Increase. Provided there exists no Default, upon notice to the
Administrative Agent (which shall promptly notify the Lenders), the Borrower may from time to time,
request an increase in the Aggregate Commitments by an amount (for all such requests) not exceeding
$50,000,000; provided that any such request for an increase shall be in a minimum amount of
$5,000,000. At the time of sending such notice, the Borrower (in consultation with



38









 




the Administrative Agent) shall specify the time period within which each Lender is requested
to respond (which shall in no event be less than ten Business Days from the date of delivery of
such notice to the Lenders).




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



     (c) Notification by Administrative Agent; Additional Lenders. The Administrative
Agent shall notify the Borrower and each Lender of the Lenders’ responses to each request made
hereunder. To achieve the full amount of a requested increase and subject to the approval of the
Administrative Agent, the Fronting Bank (which approvals shall not be unreasonably withheld), the
Borrower may also invite additional Eligible Assignees to become Lenders pursuant to a joinder
agreement in form and substance satisfactory to the Administrative Agent and its counsel.



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



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



     (f) Conflicting Provisions. This Section shall supersede any provisions in
Section 2.12 or 10.01 to the contrary.



39









 





     2.14 Cash Collateral.



     (a) Upon the request of the Administrative Agent or the Fronting Bank (i) if the Fronting Bank
has honored any full or partial drawing request under any Fronted Letter of Credit and such drawing
has resulted in an L/C Borrowing, the Borrower shall immediately Cash Collateralize 103% of the
Outstanding Amount of such L/C Borrowing, (ii) if the Borrower requests a Letter of Credit with (or
an amendment to extend) an expiry date beyond the Maturity Date, the Borrower shall immediately
Cash Collateralize 103% of the Outstanding Amount of such Letter of Credit or (iii) if, as of the
Letter of Credit Expiration Date, any L/C Obligation for any reason remains outstanding, the
Borrower shall immediately Cash Collateralize 103% of the then Outstanding Amount of all L/C
Obligations. At any time that there shall exist a Defaulting Lender, immediately upon the request
of the Administrative Agent or the Fronting Bank, the Borrower shall deliver to the Administrative
Agent Cash Collateral in an amount sufficient to cover 103% of all Fronting Exposure (after giving
effect to Section 2.15(a)(iv) and any Cash Collateral provided by the Defaulting Lender).



     (b) Grant of Security Interest. All Cash Collateral (other than credit support not
constituting funds subject to deposit) shall be maintained (x) in the case of funds deposited by
the Borrower, in a blocked deposit or securities account at the Administrative Agent or such other
financial institution as is acceptable to the Administrative Agent (each, a “Borrower L/C
Collateral Account”) which shall be invested in Permitted Investments and (y) in the case of
funds deposited by a Defaulting Lender, in blocked, non-interest bearing deposit accounts at the
Administrative Agent. The Borrower, and to the extent provided by any Lender, such Lender, hereby
grants to (and subjects to the control of) the Administrative Agent, for the benefit of the
Administrative Agent, the Fronting Bank and the Lenders, and agrees to maintain, a first priority
security interest in all such cash, deposit accounts and all balances therein, and all other
property so provided as collateral pursuant hereto, and in all proceeds of the foregoing, all as
security for the obligations to which such Cash Collateral may be applied pursuant to Section
2.14(c) and shall execute such additional documents as the Administrative Agent may reasonably
request to ensure that the Administrative Agent has a first priority security interest in such Cash
Collateral. If at any time the Administrative Agent determines that Cash Collateral is subject to
any right or claim of any Person other than the Administrative Agent as herein provided, or that
the total amount of such Cash Collateral is less than the applicable Fronting Exposure and other
obligations secured thereby, the Borrower or the relevant Defaulting Lender will, promptly upon
demand by the Administrative Agent, pay or provide to the Administrative Agent additional Cash
Collateral in an amount sufficient to eliminate such deficiency.



     (c) Application. Notwithstanding anything to the contrary contained in this
Agreement, Cash Collateral provided under any of this Section 2.14 or Sections
2.03, 2.04, 2.15 or 8.02 in respect of Letters of Credit shall be held
and applied to the satisfaction of the specific L/C Obligations, obligations to fund participations
therein (including, as to Cash Collateral provided by a Defaulting Lender, any interest accrued on
such obligation) and other obligations for which the Cash Collateral was so provided, prior to any
other application of such property as may be provided for herein.



     (d) Release. Cash Collateral (or the appropriate portion thereof) provided to reduce
Fronting Exposure or other obligations shall be released promptly following (i) the elimination of
the applicable Fronting Exposure or other obligations giving rise thereto (including by the
termination of Defaulting Lender status of the applicable Lender (or, as appropriate, its assignee



40









 




following compliance with Section 10.06(b)(vi))) or (ii) the Administrative Agent’s
good faith determination that there exists excess Cash Collateral; provided, however, (x)
that Cash Collateral furnished by or on behalf of the Borrower shall not be released during the
continuance of a Default or Event of Default (and following application as provided in this
Section 2.14 may be otherwise applied in accordance with Section 8.03), and (y) the
Person providing Cash Collateral and the Fronting Bank may agree that Cash Collateral shall not be
released but instead held to support future anticipated Fronting Exposure or other obligations.




     2.15 Defaulting Lenders. Adjustments. Notwithstanding anything to the contrary
contained in this Agreement, if any Lender becomes a Defaulting Lender, then, until such time as
that Lender is no longer a Defaulting Lender, to the extent permitted by applicable Law:




     (i) Waivers and Amendments. A Defaulting Lender’s right to approve or
disapprove any amendment, waiver or consent with respect to this Agreement shall be
restricted as set forth in Section 10.01.




     (ii) Reallocation of Payments. Any payment of principal, interest, fees or
other amounts received by the Administrative Agent for the account of that Defaulting Lender
(whether voluntary or mandatory, at maturity, pursuant to Article VIII or otherwise,
and including any amounts made available to the Administrative Agent by that Defaulting
Lender pursuant to Section 10.08), shall be applied at such time or times as may be
determined by the Administrative Agent as follows: first, to the payment of any amounts
owing by that Defaulting Lender to the Administrative Agent hereunder; second, to the
payment on a pro rata basis of any amounts owing by that Defaulting Lender to the Fronting
Bank hereunder; third, if so determined by the Administrative Agent or requested by the
Fronting Bank, to be held as Cash Collateral for future funding obligations of that
Defaulting Lender of any participation in any Fronted Letter of Credit; fourth, as the
Borrower may request (so long as no Default or Event of Default exists), to the funding of
any Loan or Cash Collateralization of any Several Letter of Credit in respect of which that
Defaulting Lender has failed to fund its portion thereof as required by this Agreement, as
determined by the Administrative Agent; fifth, if so determined by the Administrative Agent
and the Borrower, to be held in a non-interest bearing deposit account and released in order
to satisfy obligations of that Defaulting Lender to fund Loans or Several Letters of Credit
under this Agreement; sixth, to the payment of any amounts owing to the Lenders, the
Fronting Bank as a result of any judgment of a court of competent jurisdiction obtained by
any Lender, the Fronting Bank against that Defaulting Lender as a result of that Defaulting
Lender’s breach of its obligations under this Agreement; seventh, so long as no Default or
Event of Default exists, to the payment of any amounts owing to the Borrower as a result of
any judgment of a court of competent jurisdiction obtained by the Borrower against that
Defaulting Lender as a result of that Defaulting Lender’s breach of its obligations under
this Agreement; and eighth, to that Defaulting Lender or as otherwise directed by a court of
competent jurisdiction; provided that if (x) such payment is a payment of the
principal amount of any Loans or L/C Borrowings in respect of which that Defaulting Lender
has not fully funded its appropriate share and (y) such Loans or L/C Borrowings were made at
a time when the conditions set forth in Section 4.02 were satisfied or waived, such
payment



41









 






shall be applied solely to pay the Loans of, and L/C Borrowings owed to, all
non-Defaulting Lenders on a pro rata basis prior to being applied to the payment of any
Loans of, or L/C Borrowings owed to, that Defaulting Lender. Any payments, prepayments or
other amounts paid or payable to a Defaulting Lender that are applied (or held) to pay
amounts owed by a Defaulting Lender or to post Cash Collateral pursuant to this Section
2.15(a)(ii) shall be deemed paid to and redirected by that Defaulting Lender, and each
Lender irrevocably consents hereto.




     (iii) Certain Fees. That Defaulting Lender (x) shall not be entitled to
receive any commitment fee pursuant to Section 2.08(a) for any period during which
that Lender is a Defaulting Lender (and the Borrower shall not be required to pay any such
fee that otherwise would have been required to have been paid to that Defaulting Lender) and
(y) shall be limited in its right to receive Letter of Credit Fees as provided in
Section 2.03(h).




     (iv) Reallocation of Applicable Percentages to Reduce Fronting Exposure.
During any period in which there is a Defaulting Lender, for purposes of computing the
amount of the obligation of each non-Defaulting Lender to acquire, refinance or fund
participations in Letters of Credit pursuant to Section 2.03, the “Applicable
Percentage” of each non-Defaulting Lender shall be computed without giving effect to the
Commitment of that Defaulting Lender; provided, that, (i) each such reallocation
shall be given effect only if, at the date the applicable Lender becomes a Defaulting
Lender, no Default or Event of Default exists; and (ii) the aggregate obligation of each
non-Defaulting Lender to acquire, refinance or fund participations in Letters of Credit
shall not exceed the positive difference, if any, of (1) the Commitment of that
non-Defaulting Lender minus (2) the aggregate Outstanding Amount of the Loans of
that Lender.



     (b) Defaulting Lender Cure. If the Borrower, the Administrative Agent and the
Fronting Bank agree in writing in their sole discretion that a Defaulting Lender should no longer
be deemed to be a Defaulting Lender, the Administrative Agent will so notify the parties hereto,
whereupon as of the effective date specified in such notice and subject to any conditions set forth
therein (which may include arrangements with respect to any Cash Collateral), that Lender will, to
the extent applicable, purchase that portion of outstanding Loans of the other Lenders or take such
other actions as the Administrative Agent may determine to be necessary to cause the Loans and
funded and unfunded participations in Letters of Credit to be held on a pro rata basis by the
Lenders in accordance with their Applicable Percentages (without giving effect to Section
2.15(a)(iv)), whereupon that Lender will cease to be a Defaulting Lender; provided that
no adjustments will be made retroactively with respect to fees accrued or payments made by or on
behalf of the Borrower while that Lender was a Defaulting Lender; and provided,
further, that except to the extent otherwise expressly agreed by the affected parties, no
change hereunder from Defaulting Lender to Lender will constitute a waiver or release of any claim
of any party hereunder arising from that Lender’s having been a Defaulting Lender.



42









 





ARTICLE
III. TAXES, YIELD PROTECTION AND ILLEGALITY




     3.01 Taxes.



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




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



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



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



43









 




Agent on its own behalf or on behalf of a Lender or the Fronting Bank, shall be conclusive
absent manifest error.





     (ii) Without limiting the provisions of subsection (a) or (b) above, each Lender and the
Fronting Bank shall, and does hereby, indemnify the Borrower and the Administrative Agent,
and shall make payment in respect thereof within 10 days after demand therefor, against any
and all Taxes and any and all related losses, claims, liabilities, penalties, interest and
expenses (including the fees, charges and disbursements of any counsel for the Borrower or
the Administrative Agent) incurred by or asserted against the Borrower or the Administrative
Agent by any Governmental Authority as a result of the failure by such Lender or the
Fronting Bank, as the case may be, to deliver, or as a result of the inaccuracy, inadequacy
or deficiency of, any documentation required to be delivered by such Lender or the Fronting
Bank, as the case may be, to the Borrower or the Administrative Agent pursuant to subsection
(e). Each Lender and the Fronting Bank hereby authorizes the Administrative Agent to set
off and apply any and all amounts at any time owing to such Lender or the Fronting Bank, as
the case may be, under this Agreement or any other Loan Document against any amount due to
the Administrative Agent under this clause (ii); provided that, for the avoidance of doubt,
the Borrower’s Obligations under this Agreement or any other Loan Document shall not be
increased as a result of such set off. The agreements in this clause (ii) shall survive the
resignation and/or replacement of the Administrative Agent, any assignment of rights by, or
the replacement of, a Lender or the Fronting Bank, the termination of the Aggregate
Commitments and the repayment, satisfaction or discharge of all other Obligations.



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



     (e) Status of Lenders; Tax Documentation. (i) Each Lender and each Fronting Bank
that is a “United States person” within the meaning of Section 7701(a)(30) of the Code shall on or
prior to the date such Lender or Fronting Bank becomes a party to this Agreement or any Loan
Document deliver to the Borrower and the Administrative Agent two completed and executed originals
of IRS Form W-9 (or any successor form) or such other documentation or information prescribed by
applicable Law or reasonably requested by the Borrower or the Administrative Agent certifying that
such Lender or Fronting Bank, as the case may be, is a United States person and is entitled to an
exemption from U.S. backup withholding tax and information reporting with respect to all payments
made pursuant to this Agreement and the Loan Documents.




     (ii) Each Lender and each Fronting Bank that is not a “United States person” within the
meaning of Section 7701(a)(30) of the Code (a “Non-U.S. Lender”) shall, on or prior to the
date such Non-U.S. Lender becomes a party to this Agreement or any Loan Document, deliver to
the Borrower and the Administrative Agent (A) two properly completed and duly executed
originals of IRS Form W-8BEN (claiming and certifying



44









 






that such Lender or Fronting Bank is entitled to a complete exemption from the
withholding of United States federal income tax under an applicable tax treaty), IRS Form
W-8ECI (claiming and certifying that such Lender or Fronting Bank is entitled to a complete
exemption from United States withholding tax because the income is effectively connected
with a U.S. trade or business) or, in either case, any successor form prescribed by the IRS,
(B) in the case of a Non-U.S. Lender claiming exemption from the withholding of United
States federal income tax under section 871(h) or 881(c) of the Code with respect to
payments of “portfolio interest,” a certificate representing that such Non-U.S. Lender is
not (1) a “bank” within the meaning of Section 881(c) of the Code or an Affiliate of such a
“bank,” (2) a ten-percent shareholder of the Borrower (within the meaning of section
871(h)(3)(B) of the Code), or (3) a controlled foreign corporation related to the Borrower
(within the meaning of section 864(d)(4) of the Code), and a Form W-8BEN (or any successor
form prescribed by the IRS), or (C) any other form or document (including any supplementary
documentation) prescribed by applicable Law and reasonably requested by Borrower that is
required to establish that such Lender or Fronting Bank is entitled to a complete exemption
from United States federal withholding tax; provided, however, that clause (C) of this
paragraph shall apply to all Lenders and Fronting Banks.




     (iii) Each Non-U.S. Lender shall provide, promptly upon the reasonable demand of the
Borrower or the Administrative Agent, any information, form or document, accurately
completed and in a manner reasonably satisfactory to the requesting party, that may be
required and reasonably requested in order to allow the requesting party to make a payment
under this Agreement or the Loan Documents without any deduction or withholding for or on
account of any Tax otherwise required to be withheld or assessed under FATCA and shall (and
shall cause other persons acting on its behalf to) comply with any information gathering and
reporting requirements (including entering into any agreement with the IRS), in each case,
that are required to obtain a complete exemption from any U.S. withholding taxes with
respect to payments received by or on behalf of such Non-U.S. Lender.




     (iv) Each Lender, the Fronting Bank and each Non-U.S. Lender agree that it shall
promptly deliver to the Borrower and Administrative Agent any new or revised forms required
under this Section 3.01(e) upon the obsolescence or invalidity of any form previously
delivered pursuant to this Section 3.01(e). Each Lender, the Fronting Bank and each
Non-U.S. Lender (and, in each case, any assignee or Participant) shall (A) promptly notify
the Borrower and the Administrative Agent at any time it determines that it is no longer in
a position to claim a complete exemption from U.S. federal withholding taxes or is no longer
in a position to provide a form or certificate provided to the Borrower or Administrative
Agent pursuant to this Section 3.01(e) (including the inability to provide any such forms or
certificates in the future) and of any change in circumstances which would modify or render
invalid any claimed complete exemption from any withholding taxes, and (B) take such steps
as shall not be materially disadvantageous to it, in the reasonable judgment of such Lender,
the Fronting Bank or Non-U.S. Lender, and as may be reasonably necessary (including the
re-designation of its Lending Office) to avoid any requirement of applicable Laws of any
jurisdiction that the



45









 






Borrower or the Administrative Agent make any withholding or deduction for taxes from
amounts payable to such Lender, the Fronting Bank, or Non-U.S. Lender.



     (f) If the Borrower determines in its sole discretion that a reasonable basis exists for
contesting an Indemnified Tax or Other Tax, the Administrative Agent and each Lender (including any
Non-U.S. Lender and any relevant assignee or Participant) shall reasonably cooperate with the
Borrower in challenging such Indemnified Tax or Other Tax.



     (g) Treatment of Certain Refunds. Unless required by applicable Laws, at no time
shall the Administrative Agent have any obligation to file for or otherwise pursue on behalf of a
Lender or the Fronting Bank, or have any obligation to pay to any Lender or the/ Fronting Bank, any
refund of Taxes withheld or deducted from funds paid for the account of such Lender or the Fronting
Bank, as the case may be. If the Administrative Agent, any Lender or the Fronting Bank determines,
in its reasonable discretion, that it has received a refund of any Indemnified Taxes or Other Taxes
as to which it has been indemnified by the Borrower or with respect to which the Borrower has paid
additional amounts pursuant to this Section 3.01, it shall pay to the Borrower an amount equal to
such refund (but only to the extent of indemnity payments made, or additional amounts paid, by the
Borrower under this Section 3.01 with respect to the Indemnified Taxes or Other Taxes giving rise
to such refund), net of all out-of-pocket expenses incurred by the Administrative Agent, such
Lender or the Fronting Bank, as the case may be, and without interest (other than any interest paid
by the relevant Governmental Authority with respect to such refund), provided that the
Borrower, upon the request of the Administrative Agent, such Lender or the Fronting Bank, agrees to
repay the amount paid over to the Borrower (plus any penalties, interest or other charges imposed
by the relevant Governmental Authority) to the Administrative Agent, such Lender or the Fronting
Bank in the event the Administrative Agent, such Lender or the Fronting Bank is required to repay
such refund to such Governmental Authority, provided, further, however, that the Borrower shall not
have any obligation to indemnify the Administrative Agent, any Lender or the Fronting Bank, as the
case may be, for any penalties, interest or other charges to the extent that such interest,
penalties or other charges are attributable to the failure of the Administrative Agent, any Lender
or the Fronting Bank, as the case may be, to timely notify the Borrower of the incurrence of any
such Taxes. This subsection shall not be construed to require the Administrative Agent, any Lender
or the Fronting Bank to make available its tax returns (or any other information relating to its
Taxes that it deems confidential) to the Borrower or any other Person.



     (h) For the avoidance of doubt, reference to Lender (and Non U.S. Lender) include any
successors thereto and any assignee of any interest or rights under this Agreement or the Loan
Documents.



     3.02 Illegality. If any Lender determines that any Law has made it unlawful, or that any
Governmental Authority has asserted that it is unlawful, for any Lender or its applicable Lending
Office to make, maintain or fund Loans whose interest is determined by reference to the Eurodollar
Rate, or to determine or charge interest rates based upon the Eurodollar Rate, or any Governmental
Authority has imposed material restrictions on the authority of such Lender to purchase or sell, or
to take deposits of, Dollars in the London interbank market, then, on notice thereof by such Lender
to the Borrower through the Administrative Agent, (i) any obligation of such Lender to make or
continue Eurodollar Rate Loans or to convert Base Rate Loans to



46









 




Eurodollar Rate Loans shall be suspended, and (ii) if such notice asserts the illegality of
such Lender making or maintaining Base Rate Loans the interest rate on which is determined by
reference to the Eurodollar Rate component of the Base Rate, the interest rate on which Base Rate
Loans of such Lender shall, if necessary to avoid such illegality, be determined by the
Administrative Agent without reference to the Eurodollar Rate component of the Base Rate, in each
case until such Lender notifies the Administrative Agent and the Borrower that the circumstances
giving rise to such determination no longer exist. Upon receipt of such notice, (x) the Borrower
shall, upon demand from such Lender (with a copy to the Administrative Agent), prepay or, if
applicable, convert all Eurodollar Rate Loans of such Lender to Base Rate Loans (the interest rate
on which Base Rate Loans of such Lender shall, if necessary to avoid such illegality, be determined
by the Administrative Agent without reference to the Eurodollar Rate component of the Base Rate),
either on the last day of the Interest Period therefor, if such Lender may lawfully continue to
maintain such Eurodollar Rate Loans to such day, or immediately, if such Lender may not lawfully
continue to maintain such Eurodollar Rate Loans and (y) if such notice asserts the illegality of
such Lender determining or charging interest rates based upon the Eurodollar Rate, the
Administrative Agent shall during the period of such suspension compute the Base Rate applicable to
such Lender without reference to the Eurodollar Rate component thereof until the Administrative is
advised in writing by such Lender that it is no longer illegal for such Lender to determine or
charge interest rates based upon the Eurodollar Rate. Upon any such prepayment or conversion, the
Borrower shall also pay accrued interest on the amount so prepaid or converted.




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



     3.04 Increased Costs; Reserves on Eurodollar Rate Loans.



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




     (i) impose, modify or deem applicable any reserve, special deposit, compulsory loan,
insurance charge or similar requirement against assets of, deposits with



47









 






or for the account of, or credit extended or participated in by, any Lender (except any
reserve requirement contemplated by Section 3.04(e)) or the Fronting Bank; or




     (ii) impose on any Lender or the Fronting Bank or the London interbank market any other
condition, cost or expense affecting this Agreement or Eurodollar Rate Loans made by such
Lender or any Letter of Credit or participation therein other than with respect to Taxes,
which shall be governed by Section 3.01;


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




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



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



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



48









 




suffered more than nine months prior to the date that such Lender or the Fronting Bank, as the
case may be, notifies the Borrower of the Change in Law giving rise to such increased costs or
reductions and of such Lender’s or the Fronting Bank’s intention to claim compensation therefor
(except that, if the Change in Law giving rise to such increased costs or reductions is
retroactive, then the nine-month period referred to above shall be extended to include the period
of retroactive effect thereof).




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



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



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



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



     (c) any assignment of a Eurodollar Rate Loan on a day other than the last day of the Interest
Period therefor as a result of a request by the Borrower pursuant to Section 10.13;


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



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




     3.06 Mitigation Obligations; Replacement of Lenders.




49












 





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



     (b) Replacement of Lenders. If any Lender requests compensation under Section
3.04, or if the Borrower is required to pay any additional amount to any Lender (including any
assignee or for the benefit of a Participant) or any Governmental Authority for the account of any
Lender pursuant to Section 3.01, the Borrower may replace such Lender in accordance with
Section 10.13.



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



ARTICLE IV. CONDITIONS PRECEDENT TO CREDIT EXTENSIONS




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



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




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



50









 






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




     (iii) such certificates of resolutions or other action, incumbency certificates and/or
other certificates of Responsible Officers of the Borrower as the Administrative Agent may
require evidencing the identity, authority and capacity of each Responsible Officer thereof
authorized to act as a Responsible Officer in connection with this Agreement and the other
Loan Documents;




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




     (v) favorable opinions of Dewey & LeBoeuf LLP, counsel to the Borrower, and Elliott S.
Orol, in-house counsel to the Borrower, addressed to the Administrative Agent and each
Lender, as to the matters set forth in Exhibit E and such other matters concerning
the Borrower and the Loan Documents as the Required Lenders may reasonably request;





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




     (vii) a certificate signed by a Responsible Officer of the Borrower certifying (A) that
the conditions specified in Sections 4.02(a) and (b) have been satisfied,
and (B) that there has been no event or circumstance since the date of the Audited Financial
Statements that has had or could be reasonably expected to have, either individually or in
the aggregate, a Material Adverse Effect;




     (viii) a duly completed Compliance Certificate as of the last day of the fiscal quarter
of the Borrower ended on March 31, 2010, signed by a Responsible Officer of the Borrower;




     (ix) the Audited Financial Statements (which shall be unqualified), the Projections and
the most recently filed Statutory Statements for each Material Subsidiary;




     (x) each Material Subsidiary shall have an A- stable Financial Strength Rating; and



51









 






     (xi) such other assurances, certificates, documents, consents or opinions as the
Administrative Agent, the Fronting Bank or the Required Lenders reasonably may require.



     (b) Any fees required to be paid on or before the Closing Date shall have been paid.



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



     (d) The Closing Date shall have occurred on or before May 28, 2010.



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



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



     (a) The representations and warranties of the Borrower contained in Article V or any
other Loan Document, or which are contained in any document furnished at any time under or in
connection herewith or therewith, shall be true and correct on and as of the date of such Credit
Extension, except to the extent that such representations and warranties specifically refer to an
earlier date, in which case they shall be true and correct as of such earlier date, and except that
for purposes of this Section 4.02, the representations and warranties contained in
subsections (a), (b) and (c) of Section 5.05 shall be deemed to refer to the most recent
statements furnished pursuant to clauses (a) and (b), respectively, of Section 6.01.



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



     (c) After giving effect to such Credit Extension, the Borrower will be in compliance with
Sections 7.01(a) and (b) calculated as of the date of such Credit Extension, rather
than as of the end of the immediately preceding fiscal quarter.



     (d) The Administrative Agent and, if applicable, the Applicable Issuing Party shall have
received a Request for Credit Extension in accordance with the requirements hereof.



52









 





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



ARTICLE V. REPRESENTATIONS AND WARRANTIES




     The Borrower represents and warrants to the Administrative Agent and the Lenders that:



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



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



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



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



     5.05 Financial Statements; No Material Adverse Effect.



     (a) The Audited Financial Statements (i) were prepared in accordance with GAAP consistently
applied throughout the period covered thereby, except as otherwise expressly noted therein; (ii)
fairly present the financial condition of the Borrower and its Subsidiaries as of the



53









 





date thereof and their results of operations for the period covered thereby in accordance with
GAAP consistently applied throughout the period covered thereby, except as otherwise expressly
noted therein; and (iii) show all material indebtedness and other liabilities, direct or
contingent, of the Borrower and its Subsidiaries as of the date thereof, including liabilities for
taxes, material commitments and Indebtedness.




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



     (c) The Statutory Financial Statements listed on Schedule 5.05 and delivered to each
Lender prior to the execution and delivery of this Agreement are the most recently filed Statutory
Financial Statements filed by each Material Subsidiary, are complete and correct in all material
respects and present fairly in accordance with SAP the financial position of such Material
Subsidiary for the period then ended and were in material compliance with applicable Law when
filed.



     (d) The Projections were prepared in good faith on the basis of the assumptions stated
therein, which assumptions were fair in light of the conditions existing at the time of delivery of
such forecasts, and represented, at the time of delivery, the Borrower’s best estimate of its
future financial condition and performance.



     5.06 Litigation. There are no actions, suits, proceedings, claims or disputes pending or, to
the knowledge of the Borrower, threatened or contemplated, at law, in equity, in arbitration or
before any Governmental Authority, by or against the Borrower or any of its Subsidiaries or against
any of their properties or revenues that (a) purport to affect or pertain to this Agreement or any
other Loan Document, or any of the transactions contemplated hereby, or (b) except as specifically
disclosed in Schedule 5.06, either individually or in the aggregate, if determined
adversely, could reasonably be expected to have a Material Adverse Effect.



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



     5.08 Ownership of Property; Liens. Each of the Borrower and each Subsidiary has good record
and marketable title in fee simple to, or valid leasehold interests in, all real property necessary
or used in the ordinary conduct of its business, except for such defects in title as could not,
individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. The
property of the Borrower and its Subsidiaries is subject to no Liens, other than Liens permitted by
Section 7.01.



     5.09 Insurance. The properties of the Borrower and its Subsidiaries are insured with
financially sound and reputable insurance companies not Affiliates of the Borrower, in such
amounts, with such deductibles and covering such risks as are customarily carried by companies



54









 





engaged in similar businesses and owning similar properties in localities where the Borrower
or the applicable Subsidiary operates.




     5.10 Taxes. The Borrower and its Subsidiaries have filed all Federal, state and other
material tax returns and reports required to be filed, and have paid all material Federal, state
and other material taxes, assessments, fees and other governmental charges levied or imposed upon
them or their properties, income or assets otherwise due and payable, except those which are being
contested in good faith by appropriate proceedings diligently conducted and for which adequate
reserves have been provided in accordance with GAAP. There is no proposed tax assessment against
the Borrower or any Subsidiary that would, if made, have a Material Adverse Effect. Neither the
Borrower nor any Subsidiary thereof is party to any tax sharing agreement other than as disclosed
on Schedule 5.10.



     5.11 ERISA Compliance.



     (a) Each Plan is in compliance in all material respects with the applicable provisions of
ERISA, the Code and other Federal or state laws. Each Pension Plan that is intended to be a
qualified plan under Section 401(a) of the Code has received a favorable determination letter from
the Internal Revenue Service to the effect that the form of such Plan is qualified under Section
401(a) of the Code and the trust related thereto has been determined by the Internal Revenue
Service to be exempt from federal income tax under Section 501(a) of the Code, or an application
for such a letter is currently being processed by the Internal Revenue Service. To the best
knowledge of the Borrower, nothing has occurred that would prevent or cause the loss of such
tax-qualified status.



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



     (c) (i) No ERISA Event has occurred, and neither the Borrower nor any ERISA Affiliate is aware
of any fact, event or circumstance that could reasonably be expected to constitute or result in an
ERISA Event with respect to any Pension Plan; (ii) the Borrower and each ERISA Affiliate has met
all applicable requirements under the Pension Funding Rules in respect of each Pension Plan, and no
waiver of the minimum funding standards under the Pension Funding Rules has been applied for or
obtained; (iii) as of the most recent valuation date for any Pension Plan, the funding target
attainment percentage (as defined in Section 430(d)(2) of the Code) is 60% or higher and neither
the Borrower nor any ERISA Affiliate knows of any facts or circumstances that could reasonably be
expected to cause the funding target attainment percentage for any such plan to drop below 60% as
of the most recent valuation date; (iv) neither the Borrower nor any ERISA Affiliate has incurred
any liability to the PBGC other than for the payment of premiums, and there are no premium payments
which have become due that are unpaid; (v) neither the Borrower nor any ERISA Affiliate has engaged
in a transaction that could be subject to Section 4069 or Section 4212(c) of ERISA; and (vi) no
Pension Plan has been terminated by the plan administrator thereof nor by the PBGC, and no event or
circumstance has



55









 





occurred or exists that could reasonably be expected to cause the PBGC to institute
proceedings under Title IV of ERISA to terminate any Pension Plan.




     (d) Neither the Borrower or any ERISA Affiliate maintains or contributes to, or has any
unsatisfied obligation to contribute to, or liability under, any active or terminated Pension Plan
other than Pension Plans not otherwise prohibited by this Agreement.



     5.12 Subsidiaries; Equity Interests. As of the Closing Date, (a) the Borrower has no
Subsidiaries other than those specifically disclosed on Schedule 5.12 and such schedule
correctly indicates which Subsidiaries are Insurance Subsidiaries and Material Subsidiaries, (b)
all of the outstanding Equity Interests in such Subsidiaries have been validly issued, are fully
paid and non-assessable and are owned by the Person and in the amounts specified on Schedule
5.12 free and clear of all Liens and (c) the Borrower and its Subsidiaries have no equity
investments in any other corporation or entity which represent 10% or more of the total equity
interests of such corporation or entity other than those specifically disclosed on Schedule
5.12.



     5.13 Margin Regulations; Investment Company Act.



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



     (b) The Borrower is not and is not required to be registered as an “investment company” under
the Investment Company Act of 1940.



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



     5.15 Compliance with Laws. The Borrower and each Subsidiary thereof is in compliance in all
material respects with the requirements of all Laws and all orders, writs, injunctions and decrees
applicable to it or to its properties, except in such instances in which (a) such requirement of
Law or order, writ, injunction or decree is being contested in good faith by



56









 





appropriate proceedings diligently conducted or (b) the failure to comply therewith,
individually or in the aggregate, could not reasonably be expected to have a Material Adverse
Effect.




     5.16 Taxpayer Identification Number. The Borrower’s true and correct U.S. taxpayer
identification number is set forth on Schedule 10.02.



     5.17 Solvency. On the Closing Date, (a) the fair value of the assets of the Borrower, at a
fair valuation, will exceed its debts and liabilities, subordinated, contingent or otherwise; (b)
the present fair value of the property of the Borrower will be greater than the amount that will be
required to pay the probable liability of their debts and other liabilities, subordinated,
contingent or otherwise, as such debts and other liabilities become absolute and matured; (c) the
Borrower will be able to pay its debts and liabilities, subordinated, contingent or otherwise, as
such debt and liabilities become absolute and matured; and (d) the Borrower will not have
unreasonably small capital with which to conduct the business in which it is engaged as such
business is now conducted and is proposed to be conducted following the Closing Date.



ARTICLE VI. AFFIRMATIVE COVENANTS




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



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



     (a) as soon as available, but in any event within 90 days after the end of each fiscal year of
the Borrower (commencing with the fiscal year ended December 31, 2010), a consolidated balance
sheet of the Borrower and its Subsidiaries as at the end of such fiscal year, and the related
consolidated statements of income or operations, changes in shareholders’ equity, and cash flows
for such fiscal year, setting forth in each case in comparative form the figures for the previous
fiscal year, all in reasonable detail and prepared in accordance with GAAP, audited and accompanied
by a report and opinion of an independent certified public accountant of nationally recognized
standing reasonably acceptable to the Required Lenders, which report and opinion shall be prepared
in accordance with generally accepted auditing standards and shall not be subject to any “going
concern” or like qualification or exception or any qualification or exception as to the scope of
such audit;



     (b) as soon as available, but in any event within 45 days after the end of each of the first
three fiscal quarters of each fiscal year of the Borrower (commencing with the fiscal quarter ended
March 31, 2010), a consolidated balance sheet of the Borrower and its Subsidiaries as at the end
of such fiscal quarter, the related consolidated statements of income or operations for such fiscal
quarter and for the portion of the Borrower’s fiscal year then ended, and the related consolidated
statements of changes in shareholders’ equity, and cash flows for the portion of the Borrower’s
fiscal year then ended, in each case setting forth in comparative form, as applicable, the figures
for the corresponding fiscal quarter of the previous fiscal year and the corresponding portion of
the previous fiscal year, all in reasonable detail, certified by the chief executive



57









 





officer, chief financial officer, treasurer or controller of the Borrower as fairly presenting
the financial condition, results of operations, shareholders’ equity and cash flows of the Borrower
and its Subsidiaries in accordance with GAAP, subject only to normal year-end audit adjustments and
the absence of footnotes; and




     (c) Within five (5) days after the date filed with the Applicable Insurance Regulatory
Authority (but in any event within 125 days after the end of each fiscal year of each Material
Subsidiary), a copy of the Quarterly Statutory Statement or Annual Statement, as applicable, of
such Material Subsidiary for such period, if any, required by such Applicable Insurance Regulatory
Authority to be filed, each of which Statutory Financial Statements delivered to be prepared in
accordance with SAP and accompanied by the certification of the chief financial officer or chief
executive officer of such Material Subsidiary that such financial statement is complete and correct
in all material respects and presents fairly in accordance with SAP the financial position of such
Material Subsidiary for the period then ended.



As to any information contained in materials furnished pursuant to Section 6.02(c), the
Borrower shall not be separately required to furnish such information under clause (a) or (b)
above, but the foregoing shall not be in derogation of the obligation of the Borrower to furnish
the information and materials described in clauses (a) and (b) above at the times specified
therein.




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



     (a) concurrently with the delivery of the financial statements referred to in Sections
6.01(a) and (b) (commencing with the delivery of the financial statements for the
fiscal quarter ended March 31, 2010) a duly completed Compliance Certificate signed by the chief
executive officer, chief financial officer, treasurer or controller of the Borrower (which delivery
may, unless the Administrative Agent, or a Lender requests executed originals, be by electronic
communication including fax or email and shall be deemed to be an original authentic counterpart
thereof for all purposes);



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



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



     (d) promptly, and in any event within five (5) Business Days after receipt thereof by the
Borrower or any Subsidiary thereof, copies of each notice or other correspondence received from the
SEC (or comparable agency in any applicable non-U.S. jurisdiction) concerning any



58









 





investigation or possible investigation or other inquiry by such agency regarding financial or
other operational results of the Borrower or any Subsidiary thereof;




     (e) within five (5) Business Days of such notice, notice of proposed or actual suspension,
termination or revocation of any material License of any Material Subsidiary by any Applicable
Regulatory Insurance Authority or of receipt of notice from any Applicable Regulatory Insurance
Authority notifying the Borrower or any Material Subsidiary of a hearing relating to such a
suspension, termination or revocation, including any request by an Applicable Regulatory Insurance
Authority which commits the Borrower or any Material Subsidiary to take, or refrain from taking,
any action or which otherwise materially and adversely affects the authority of the Borrower or any
Material Subsidiary to conduct its business;



     (f) within five (5) Business Days of such notice, notice of any pending or threatened
investigation or regulatory proceeding (other than routine periodic investigations or reviews) by
any Applicable Regulatory Insurance Authority concerning the business, practices or operations of
the Borrower or any Material Subsidiary;



     (g) promptly, notice of any actual or, to the best of the Borrower’s knowledge, proposed
material changes in the Insurance Code governing the investment or dividend practices of any
Material Subsidiary;



     (h) promptly, notice of any material change in the accounting or financial reporting practices
of the Borrower or any Material Subsidiary; and.



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



     Documents required to be delivered pursuant to Section 6.01(a) or (b) or
Section 6.02(c) (to the extent any such documents are included in materials otherwise filed
with the SEC) may be delivered electronically and if so delivered, shall be deemed to have been
delivered on the date (i) on which the Borrower posts such documents, or provides a link thereto on
the Borrower’s website on the Internet at the website address listed on Schedule 10.02; or
(ii) on which such documents are posted on the Borrower’s behalf on an Internet or intranet
website, if any, to which each Lender and the Administrative Agent have access (whether a
commercial, third-party website or whether sponsored by the Administrative Agent); provided
that: (i) the Borrower shall deliver paper copies of such documents to the Administrative Agent or
any Lender upon its request to the Borrower to deliver such paper copies until a written request to
cease delivering paper copies is given by the Administrative Agent or such Lender and (ii) the
Borrower shall notify the Administrative Agent and each Lender (by telecopier or electronic mail)
of the posting of any such documents and provide to the Administrative Agent by electronic mail
electronic versions (i.e., soft copies) of such documents. The Administrative Agent shall
have no obligation to request the delivery of or to maintain paper copies of the documents referred
to above, and in any event shall have no responsibility to monitor compliance by the Borrower with
any such request by a Lender for delivery, and each Lender



59









 





shall be solely responsible for requesting delivery to it or maintaining its copies of such
documents.




     The Borrower hereby acknowledges that (a) the Administrative Agent and/or the Arranger will
make available to the Lenders and the Fronting Bank materials and/or information provided by or on
behalf of the Borrower hereunder (collectively, “Borrower Materials”) by posting the
Borrower Materials on IntraLinks or another similar electronic system (the “Platform”) and
(b) certain of the Lenders (each, a “Public Lender”) may have personnel who do not wish to
receive material non-public information with respect to the Borrower or its Affiliates, or the
respective securities of any of the foregoing, and who may be engaged in investment and other
market-related activities with respect to such Persons’ securities. The Borrower hereby agrees
that (w) all Borrower Materials that are to be made available to Public Lenders shall be clearly
and conspicuously marked “PUBLIC” which, at a minimum, shall mean that the word “PUBLIC” shall
appear prominently on the first page thereof; (x) by marking Borrower Materials “PUBLIC,” the
Borrower shall be deemed to have authorized the Administrative Agent, the Arranger, the Fronting
Bank and the Lenders to treat such Borrower Materials as not containing any material non-public
information with respect to the Borrower or its securities for purposes of United States Federal
and state securities laws (provided, however, that to the extent such Borrower
Materials constitute Information, they shall be treated as set forth in Section
10.07); (y) all Borrower Materials marked “PUBLIC” are permitted to be made available
through a portion of the Platform designated “Public Side Information;” and (z) the Administrative
Agent and the Arranger shall be entitled to treat any Borrower Materials that are not marked
“PUBLIC” as being suitable only for posting on a portion of the Platform not designated “Public
Side Information.”



     6.03 Notices. Promptly notify the Administrative Agent and each Lender:



     (a) of the occurrence of any Default;



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



     (c) of the occurrence of any ERISA Event.



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



     6.04 Payment of Obligations. Pay and discharge as the same shall become due and payable, all
its obligations and liabilities, including (a) all material tax liabilities, assessments



60









 





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




     6.05 Preservation of Existence, Etc. (a) Preserve, renew and maintain in full force and
effect its legal existence and good standing under the Laws of the jurisdiction of its organization
except in a transaction permitted by Section 7.03 or 7.04; (b) take all reasonable
action to maintain all rights, privileges, permits, licenses and franchises necessary or desirable
in the normal conduct of its business, except to the extent that failure to do so could not
reasonably be expected to have a Material Adverse Effect; and (c) preserve or renew all of its
registered patents, trademarks, trade names and service marks, the non-preservation of which could
reasonably be expected to have a Material Adverse Effect.



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



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



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



     6.09 Books and Records. (a) Maintain proper books of record and account, in which full, true
and correct entries in conformity with GAAP consistently applied shall be made of all financial
transactions and matters involving the assets and business of the Borrower or such Subsidiary, as
the case may be; and (b) maintain such books of record and account in material conformity with all
applicable requirements of any Governmental Authority having regulatory jurisdiction over the
Borrower or such Subsidiary, as the case may be.



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



61









 





business hours and as often as may be reasonably desired but no more than three times a year
unless an Event of Default exists, upon reasonable advance notice to the Borrower;
provided, however, that when an Event of Default exists the Administrative Agent or
any Lender (or any of their respective representatives or independent contractors) may do any of
the foregoing at the expense of the Borrower at any time during normal business hours and without
advance notice.




     6.11 Use of Proceeds. Use the proceeds of the Credit Extensions for general corporate
purposes (including acquisitions) not in contravention of any Law or of any Loan Document.



ARTICLE VII. NEGATIVE COVENANTS




     So long as any Lender shall have any Commitment hereunder, any Loan or other Obligation
hereunder shall remain unpaid or unsatisfied, or any Letter of Credit shall remain outstanding, the
Borrower, without the prior written consent of the Required Lenders, shall not, nor shall it permit
any Subsidiary to, directly or indirectly:



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



     (a) Liens pursuant to any Loan Document;



     (b) Liens existing on the date hereof and listed on Schedule 7.01 and any renewals or
extensions thereof, provided that (i) the property covered thereby is not changed, (ii) the
amount secured or benefited thereby is not increased except as contemplated by Section
7.02(b), (iii) the direct or any contingent obligor with respect thereto is not changed, and
(iv) any renewal or extension of the obligations secured or benefited thereby is permitted by
Section 7.02(b);



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



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



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



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



     (g) easements, rights-of-way, restrictions and other similar encumbrances affecting real
property which, in the aggregate, are not substantial in amount, and which do not in any case



62









 





materially detract from the value of the property subject thereto or materially interfere with
the ordinary conduct of the business of the applicable Person;




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



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



     (j) The filing of UCC financing statements as a precautionary measure in connection with
operating leases;



     (k) Liens on deposit and securities accounts that are imposed by law or account opening
documents;



     (l) Liens on invested assets pursuant to trust or other security arrangements in connection
with reinsurance policies or regulatory requirements (for insurance licensing purposes); and



     (m) Liens not otherwise permitted under this Section 7.01 securing Indebtedness
provided that the amount of the Indebtedness secured thereby does not exceed $25,000,000 at any
time;



     provided, however, that no Lien shall be permitted to exist on the Equity Interest in any
Insurance Subsidiary.



     7.02 Indebtedness. Create, incur, assume or suffer to exist any Indebtedness of the
Borrower’s Subsidiaries, except:



     (a) Indebtedness under the Loan Documents;



     (b) Indebtedness outstanding on the date hereof and listed on Schedule 7.02;



     (c) obligations (contingent or otherwise) existing or arising under any Swap Contract,
provided that (i) such obligations are (or were) entered into by such Person in the
ordinary course of business for the purpose of directly mitigating risks associated with
liabilities, commitments, investments, assets, or property held or reasonably anticipated by such
Person, or changes in the value of securities issued by such Person, and not for purposes of
speculation or taking a “market view;” and (ii) such Swap Contract does not contain any provision
exonerating the non-defaulting party from its obligation to make payments on outstanding
transactions to the defaulting party;



     (d) Indebtedness in respect of capital leases and purchase money obligations for fixed or
capital assets within the limitations set forth in Section 7.01(i); provided,
however, that the aggregate amount of all such Indebtedness at any one time outstanding
shall not exceed $25,000,000;



63









 





     (e) unsecured Indebtedness in an aggregate principal amount not to exceed $25,000,000 at any
time outstanding; and



     (f) Indebtedness owed by any Subsidiary to the Borrower or any of its Subsidiaries.



     7.03 Fundamental Changes. Merge, dissolve, liquidate, consolidate with or into another
Person, or make any Acquisition except that, so long as no Default exists or would result
therefrom:



     (a) any Subsidiary may merge with (i) the Borrower, provided that the Borrower shall
be the continuing or surviving Person, or (ii) any one or more other Subsidiaries, provided
that (A) when any Wholly-Owned Subsidiary is merging with another Subsidiary, the Wholly-Owned
Subsidiary shall be the continuing or surviving Person and (B) if either of the Subsidiaries is
directly owned by the Borrower, the surviving entity must be directly owned by the Borrower;



     (b) the Borrower or any Subsidiary may merge, consolidate or amalgamate with another Person
provided (i) if the Borrower is involved in the merger, consolidation or amalgamation, the
surviving company, must be organized in the United States, (ii) if the merger, consolidation or
amalgamation involves an Insurance Subsidiary, restrictions on dividends in the jurisdiction of the
surviving company shall not be less favorable than such restrictions in the jurisdiction of such
Insurance Subsidiary, (iii) if any Wholly-Owned Subsidiary is merging, consolidating or
amalgamating with another Person, the surviving company shall continue to be a Wholly-Owned
Subsidiary after such merger, consolidation or amalgamation; and (iv) the merger, consolidation or
amalgamation is not a hostile takeover;



     (c) any Subsidiary may Dispose of all or any or substantially all of its assets (upon
voluntary liquidation or otherwise) to one or more of the Borrower or to other Subsidiaries;
provided that if the transferor in such a transaction is a Wholly-Owned Subsidiary, then
the transferees must either be the Borrower or one or more Wholly-Owned Subsidiaries; and



     (d) the Borrower or any Subsidiary may make Acquisitions.



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



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



     (b) Dispositions of assets invested in the ordinary course of business, including, without
limitation, securities, commodities, mutual funds and Permitted Investments;



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



     (d) Dispositions of property by any Subsidiary to the Borrower or to a Wholly-Owned
Subsidiary;



64









 





     (e) Dispositions permitted by Section 7.03; and



     (f) Dispositions by the Borrower and its Subsidiaries not otherwise permitted under this
Section 7.04; provided that (i) at the time of such Disposition, no Default shall
exist or would result from such Disposition and (ii) the aggregate book value of all property
Disposed of in reliance on this clause (f) in any fiscal year shall not exceed 10% of Consolidated
Net Worth.



     7.05 Restricted Payments. Declare or make, directly or indirectly, any Restricted Payment, or
incur any obligation (including contingent or otherwise) to do so (other than those permitted under
Section 7.03(c) or Section 7.04(d)) except that so long as no Default shall have
occurred and be continuing at the time of any action described below or would result therefrom:



     (a) each Subsidiary (which for this purpose includes any trust or trusts formed for the
purposes of issuing trust preferred securities) may make Restricted Payments to the Borrower and
any other Person that owns an Equity Interest in such Subsidiary, ratably according to their
respective holdings of the type of Equity Interest in respect of which such Restricted Payment is
being made;



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



     (c) the Borrower and each Subsidiary may purchase, redeem or otherwise acquire Equity
Interests issued by it with the proceeds received from the substantially concurrent issue of new
shares of its common stock or other common Equity Interests;



     (d) the Borrower may declare or pay ordinary cash dividends to its stockholders;



     (e) the Borrower may declare or make, directly or indirectly, extraordinary dividends, stock
repurchases and other extraordinary distributions (other than ordinary dividends), provided that
after giving effect to such extraordinary dividend, stock repurchase or extraordinary distribution,
the Debt to Capitalization Ratio will be equal to or lower than 0.275:1.0; and



     (f) the Borrower and any Subsidiary may make any payment (even if such payment is in the form
of a Restricted Payment) to the Borrower or another Subsidiary that is required to be made with
respect to or in connection with the terms of any Tax sharing, Tax allocation or other similar Tax
arrangement or agreement entered into among the Borrower and its Subsidiaries.



     7.06 Change in Nature of Business; Hedging. Engage in any material business substantially
different from those businesses conducted by the Borrower and its Subsidiaries on the date hereof
or any business substantially related or incidental thereto or engage in speculative hedging.



     7.07 Transactions with Affiliates. Enter into any transaction of any kind with any Affiliate
of the Borrower, whether or not in the ordinary course of business, other than on fair and
reasonable terms substantially as favorable to the Borrower or such Subsidiary as would be
obtainable by the Borrower or such Subsidiary at the time in a comparable arm’s length



65









 





transaction with a Person other than an Affiliate, provided that the foregoing
restriction shall not apply to transactions between or among the Borrower and any of its
Wholly-Owned Subsidiaries or between and among any Wholly-Owned Subsidiaries.




     7.08 Burdensome Agreements. Enter into any Contractual Obligation (other than this Agreement
or any other Loan Document) that (a) limits the ability (i) of any Subsidiary to make Restricted
Payments to the Borrower or to otherwise transfer property to the Borrower or any other Subsidiary,
(ii) of any Subsidiary to Guarantee or grant Liens to secure Indebtedness of the Borrower or (iii)
of the Borrower to grant Liens to secure the Obligations; or (b) requires the grant of a Lien to
secure, or the Guarantee of, an obligation of such Person if a Lien is granted to secure, or a
Guarantee is made of, another obligation of such Person; provided, however, that
this Section shall not prohibit such limitations existing under or by reason of (A) applicable Law,
(B) this Agreement or any other Loan Document, (C) customary provisions restricting subletting or
assignment in any lease governing any leasehold interest of the Borrower or any of its
Subsidiaries, (D) customary provisions restricting assignment in any licensing agreement (in which
the Borrower or any of its Subsidiaries is the licensee) entered into by the Borrower or any of its
Subsidiaries in the ordinary course of business, (E) restrictions and conditions on the transfer of
or granting of a Lien on any asset subject to a Lien permitted by Section 7.01 solely to
the extent any such negative pledge relates to the property financed by or the subject of such
Indebtedness, (F) restrictions and conditions on the transfer of any asset pending the close of the
sale of such asset, (G) agreements entered into by an Insurance Subsidiary with any Applicable
Insurance Regulatory Authority, or (H) any Tax sharing, Tax allocation, or other similar Tax
arrangement or agreement entered into among the Borrower and its Subsidiaries.



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



     7.10 Financial Covenants.



     (a) Consolidated Net Worth. Permit Consolidated Net Worth as of the end of any fiscal
quarter to be less than the sum of (i) $787,900,000, (ii) an amount equal to 50% of the
Consolidated Net Income earned in each full fiscal quarter ending after December 31, 2009 (with no
deduction for a net loss in any such fiscal quarter) and (iii) an amount equal to 50% of the
aggregate increases in Consolidated Net Worth of the Borrower and its Subsidiaries after the date
hereof by reason of the issuance and sale of Equity Interests of the Borrower or any Subsidiary
(other than issuances to the Borrower or a Wholly-Owned Subsidiary), including upon any conversion
of debt securities of the Borrower into such Equity Interests.



     (b) Debt to Capitalization Ratio. Permit the Debt to Capitalization Ratio as of the
end of any fiscal quarter to be greater than 0.35:1.0.



     (c) Minimum Risk-Based Capital. Permit the Risk Based Capital Ratio of Tower
Insurance Company of New York as of any fiscal year end to be less than 175%.



66









 





     (d) Minimum Statutory Surplus. Permit the Statutory Surplus of any Material
Subsidiary as of the end of any fiscal quarter to be less than the amount set forth opposite such
Material Subsidiary’s name on Schedule 7.10, as such Schedule is amended pursuant to any
Compliance Certificate in connection with the addition of a new Material Subsidiary. If a
Subsidiary becomes a Material Subsidiary after the Closing Date, the minimum Statutory Surplus for
such new Material Subsidiary shall be an amount equal to 75% of such Subsidiary’s Statutory Surplus
as of the fiscal quarter end in which it became a Material Subsidiary.



     7.11 Investments in Reciprocal Insurers. To (i) make any loans to or purchase or redeem any
Equity Interests in, (ii) incur contingent liabilities or otherwise provide credit support
(including granting a Lien on any of its assets) for the Indebtedness of, or (iii) enter into any
net worth maintenance agreements with respect to, any Reciprocal Insurer except as required
pursuant to that certain Loan Agreement dated as of August 31, 2004 between Homeland Insurance
Company of New York, as lender, and Adirondack Insurance Exchange, as borrower, as in effect on the
date hereof, provided that the amount of any such loans made after the date hereof shall not exceed
$30,000,000.



ARTICLE
VIII. EVENTS OF DEFAULT AND REMEDIES




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



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



     (b) Specific Covenants. The Borrower fails to perform or observe any term, covenant
or agreement contained in any of Section 6.01, 6.02, 6.03, 6.05, or
Article VII; or



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



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



     (e) Cross-Default. (i) The Borrower or any Material Subsidiary (A) fails to make any
payment when due (whether by scheduled maturity, required prepayment, acceleration, demand, or
otherwise) in respect of any Indebtedness or Guarantee (other than Indebtedness hereunder and
Indebtedness under Swap Contracts) having an aggregate principal amount (including undrawn
committed or available amounts and including amounts owing to all creditors under any combined or
syndicated credit arrangement) of more than the Threshold Amount, or (B) fails to observe or
perform any other agreement or condition relating to any such Indebtedness or Guarantee or
contained in any instrument or agreement evidencing, securing or relating thereto,



67









 





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




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



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



     (h) Judgments. There is entered against (i) the Borrower or any Material Subsidiary
one or more final judgments or orders for the payment of money in an aggregate amount (as to all
such judgments or orders) exceeding the Threshold Amount (to the extent not covered by independent
third-party insurance as to which the insurer does not dispute coverage), or (ii) the Borrower or
any Material Subsidiary any one or more non-monetary final judgments that have, or could reasonably
be expected to have, individually or in the aggregate, a Material Adverse Effect and, in either
case, (A) enforcement proceedings are commenced by any creditor upon such judgment or order, or (B)
there is a period of 10 consecutive days during which a stay of enforcement of such judgment, by
reason of a pending appeal or otherwise, is not in effect; or



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



68









 





installment payment with respect to its withdrawal liability under Section 4201 of ERISA under
a Multiemployer Plan in an aggregate amount in excess of the Threshold Amount; or




     (j) Invalidity of Loan Documents. Any Loan Document, at any time after its execution
and delivery and for any reason other than as expressly permitted hereunder or thereunder or
satisfaction in full of all the Obligations, ceases to be in full force and effect; or the Borrower
or any other Person contests in any manner the validity or enforceability of any Loan Document; or
the Borrower denies that it has any or further liability or obligation under any Loan Document, or
purports to revoke, terminate or rescind any Loan Document; or



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



     (l) Change in Law. Any change is made in any Insurance Code which affects the
dividend practices of any Insurance Subsidiary and which is reasonably likely to have a Material
Adverse Effect on the ability of the Borrower to perform its obligations under the Agreement and
such circumstances shall continue for 120 days; or



     (m) Insurance License. Any insurance license of the Borrower or any Material
Subsidiary is suspended, limited, terminated or not renewed which could reasonably be expected to
have a Material Adverse Effect.



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



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



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



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



     (d) exercise on behalf of itself, the Lenders and the Fronting Bank all rights and remedies
available to it, the Lenders and the Fronting Bank under the Loan Documents;



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




69









 








     8.03 Application of Funds. After the exercise of remedies provided for in Section
8.02 (or after the Loans have automatically become immediately due and payable and the L/C
Obligations have automatically been required to be Cash Collateralized as set forth in the proviso
to Section 8.02), any amounts received on account of the Obligations shall, subject to the
provisions of Sections 2.14 and 2.15, be applied by the Administrative Agent in the
following order:



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



     Second, to payment of that portion of the Obligations constituting fees, indemnities
and other amounts (other than principal, interest and Letter of Credit Fees) payable to the Lenders
and the Fronting Bank (including fees, charges and disbursements of counsel to the respective
Lenders and the Fronting Bank and amounts payable under Article III), ratably among them in
proportion to the respective amounts described in this clause Second payable to them;



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



     Fourth, to payment of that portion of the Obligations constituting unpaid principal of
the Loans and L/C Borrowings, ratably among the Lenders and the Fronting Bank in proportion to the
respective amounts described in this clause Fourth held by them;



     Fifth, to the Administrative Agent for the account of the Fronting Bank and the
Lenders, to Cash Collateralize that portion of L/C Obligations comprised of the aggregate undrawn
amount of Letters of Credit to the extent not otherwise Cash Collateralized by the Borrower
pursuant to Sections 2.04 and 2.14; and



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



Subject to Sections 2.03(c) and 2.14, amounts used to Cash Collateralize the aggregate
undrawn amount of Letters of Credit pursuant to clause Fifth above shall be applied to
satisfy drawings under such Letters of Credit as they occur. If any amount remains on deposit as
Cash Collateral after all Letters of Credit have either been fully drawn or expired, such remaining
amount shall be applied to the other Obligations, if any, in the order set forth above.




ARTICLE IX. ADMINISTRATIVE AGENT




     9.01 Appointment and Authority. Each of the Lenders and the Fronting Bank hereby irrevocably
appoints Bank of America to act on its behalf as the Administrative Agent hereunder and under the
other Loan Documents and authorizes the Administrative Agent to take such actions on its behalf and
to exercise such powers as are delegated to the Administrative Agent by the terms hereof or
thereof, together with such actions and powers as are reasonably incidental



70









 





thereto. The provisions of this Article are solely for the benefit of the Administrative
Agent, the Lenders and the Fronting Bank, and the Borrower shall not have rights as a third party
beneficiary of any of such provisions.




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



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




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




     (b) shall not have any duty to take any discretionary action or exercise any
discretionary powers, except discretionary rights and powers expressly contemplated hereby
or by the other Loan Documents that the Administrative Agent is required to exercise as
directed in writing by the Required Lenders (or such other number or percentage of the
Lenders as shall be expressly provided for herein or in the other Loan Documents),
provided that the Administrative Agent shall not be required to take any action
that, in its opinion or the opinion of its counsel, may expose the Administrative Agent to
liability or that is contrary to any Loan Document or applicable law; and




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



     The Administrative Agent shall not be liable for any action taken or not taken by it (i) with
the consent or at the request of the Required Lenders (or such other number or percentage of the
Lenders as shall be necessary, or as the Administrative Agent shall believe in good faith shall be
necessary, under the circumstances as provided in Sections 10.01 and 8.02) or (ii)
in the absence of its own gross negligence or willful misconduct. The Administrative Agent shall
be deemed not to have knowledge of any Default unless and until notice describing such Default is
given to the Administrative Agent by the Borrower, a Lender or the Fronting Bank.



     The Administrative Agent shall not be responsible for or have any duty to ascertain or inquire
into (i) any statement, warranty or representation made in or in connection with this Agreement or
any other Loan Document, (ii) the contents of any certificate, report or other



71









 





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




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



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



     9.06 Resignation of Administrative Agent. The Administrative Agent may at any time give
notice of its resignation to the Lenders, the Fronting Bank, the L/C Administrator and the
Borrower. Upon receipt of any such notice of resignation, the Required Lenders shall have the
right, subject to the approval of the Borrower (unless an Event of Default has occurred and is
continuing), to appoint a successor, which shall be a bank with an office in the United States, or
an Affiliate of any such bank with an office in the United States. If no such successor shall have
been so appointed by the Required Lenders and shall have accepted such appointment within 30 days
after the retiring Administrative Agent gives notice of its resignation, then the retiring
Administrative Agent may on behalf of the Lenders, the L/C Administrator and the Fronting Bank,
appoint a successor Administrative Agent meeting the qualifications set forth above;
provided that if the Administrative Agent shall notify the Borrower and the Lenders that no
qualifying Person has accepted such appointment, then such resignation shall nonetheless become
effective in accordance with such notice and (1) the retiring Administrative Agent shall



72









 





be discharged from its duties and obligations hereunder and under the other Loan Documents
(except that in the case of any collateral security held by the Administrative Agent on behalf of
the Lenders or the Fronting Bank under any of the Loan Documents, the retiring Administrative Agent
shall continue to hold such collateral security until such time as a successor Administrative Agent
is appointed) and (2) all payments, communications and determinations provided to be made by, to or
through the Administrative Agent shall instead be made by or to each Lender, the L/C Administrator
and the Fronting Bank directly, until such time as the Required Lenders appoint a successor
Administrative Agent as provided for above in this Section. Upon the acceptance of a successor’s
appointment as Administrative Agent hereunder, such successor shall succeed to and become vested
with all of the rights, powers, privileges and duties of the retiring (or retired) Administrative
Agent, and the retiring Administrative Agent shall be discharged from all of its duties and
obligations hereunder or under the other Loan Documents (if not already discharged therefrom as
provided above in this Section). The fees payable by the Borrower to a successor Administrative
Agent shall be the same as those payable to its predecessor unless otherwise agreed between the
Borrower and such successor. After the retiring Administrative Agent’s resignation hereunder and
under the other Loan Documents, the provisions of this Article and Section 10.04 shall
continue in effect for the benefit of such retiring Administrative Agent, its sub-agents and their
respective Related Parties in respect of any actions taken or omitted to be taken by any of them
while the retiring Administrative Agent was acting as Administrative Agent.




     (b) Any resignation by Bank of America as Administrative Agent pursuant to this Section shall
also constitute its resignation as Fronting Bank and L/C Administrator. Upon the acceptance of a
successor’s appointment as Administrative Agent hereunder, (a) such successor shall succeed to and
become vested with all of the rights, powers, privileges and duties of the retiring Fronting Bank
and L/C Administrator, (b) the retiring Fronting Bank and L/C Administrator shall be discharged
from all of their respective duties and obligations hereunder or under the other Loan Documents,
and (c) the successor Fronting Bank and L/C Administrator shall issue letters of credit in
substitution for the Letters of Credit, if any, outstanding at the time of such succession (unless
such substitution would require the consent of the beneficiary and such consent cannot be obtained)
or make other arrangements satisfactory to the retiring Fronting Bank and the L/C Administrator to
effectively assume the obligations of the retiring Fronting Bank and the L/C Administrator with
respect to such Letters of Credit.



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



     9.08 No Other Duties, Etc. Anything herein to the contrary notwithstanding, none of the
Bookrunners, Arrangers, Syndication Agents or Documentation Agents listed on the cover



73









 





page hereof shall have any powers, duties or responsibilities under this Agreement or any of
the other Loan Documents, except in its capacity, as applicable, as the Administrative Agent, a
Lender, the L/C Administrator or the Fronting Bank hereunder.




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




     (a) to file and prove a claim for the whole amount of the principal and interest owing
and unpaid in respect of the Loans, L/C Obligations and all other Obligations that are owing
and unpaid and to file such other documents as may be necessary or advisable in order to
have the claims of the Lenders, the Fronting Bank, the L/C Administrator and the
Administrative Agent (including any claim for the reasonable compensation, expenses,
disbursements and advances of the Lenders, the Fronting Bank, the L/C Administrator and the
Administrative Agent and their respective agents and counsel and all other amounts due the
Lenders, the Fronting Bank, the L/C Administrator and the Administrative Agent under
Sections 2.03(i) and (j), 2.08 and 10.04) allowed in such
judicial proceeding; and




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



and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official
in any such judicial proceeding is hereby authorized by each Lender and the Fronting Bank to make
such payments to the Administrative Agent and, in the event that the Administrative Agent shall
consent to the making of such payments directly to the Lenders and the Fronting Bank, to pay to the
Administrative Agent any amount 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 Sections 2.08 and 10.04.




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



ARTICLE X. MISCELLANEOUS




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



74









 





     (a) waive any condition set forth in Section 4.01(a) without the written consent of
each Lender;



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



     (c) postpone any date fixed by this Agreement or any other Loan Document for any payment of
principal, interest, fees or other amounts due to the Lenders (or any of them) hereunder or under
any other Loan Document without the written consent of each Lender directly affected thereby;



     (d) reduce the principal of, or the rate of interest specified herein on, any Loan or L/C
Borrowing, or (subject to clause (iii) of the second proviso to this Section 10.01) any
fees or other amounts payable hereunder or under any other Loan Document without the written
consent of each Lender directly affected thereby; provided, however, that only the
consent of the Required Lenders shall be necessary (i) to amend the definition of “Default Rate” or
to waive any obligation of the Borrower to pay interest or Letter of Credit Fees at the Default
Rate or any provision relating to Defaulting Lenders (including the definition thereof); or (ii) to
amend any financial covenant hereunder (or any defined term used therein) even if the effect of
such amendment would be to reduce the rate of interest on any Loan or L/C Borrowing or to reduce
any fee payable hereunder;



     (e) change Section 8.03 in a manner that would alter the pro rata sharing of payments
required thereby without the written consent of each Lender; or



     (f) change any provision of this Section or the definition of “Required Lenders” or any other
provision hereof specifying the number or percentage of Lenders required to amend, waive or
otherwise modify any rights hereunder or make any determination or grant any consent hereunder,
without the written consent of each Lender;



and, provided further, that (i) no amendment, waiver or consent shall, unless in
writing and signed by the Applicable Issuing Party in addition to the Lenders required above,
affect the rights or duties of the Applicable Issuing Party under this Agreement or any Issuer
Document relating to any Letter of Credit issued or to be issued by it; (ii) no amendment, waiver
or consent shall, unless in writing and signed by the Administrative Agent in addition to the
Lenders required above, affect the rights or duties of the Administrative Agent under this
Agreement or any other Loan Document; (iii) either Fee Letter may be amended, or rights or
privileges thereunder waived, in a writing executed only by the parties thereto whose rights and
privileges are affected thereby. Notwithstanding anything to the contrary herein, no Defaulting
Lender shall have any right to approve or disapprove any amendment, waiver or consent hereunder
(and any amendment, waiver or consent which by its terms requires the consent of all Lenders or
each affected Lender may be effected with the consent of the applicable Lenders other than
Defaulting Lenders), except that (x) the Commitment of any Defaulting Lender may not be increased
or extended without the consent of such Lender and (y) any waiver, amendment or modification
requiring the consent of all Lenders or each affected Lender that by its terms affects any
Defaulting Lender more adversely than other affected Lenders shall require the consent of such
Defaulting Lender.





75












 





     10.02 Notices; Effectiveness; Electronic Communication.



     (a) Notices Generally. Except in the case of notices and other communications
expressly permitted to be given by telephone (and except as provided in subsection (b) below), all
notices and other communications provided for herein shall be in writing and shall be delivered by
hand or overnight courier service, mailed by certified or registered mail or sent by telecopier or,
subject to subsection (b) below, electronic mail as follows, and all notices and other
communications expressly permitted hereunder to be given by telephone shall be made to the
applicable telephone number, as follows:




     (i) if to the Borrower, the Administrative Agent, the L/C Administrator or the Fronting
Bank, to the address, telecopier number, electronic mail address or telephone number
specified for such Person on Schedule 10.02; and




     (ii) if to any other Lender, to the address, telecopier number, electronic mail address
or telephone number specified in its Administrative Questionnaire (including, as
appropriate, notices delivered solely to the Person designated by a Lender on its
Administrative Questionnaire then in effect for the delivery of notices that may contain
material non-public information relating to the Borrower).


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




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



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



76









 




its e-mail address as described in the foregoing clause (i) of notification that such notice
or communication is available and identifying the website address therefor.




     (c) The Platform. THE PLATFORM IS PROVIDED “AS IS” AND “AS AVAILABLE.” THE AGENT
PARTIES (AS DEFINED BELOW) DO NOT WARRANT THE ACCURACY OR COMPLETENESS OF THE BORROWER MATERIALS OR
THE ADEQUACY OF THE PLATFORM, AND EXPRESSLY DISCLAIM LIABILITY FOR ERRORS IN OR OMISSIONS FROM THE
BORROWER MATERIALS. NO WARRANTY OF ANY KIND, EXPRESS, IMPLIED OR STATUTORY, INCLUDING ANY WARRANTY
OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, NON-INFRINGEMENT OF THIRD PARTY RIGHTS OR
FREEDOM FROM VIRUSES OR OTHER CODE DEFECTS, IS MADE BY ANY AGENT PARTY IN CONNECTION WITH THE
BORROWER MATERIALS OR THE PLATFORM. In no event shall the Administrative Agent or any of its
Related Parties (collectively, the “Agent Parties”) have any liability to the Borrower, any
Lender, the Fronting Bank or any other Person for losses, claims, damages, liabilities or expenses
of any kind (whether in tort, contract or otherwise) arising out of the Borrower’s or the
Administrative Agent’s transmission of Borrower Materials through the Internet, except to the
extent that such losses, claims, damages, liabilities or expenses are determined by a court of
competent jurisdiction by a final and nonappealable judgment to have resulted from the gross
negligence or willful misconduct of such Agent Party; provided, however, that in no
event shall any Agent Party have any liability to the Borrower, any Lender, the Fronting Bank or
any other Person for indirect, special, incidental, consequential or punitive damages (as opposed
to direct or actual damages).



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



     (e) Reliance by Administrative Agent, L/C Administrator, Fronting Bank and Lenders.
The Administrative Agent, the L/C Administrator, the Fronting Bank and the Lenders shall be
entitled to rely and act upon any notices (including telephonic Loan Notices) purportedly given by
or on behalf of the Borrower even if (i) such notices were not made in a manner



77









 




specified herein, were incomplete or were not preceded or followed by any other form of notice
specified herein, or (ii) the terms thereof, as understood by the recipient, varied from any
confirmation thereof. The Borrower shall indemnify the Administrative Agent, the L/C
Administrator, the Fronting Bank, each Lender and the Related Parties of each of them from all
losses, costs, expenses and liabilities resulting from the reliance by such Person on each notice
purportedly given by or on behalf of the Borrower. All telephonic notices to and other telephonic
communications with the Administrative Agent may be recorded by the Administrative Agent, and each
of the parties hereto hereby consents to such recording.




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



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



     10.04 Expenses; Indemnity; Damage Waiver.  



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



78









 




out-of-pocket expenses incurred by the Applicable Issuing Party in connection with the
issuance, amendment, renewal or extension of any Letter of Credit or any demand for payment
thereunder and (iii) all out-of-pocket expenses incurred by the Administrative Agent, any Lender or
the Applicable Issuing Party (including the fees, charges and disbursements of any counsel for the
Administrative Agent, any Lender or the Applicable Issuing Party, in connection with the
enforcement or protection of its rights) (A) in connection with this Agreement and the other Loan
Documents, including its rights under this Section, or (B) in connection with the Loans made or
Letters of Credit issued hereunder, including all such out-of-pocket expenses incurred during any
workout, restructuring or negotiations in respect of such Loans or Letters of Credit.




     (b) Indemnification by the Borrower. The Borrower shall indemnify the Administrative
Agent (and any sub-agent thereof), each Lender, the L/C Administrator and the Fronting Bank, and
each Related Party of any of the foregoing Persons (each such Person being called an
“Indemnitee”) against, and hold each Indemnitee harmless from, any and all losses, claims,
damages, liabilities and related expenses (including the fees, charges and disbursements of any
counsel for any Indemnitee, incurred by any Indemnitee or asserted against any Indemnitee by any
third party or by the Borrower 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, the consummation of the transactions contemplated hereby or
thereby, or, in the case of the Administrative Agent (and any sub-agent thereof) and its Related
Parties only, the administration of this Agreement and the other Loan Documents, (ii) any Loan or
Letter of Credit or the use or proposed use of the proceeds therefrom (including any refusal by an
Applicable Issuing Party or L/C Issuer to honor a demand for payment under a Letter of Credit if
the documents presented in connection with such demand do not strictly comply with the terms of
such Letter of Credit), (iii) any actual or alleged presence or Release of Hazardous Materials on
or from any property owned or operated by the Borrower or any of its Subsidiaries, or any
Environmental Liability related in any way to the Borrower or any of its Subsidiaries, or (iv) any
actual or prospective claim, litigation, investigation or proceeding relating to any of the
foregoing, whether based on contract, tort or any other theory, whether brought by a third party or
by the Borrower, and regardless of whether any Indemnitee is a party to such proceeding;
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 or (y) result from a claim brought by the
Borrower against an Indemnitee for breach in bad faith of such Indemnitee’s obligations hereunder
or under any other Loan Document, if the Borrower has obtained a final and nonappealable judgment
in its favor on such claim as determined by a court of competent jurisdiction.



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



79









 




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




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



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



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



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



80









 





     10.06 Successors and Assigns.



     (a) Successors and Assigns Generally. The provisions of this Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective successors and
assigns permitted hereby, except that the Borrower 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 subsection (b) of this
Section, (ii) by way of participation in accordance with the provisions of subsection (d) of this
Section, or (iii) by way of pledge or assignment of a security interest subject to the restrictions
of subsection (f) 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 subsection (d) of this Section
and, to the extent expressly contemplated hereby, the Related Parties of each of the Administrative
Agent, the Fronting Bank, the L/C Administrator and the Lenders) any legal or equitable right,
remedy or claim under or by reason of this Agreement.



     (b) Assignments by Lenders. Any Lender may at any time assign to one or more
assignees all or a portion of its rights and obligations under this Agreement (including all or a
portion of its Commitment and the Loans (including for purposes of this subsection (b), direct
obligations under and participations in L/C Obligations) at the time owing to it); provided
that any such assignment shall be subject to the following conditions:




(i) Minimum Amounts.




     (A) in the case of an assignment of the entire remaining amount of the
assigning Lender’s Commitment 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 subsection (b)(i)(A) of this Section, the
aggregate amount of the Commitment (which for this purpose includes Loans
outstanding thereunder) or, if the Commitment is not then in effect, the principal
outstanding balance of the Loans of the assigning Lender subject to each such
assignment, determined as of the date the Assignment and Assumption with respect to
such assignment is delivered to the Administrative Agent or, if “Trade Date” is
specified in the Assignment and Assumption, as of the Trade Date, shall not be less
than $5,000,000 unless each of the Administrative Agent and, so long as no Event of
Default has occurred and is continuing, the Borrower otherwise consents (each such
consent not to be unreasonably withheld or delayed); provided,
however, that concurrent assignments to members of an Assignee Group and
concurrent assignments from members of an Assignee Group to a single Eligible
Assignee (or to an Eligible Assignee and members of its Assignee Group) will be
treated as a single assignment for purposes of determining whether such minimum
amount has been met.



81









 






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




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




     (A) the consent of the Borrower (such consent not to be unreasonably withheld)
shall be required unless (1) an Event of Default has occurred and is continuing at
the time of such assignment or (2) such assignment is to a Lender, an Affiliate of a
Lender or an Approved Fund; provided that the Borrower shall be
deemed to have consented to any such assignment unless it shall object thereto by
written notice to the Administrative Agent within five (5) Business Days after
having received notice thereof;




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




     (C) the consent of the Fronting Bank (such consent not to be unreasonably
withheld or delayed) shall be required for any assignment and, if such Assignee
could not be an L/C Issuer of a Several Letter of Credit under applicable regulatory
requirements, the Fronting Agent must have agreed (in its sole discretion) to front
for such Assignee under Several Letters of Credit.




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




     (v) No Assignment to Certain Persons. No such assignment shall be made (A) to
the Borrower or any of the Borrower’s Affiliates or Subsidiaries, or (B) to any Defaulting
Lender or any of its Subsidiaries, or any Person who, upon becoming a Lender hereunder,
would constitute any of the foregoing Persons described in this clause (B), (C) to a natural
person, or (D) to any Person who has not on or prior to the date of such assignment complied
with the requirements of Section 3.01(e).




     (vi) Certain Additional Payments. In connection with any assignment of rights
and obligations of any Defaulting Lender hereunder, no such assignment shall be effective
unless and until, in addition to the other conditions thereto set forth herein, the parties
to the assignment shall make such additional payments to the Administrative Agent in an
aggregate amount sufficient, upon distribution thereof as appropriate (which may be outright
payment, purchases by the assignee of participations or subparticipations, or other
compensating actions, including funding, with the consent of



82









 






the Borrower and the Administrative Agent, the applicable pro rata share of Loans
previously requested but not funded by the Defaulting Lender, to each of which the
applicable assignee and assignor hereby irrevocably consent), to (x) pay and satisfy in full
all payment liabilities then owed by such Defaulting Lender to the Administrative Agent or
any Lender hereunder (and interest accrued thereon) and (y) acquire (and fund as
appropriate) its full pro rata share of all Loans, obligations under Several Letters of
Credit and participations in Fronted Letters of Credit in accordance with its Applicable
Percentage. Notwithstanding the foregoing, in the event that any assignment of rights and
obligations of any Defaulting Lender hereunder shall become effective under applicable Law
without compliance with the provisions of this paragraph, then the assignee of such interest
shall be deemed to be a Defaulting Lender for all purposes of this Agreement until such
compliance occurs.


Subject to acceptance and recording thereof by the Administrative Agent pursuant to subsection (c)
of this Section, from and after the effective date specified in each Assignment and Assumption, the
assignee thereunder shall be a party to this Agreement and, to the extent of the interest assigned
by such Assignment and Assumption, have the rights and obligations of a Lender under this
Agreement, and the assigning Lender thereunder shall, to the extent of the interest assigned by
such Assignment and Assumption, be released from its obligations under this Agreement (and, in the
case of an Assignment and Assumption covering all of the assigning Lender’s rights and obligations
under this Agreement, such Lender shall cease to be a party hereto) but shall continue to be
entitled to the benefits of Sections 3.01, 3.04, 3.05, and 10.04
with respect to facts and circumstances occurring prior to the effective date of such assignment.
Upon request, the Borrower (at its expense) shall execute and deliver a Note to the assignee
Lender. Any assignment or transfer by a Lender of rights or obligations under this Agreement that
does not comply with this subsection shall be treated for purposes of this Agreement as a sale by
such Lender of a participation in such rights and obligations in accordance with subsection (d) of
this Section. Notwithstanding any other provision to the contrary, an assignee under this
Section 10.6 shall not be entitled to receive any payment under Section 3.01 that
is greater in amount than the applicable assignor would have been entitled to receive with respect
to the Commitment or Loans being assigned unless such assignment is made with the Borrower’s prior
written consent.




     (c) Register. The Administrative Agent, acting solely for this purpose as an agent of
the Borrower (and such agency being solely for tax purposes), shall maintain at the Administrative
Agent’s Office a copy of each Assignment and Assumption delivered to it and a register for the
recordation of the names and addresses of the Lenders, and the Commitments of, and principal
amounts of the Loans and L/C Obligations owing to, each Lender pursuant to the terms hereof from
time to time (the “Register”). The entries in the Register shall be conclusive, and the
Borrower, the Administrative Agent and the Lenders may treat each Person whose name is recorded in
the Register pursuant to the terms hereof as a Lender hereunder for all purposes of this Agreement,
notwithstanding notice to the contrary. In addition, the Administrative Agent shall maintain on the
Register information regarding the designation, and revocation of designation, of any Lender as a
Defaulting Lender. The Register shall be available for inspection by the Borrower and any Lender,
at any reasonable time and from time to time upon reasonable prior notice.



83









 





     (d) Participations. Any Lender may at any time, without the consent of, or notice to,
the Borrower or the Administrative Agent, sell participations to any Person (other than a natural
person, a Defaulting Lender or the Borrower or any of the Borrower’s Affiliates or Subsidiaries)
(each, a “Participant”) in all or a portion of such Lender’s rights and/or obligations
under this Agreement (including all or a portion of its Commitment and/or the Loans (including such
Lender’s participations in L/C Obligations) owing to it); provided that (i) such Lender’s
obligations under this Agreement shall remain unchanged, (ii) such Lender shall remain solely
responsible to the other parties hereto for the performance of such obligations and (iii) the
Borrower, the Administrative Agent, the Lenders, the L/C Administrator and the Fronting Bank shall
continue to deal solely and directly with such Lender in connection with such Lender’s rights and
obligations under this Agreement.



     Any agreement or instrument pursuant to which a Lender sells such a participation shall
provide that such Lender shall retain the sole right to enforce this Agreement and to approve any
amendment, modification or waiver of any provision of this Agreement; provided that such
agreement or instrument may provide that such Lender will not, without the consent of the
Participant, agree to any amendment, waiver or other modification described in the first proviso to
Section 10.01 that affects such Participant. Subject to subsection (e) of this Section,
the Borrower agrees that each Participant shall be entitled to the benefits of Sections
3.01, 3.04 and 3.05 to the same extent as if it were a Lender and had acquired
its interest by assignment pursuant to subsection (b) of this Section. To the extent permitted by
law, each Participant also shall be entitled to the benefits of Section 10.08 as though it
were a Lender, provided such Participant agrees to be subject to Section 2.12 as
though it were a Lender.



     (e) Limitations upon Participant Rights. A Participant shall not be entitled to
receive any greater payment under Section 3.01 or 3.04 than the applicable Lender
would have been entitled to receive with respect to the participation sold to such Participant,
unless the sale of the participation to such Participant is made with the Borrower’s prior written
consent. A Participant shall not be entitled to the benefits of Section 3.01 unless the
Borrower is notified of the participation sold to such Participant and such Participant agrees, for
the benefit of the Borrower, to comply with Section 3.01(e) as though it were a Lender.



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



     (g) Resignation as Fronting Bank and L/C Administrator after Assignment.
Notwithstanding anything to the contrary contained herein, if at any time Bank of America assigns
all of its Commitment and Loans pursuant to subsection (b) above, Bank of America may, upon 30
days’ notice to the Borrower and the Lenders, resign as Fronting Bank and L/C Administrator. In
the event of any such resignation as Fronting Bank and L/C Administrator, the Borrower shall be
entitled to appoint from among the Lenders a successor Fronting Bank and L/C Administrator
hereunder; provided, however, that no failure by the Borrower to appoint any such
successor shall affect the resignation of Bank of America as Fronting Bank and L/C



84









 




Administrator. If Bank of America resigns as Fronting Bank and L/C Administrator, it shall
retain all the rights, powers, privileges and duties of the Fronting Bank hereunder with respect to
all Letters of Credit outstanding as of the effective date of its resignation as Fronting Bank and
L/C Administrator and all L/C Obligations with respect thereto (including the right to require the
Lenders to make Base Rate Loans or fund risk participations in Unreimbursed Amounts pursuant to
Section 2.03(c)). Upon the appointment of a successor Fronting Bank and L/C Administrator
(a) such successor shall succeed to and become vested with all of the rights, powers, privileges
and duties of the retiring Fronting Bank and L/C Administrator, and (b) the successor Fronting Bank
and L/C Administrator shall issue letters of credit in substitution for the Letters of Credit, if
any, outstanding at the time of such succession (unless such substitution would require the consent
of the beneficiary and such consent cannot be obtained), or make other arrangements satisfactory to
Bank of America to effectively assume the obligations of Bank of America with respect to such
Letters of Credit.




     10.07 Treatment of Certain Information; Confidentiality. Each of the Administrative Agent,
the Lenders, the L/C Administrator and the Fronting Bank agrees to maintain the confidentiality of
the Information (as defined below), except that Information may be disclosed (a) to its Affiliates
and to its and its Affiliates’ respective partners, directors, officers, employees, agents,
trustees, advisors and representatives (it being understood that the Persons to whom such
disclosure is made will be informed of the confidential nature of such Information and instructed
to keep such Information confidential), (b) to the extent requested by any regulatory authority
purporting to have jurisdiction over it (including any self-regulatory authority, such as the
National Association of Insurance Commissioners), (c) to the extent required by applicable laws or
regulations or by any subpoena or similar legal process, (d) to any other party hereto, (e) in
connection with the exercise of any remedies hereunder or under any other Loan Document or any
action or proceeding relating to this Agreement or any other Loan Document or the enforcement of
rights hereunder or thereunder, (f) subject to an agreement containing provisions substantially the
same as those of this Section, to (i) any assignee of or Participant in, or any prospective
assignee of or Participant in, any of its rights or obligations under this Agreement or any
Eligible Assignee invited to be a Lender pursuant to Section 2.13(c) or (ii) any actual or
prospective counterparty (or its advisors) to any swap or derivative transaction relating to the
Borrower and its obligations, (g) with the consent of the Borrower or (h) to the extent such
Information (x) becomes publicly available other than as a result of a breach of this Section or
(y) becomes available to the Administrative Agent, any Lender, the Fronting Bank, the L/C
Administrator or any of their respective Affiliates on a nonconfidential basis from a source other
than the Borrower. For purposes of this Section, “Information” means all information received from
the Borrower or any Subsidiary relating to the Borrower or any Subsidiary or any of their
respective businesses, other than any such information that is available to the Administrative
Agent, any Lender, the L/C Administrator or the Fronting Bank on a nonconfidential basis prior to
disclosure by the Borrower or any Subsidiary, provided that, in the case of information received
from the Borrower or any Subsidiary after the date hereof, such information is clearly identified
at the time of delivery as confidential. Any Person required to maintain the confidentiality of
Information as provided in this Section shall be considered to have complied with its obligation to
do so if such Person has exercised the same degree of care to maintain the confidentiality of such
Information as such Person would accord to its own confidential information.



85









 





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



     10.08 Right of Setoff. If an Event of Default shall have occurred and be continuing, each
Lender, the Fronting Bank, the L/C Administrator and each of their respective Affiliates is hereby
authorized at any time and from time to time, to the fullest extent permitted by applicable law, to
set off and apply any and all deposits (general or special, time or demand, provisional or final,
in whatever currency) at any time held and other obligations (in whatever currency) at any time
owing by such Lender, the Fronting Bank, and L/C Administrator or any such Affiliate to or for the
credit or the account of the Borrower against any and all of the obligations of the Borrower now or
hereafter existing under this Agreement or any other Loan Document to such Lender, the L/C
Administrator or the Fronting Bank, irrespective of whether or not such Lender, the L/C
Administrator or the Fronting Bank shall have made any demand under this Agreement or any other
Loan Document and although such obligations of the Borrower may be contingent or unmatured or are
owed to a branch or office of such Lender, the L/C Administrator or the Fronting Bank different
from the branch or office holding such deposit or obligated on such indebtedness; provided, that in
the event that any Defaulting Lender shall exercise any such right of setoff, (x) all amounts so
set off shall be paid over immediately to the Administrative Agent for further application in
accordance with the provisions of Section 2.15 and, pending such payment, shall be
segregated by such Defaulting Lender from its other funds and deemed held in trust for the benefit
of the Administrative Agent and the Lenders, and (y) the Defaulting Lender shall provide promptly
to the Administrative Agent a statement describing in reasonable detail the Obligations owing to
such Defaulting Lender as to which it exercised such right of setoff. The rights of each Lender,
the Fronting Bank, the L/C Administrator and their respective Affiliates under this Section are in
addition to other rights and remedies (including other rights of setoff) that such Lender, the
Fronting Bank, the L/C Administrator or their respective Affiliates may have. Each Lender, the L/C
Administrator and the Fronting Bank agrees to notify the Borrower and the Administrative Agent
promptly after any such setoff and application, provided that the failure to give such
notice shall not affect the validity of such setoff and application.



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



86









 





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



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



     10.12 Severability. If any provision of this Agreement or the other Loan Documents is held to
be illegal, invalid or unenforceable, (a) the legality, validity and enforceability of the
remaining provisions of this Agreement and the other Loan Documents shall not be affected or
impaired thereby and (b) the parties shall endeavor in good faith negotiations to replace the
illegal, invalid or unenforceable provisions with valid provisions the economic effect of which
comes as close as possible to that of the illegal, invalid or unenforceable provisions. The
invalidity of a provision in a particular jurisdiction shall not invalidate or render unenforceable
such provision in any other jurisdiction. Without limiting the foregoing provisions of this
Section 10.12, if and to the extent that the enforceability of any provisions in this
Agreement relating to Defaulting Lenders shall be limited by Debtor Relief Laws, as determined in
good faith by the Administrative Agent, the L/C Administrator or the Fronting Bank, as applicable,
then such provisions shall be deemed to be in effect only to the extent not so limited.



     10.13 Replacement of Lenders. If any Lender requests compensation under Section 3.04,
or if the Borrower is required to pay any additional amount to any Lender or any Governmental
Authority for the account of any Lender pursuant to Section 3.01, or if any Lender is a
Defaulting Lender, then the Borrower may, at its sole expense and effort, upon notice to such
Lender and the Administrative Agent, require such Lender to assign and delegate, without recourse
(in accordance with and subject to the restrictions contained in, and consents required by,
Section 10.06), all of its interests, rights and obligations under this Agreement and the
related Loan Documents to an assignee that shall assume such obligations (which assignee may be
another Lender, if a Lender accepts such assignment), provided that:



87









 





     (a) the Borrower shall have paid to the Administrative Agent the assignment fee specified in
Section 10.06(b);



     (b) such Lender shall have received payment of an amount equal to 100% of the outstanding
principal of its Loans and L/C Advances, accrued interest thereon, accrued fees and all other
amounts payable to it hereunder and under the other Loan Documents (including any amounts under
Section 3.05) from the assignee (to the extent of such outstanding principal and accrued
interest and fees) or the Borrower (in the case of all other amounts);



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



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



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



     10.14 Governing Law; Jurisdiction; Etc.



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



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



     (c) WAIVER OF VENUE. THE BORROWER IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY



88









 




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




     (d) SERVICE OF PROCESS. EACH PARTY HERETO IRREVOCABLY CONSENTS TO SERVICE OF PROCESS
IN THE MANNER PROVIDED FOR NOTICES IN SECTION 10.02. NOTHING IN THIS AGREEMENT WILL AFFECT
THE RIGHT OF ANY PARTY HERETO TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY APPLICABLE LAW.



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



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



89









 




either Arranger has any obligation to disclose any of such interests to the Borrower or any of
its Affiliates. To the fullest extent permitted by law, the Borrower hereby waives and releases
any claims that it may have against the Administrative Agent or either Arranger with respect to any
breach or alleged breach of agency or fiduciary duty in connection with any aspect of any
transaction contemplated hereby.




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



     10.18 USA PATRIOT Act. Each Lender that is subject to the Act (as hereinafter defined) and
the Administrative Agent (for itself and not on behalf of any Lender) hereby notifies the Borrower
that pursuant to the requirements of the USA PATRIOT Act (Title III of Pub. L. 107-56 (signed into
law October 26, 2001)) (the “Act”), it is required to obtain, verify and record information that
identifies the Borrower, which information includes the name and address of the Borrower and other
information that will allow such Lender or the Administrative Agent, as applicable, to identify the
Borrower in accordance with the Act. The Borrower shall, promptly following a request by the
Administrative Agent or any Lender, provide all documentation and other information that the
Administrative Agent or such Lender requests in order to comply with its ongoing obligations under
applicable “know your customer” and anti-money laundering rules and regulations, including the Act.



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




90












 





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



	 	 	 	 	 
	 	TOWER GROUP, INC.


 	 
	 	By:  	/s/ William Hitselberger
 	 
	 	 	Name:  	William Hitselberger 	 
	 	 	Title:  	Senior Vice President and Chief Financial  Officer 	 



S - 1









 






	 	 	 	 	 



	 	 	 	 	 
	 	BANK OF AMERICA, N.A., as

Administrative Agent, L/C Administrator, Fronting

Bank and Lender


 	 
	 	By:  	/s/ Brady Fife
 	 
	 	 	Name:  	Brady Fife 	 
	 	 	Title:  	Director 	 



S - 2









 






	 	 	 	 	 



	 	 	 	 	 
	 	JPMORGAN CHASE BANK, N.A.


 	 
	 	By:  	/s/ Thomas A. Kiepura
 	 
	 	 	Name:  	Thomas A. Kiepura 	 
	 	 	Title:  	Senior Vice President 	 



S - 3









 






	 	 	 	 	 



	 	 	 	 	 
	 	KEYBANK NATIONAL ASSOCIATION


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



S - 4









 






	 	 	 	 	 



	 	 	 	 	 
	 	PNC BANK, NATIONAL ASSOCIATION


 	 
	 	By:  	/s/ William R. McDonnell
 	 
	 	 	Name:  	William R. McDonnell 	 
	 	 	Title:  	Senior Vice President 	 



S - 5









 






	 	 	 	 	 



	 	 	 	 	 
	 	WELLS FARGO BANK, N.A.


 	 
	 	By:  	/s/ David J. Bendel
 	 
	 	 	Name:  	David J. Bendel 	 
	 	 	Title:  	Director 	 



S - 6









 






	 	 	 	 	 



	 	 	 	 	 
	 	THE NORTHERN TRUST COMPANY


 	 
	 	By:  	/s/ Chris McKean
 	 
	 	 	Name:  	Chris McKean 	 
	 	 	Title:  	Vice President 	 
	 




S - 7