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                                                                                                                                                Exhibit 10.2

SECOND ADDENDUM TO LICENSE AND SERVICE AGREEMENT     

This Second Addendum to License and Service Agreement (this “Second Addendum”) is executed as of March 2, 2021 (the “Second Addendum Date”) by and between Revance Therapeutics, Inc. (“Revance”) and List Biological Laboratories, Inc. (“List” and together with Revance, the “Parties”).

WHEREAS, the Parties entered into that certain License and Service Agreement, effective as of February 8, 2007, as subsequently amended by that certain First Addendum to License and Service Agreement, effective as of April 21, 2009 (the “Agreement”); and

WHEREAS, the Parties now desire to modify certain terms and conditions of the Agreement as more fully set forth below.

NOW, THEREFORE, in consideration of the mutual promises contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:

1.Effective as of the Second Addendum Date, Section 7.6 is hereby amended, restated and replaced in its entirety to read as follows:

“7.6    Option to Purchase.  If at any time during the term of this Agreement, the current owners of List elect to sell their business, or the portion of their business which manufactures botulinum toxin, Revance shall have an option for an exclusive period of [*] ([*]) [*] following such election in which the parties will negotiate, in good faith, the purchase of such business by Revance.

2.Effective as of the Second Addendum Date, Section 10.4 is hereby amended, restated and replaced in its entirety to read as follows: 

“ 10.4    Assignability.  Neither List nor its Affiliates may assign its rights and/or delegate its obligations under this Agreement to any third party without Revance’s prior written consent, which shall not be unreasonably withheld (and shall be provided or rejected for good reason within [*] ([*]) days of List’s request); except that List may assign its rights and/or delegate its obligations under this Agreement, without Revance’s prior written consent, to an Affiliate solely in connection with the sale, merger, or transfer of substantially all of the interests in or assets of List, provided that List shall give Revance prior written notice of such assignment and such assignee or delegate agrees to be bound by the terms of this Agreement, and provided that such action would not in any way impair or jeopardize any pending or actual regulatory approval for a Product.  Revance may assign its rights hereunder in whole or part, or delegate any of its obligations hereunder to any Third Party, provided such Third Party agrees to be bound by the terms of this Agreement.

3.Effective as of the Second Addendum Date, Attachment C of the Agreement is hereby amended, restated and replaced in its entirety to read as set forth on Exhibit A to this Second Addendum.

4.Except as modified herein, the Agreement shall remain in full force and effect.
CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [*], HAS BEEN OMITTED BECAUSE REVANCE THERAPEUTICS, INC., HAS DETERMINED THE INFORMATION (I) IS NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM TO REVANCE THERAPEUTICS, INC., IF PUBLICLY DISCLOSED.

5.This Second Addendum may be executed in one or more counterparts, each of which shall be deemed an original of this Second Addendum and all of which, when taken together, shall be deemed to constitute one and the same valid and binding Second Addendum.

[Signature Page Follows]
CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [*], HAS BEEN OMITTED BECAUSE REVANCE THERAPEUTICS, INC., HAS DETERMINED THE INFORMATION (I) IS NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM TO REVANCE THERAPEUTICS, INC., IF PUBLICLY DISCLOSED.

IN WITNESS WHEREOF, the Parties have caused their duly authorized representatives to execute this Second Addendum as of the Second Addendum Date. 

															
	Revance Therapeutics, Inc.			
	By:	/s/ Mark Foley			
	Name:	Mark Foley			
	Title:	President & CEO			
					
	List Biological Laboratories, Inc.			
	By:	/s/ Karen Crawford			
	Name:	Karen Crawford			
	Title:	Board Chair			

CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [*], HAS BEEN OMITTED BECAUSE REVANCE THERAPEUTICS, INC., HAS DETERMINED THE INFORMATION (I) IS NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM TO REVANCE THERAPEUTICS, INC., IF PUBLICLY DISCLOSED.

EXHIBIT A
Attachment C
Royalty Payments

Revance shall pay List royalties (“Royalties”) on Qualifying Revenue (as defined below). The Royalty rate on Qualifying Revenue shall be:
a)    [*]% from the first commercial sale of Qualifying Products (defined below) ("First Sale") until December 31st of the third full calendar year after First Sale;
b)    [*]% for the next three calendar years (the 4th, 5th and 6th full years after First Sale); and
c)    [*]% thereafter. Also see "Modified Royalty Rate," below.

“Qualifying Revenue” shall mean the sum of Adjusted Net Sales (as defined below), Sublicense Commercial Revenue (as defined below), and Sublicense Operating Revenue (as defined below). 

“Adjusted Net Sales” shall be determined by the formula A*([*]- B), where:
“A” equals Revance’s worldwide net product revenue from all Products incorporating Botulinum Type A Neurotoxin either native or modified made from the List Cell Line or made using List Intellectual Property (“Qualifying Products”), recognized in accordance with accounting principles generally accepted in the United States (“US GAAP”) and which are not included in the definition of either Sublicense Commercial Revenue or Sublicense Operating Revenue (the “Net Sales”); and

“B” equals (i) [*] for any calendar year in which the “A” is less than $[*], (ii) [*] for any calendar year in which the “A” equals or exceeds $[*] but is less than $[*], (iii) [*] for any calendar year in which the “A” equals or exceeds $[*] but is less than $[*] or (iv) [*] for any calendar year in which the “A” equals or exceeds $[*] (the “COGS Factor”).  

Notwithstanding the foregoing, with respect to sales of a product which combines (i) one or more Qualifying Products, with (ii) a product or service which is not a Qualifying Product (a “Other Product”) (collective, a “Combined Sale”), the Net Sales shall be calculated consistent with US GAAP’s transaction price allocation guidance and definitions in Accounting Standards Codification 606, Revenue from Contracts with Customers, whereby the net product revenue would be allocated between Qualifying Products and Other Products based on their respective standalone selling prices in calculating Net Sales. 

“Sublicense Commercial Revenue” shall be determined by the formula C*[*], where:

 “C” equals any payment which is both (i) received by Revance pursuant to an agreement by which Revance sublicenses certain of the List Intellectual Property (a “Sublicense”) to a third party (the “Sublicensee”), and (ii) paid in respect of the Sublicensee’s sales of Qualifying Products.  

For the avoidance of doubt, Sublicense Commercial Revenue does not include and List shall not be owed any royalty or other payment with respect to any upfront payments, milestone payments, lump sum payments, equity issuances, license maintenance fees, or other similar payments paid by the Sublicensee to Revance; provided however that if any such payment is attributable solely to a milestone of Sublicensee achieving a certain threshold of sales of Qualifying Products, then such payment shall be deemed Sublicense Commercial Revenue.  
“Sublicense Operating Revenue” shall be determined by the formula D*([*]), where:

 “D” equals any payment which is both (i) received by Revance pursuant to a Sublicense from a Sublicensee following [March 2, 2021, 2021], and (ii) not included within the definition of Sublicense Commercial Revenue, including without limitation any upfront payment, milestone payment, lump sum payment, equity issuance or license maintenance fee, support fee, service fee or other fee.  

CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [*], HAS BEEN OMITTED BECAUSE REVANCE THERAPEUTICS, INC., HAS DETERMINED THE INFORMATION (I) IS NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM TO REVANCE THERAPEUTICS, INC., IF PUBLICLY DISCLOSED.

Audit Rights

During the term of this Agreement and for [*] ([*]) years thereafter, on an annual basis and upon not less than [*] ([*]) business days’ notice, List has the right to audit, at List’s sole cost and expense, all books and records reasonably related to the calculation of the Qualifying Revenue and Royalties to substantiate up to [*] ([*]) prior years’ Qualifying Revenue and any Royalties payable to List hereunder.  If an audit reveals that Revance underpaid any Royalties, Revance shall pay List the underpayment. If the underpayment is more than [*] percent ([*]%), then Revance also shall pay for, and reimburse List, all costs and expenses incurred in the audit.  Any such underpayment and costs and expenses incurred in the audit shall be due and payable within [*] ([*]) days of the audit report date.  These audit rights shall survive for [*] ([*]) years after termination of the Agreement in addition to the Sections of the Agreement specified in Section 9.3(b) of the Agreement. 

Modified Royalty Rate
Beginning on January 1 of the [*] full calendar year after First Sale, and for each year thereafter, if the total Qualifying Revenue for that year is less than the highest previous annual Qualifying Revenue total (the "Reference Total"), then the royalty owed for such year (the "Modified Royalty Rate") shall be equal to: [*]% multiplied by the quotient of that year's total Qualifying Revenue divided by the Reference Total (to the nearest half percent). For clarification, in no year shall the royalty be greater than [*]% or less than [*]% of Qualifying Revenue.  

Payments

Royalty payments shall be made by Revance on a quarterly basis, due [*] days after the end of each quarter. Revance shall provide List a Royalty report detailing the calculations of the Royalties referencing numbers traceable from Revance’s respective 10k and/or 10Q, within [*] ([*]) days after the end of each quarter.  The Modified Royalty Rate shall only be calculated upon the final quarter of each applicable year, effective retroactively for that year, such that the royalty rate for the first three quarters of that year shall be an estimated royalty rate equal to the Modified Royalty Rate of the previous year.  Additionally, the COGS Factor shall only be calculated upon the final quarter of each applicable year, effective retroactively for that year, such that the COGS Factor for the first three quarters of that year shall be an estimated COGS Factor equal to the lesser of (x) the COGS Factor for the previous year, or (y) the calculation of the COGS Factor for such calendar year as of such quarter. The royalty payment for the final quarter of such year shall be adjusted such that the total royalty payments for that year will equal that year's royalty rate of Qualifying Revenue or the Modified Royalty Rate, as applicable.  

CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [*], HAS BEEN OMITTED BECAUSE REVANCE THERAPEUTICS, INC., HAS DETERMINED THE INFORMATION (I) IS NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM TO REVANCE THERAPEUTICS, INC., IF PUBLICLY DISCLOSED.EXECUTION
VERSION

 

Standby
Letter of Credit Agreement

(Committed/Secured)

February 23, 2021

364-DAY
STANDBY LETTER OF CREDIT AGREEMENT (the “Agreement”), dated as of
February 23, 2021, by and among EVEREST REINSURANCE (BERMUDA), LTD., a company
incorporated and existing under the laws of Bermuda (the “Account Party”),
and WELLS FARGO BANK, NATIONAL ASSOCIATION, a national banking association
(“Bank”).

  

1.            DEFINED
TERMS.   

(a)           Definitions.  For purposes of
this Agreement, in addition to the terms defined elsewhere herein, the
following terms have the meanings set forth below (such meanings to be equally
applicable to the singular and plural forms thereof):

“A.M.
Best” means A.M. Best Company, Inc.

“Anti-Corruption
Laws” means all laws, rules, and regulations of any jurisdiction applicable
to the Account Party or any of its Subsidiaries from time to time concerning or
relating to bribery or corruption, including, to the extent applicable, the
United States Foreign Corrupt Practices Act of 1977 and the rules and
regulations thereunder and the U.K. Bribery Act 2010 and the rules and
regulations thereunder.

“Anti-Money
Laundering Laws” means any and all laws, rules and regulations applicable
to the Account Party or any of its Subsidiaries from time to time concerning or
relating to terrorism financing or money laundering, including any applicable
provision of the PATRIOT Act and The Currency and Foreign Transactions
Reporting Act (also known as the “Bank Secrecy Act,” 31 U.S.C. §§ 5311-5330 and
12 U.S.C. §§ 1818(s), 1820(b) and 1951-1959). 

“Application”
has the meaning set forth in Section 2(a).

“Annual
Statement” means, with respect to the Account Party for any fiscal year,
the annual financial statements of the Account Party as required to be filed
with the Insurance Regulatory Authority of its jurisdiction of domicile and in
accordance with the laws of such jurisdiction, together with all exhibits,
schedules, certificates and actuarial opinions required to be filed or
delivered therewith.

“Bankruptcy
Law” means the United States Bankruptcy Code (11 U.S.C. § 101 et seq.), as
amended, modified, succeeded or replaced from time to time, 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 any state thereof,
Bermuda or any other foreign or other applicable jurisdictions from time to
time in effect and affecting the rights of creditors generally.

 1  

 

“Business Day” means (i) any day other
than a Saturday, Sunday or legal holiday on which banks in Charlotte, North
Carolina, Hamilton, Bermuda and New York City, New York, are open for the
conduct of their commercial banking business and (ii) when used in connection
with a Letter of Credit denominated in Canadian dollars, such day is also a day
on which banks are open for dealings in deposits in Canadian dollars in both
Toronto and Montreal.

“Capital
Stock” means (i) with respect to any Person that is a corporation, any and
all shares, interests or equivalents in capital stock (whether voting or
nonvoting, and whether common or preferred) of such corporation, and (ii) with
respect to any Person that is not a corporation, any and all partnership,
membership, limited liability company or other equity interests of such Person;
and in each case, any and all warrants, rights or options to purchase any of
the foregoing.

“Cash
Equivalents” means (i) securities issued or unconditionally guaranteed by
the United States of America or any agency or instrumentality thereof, backed
by the full faith and credit of the United States of America and maturing
within 90 days from the date of acquisition, (ii) commercial paper issued by
any Person organized under the laws of the United States of America, maturing
within 90 days from the date of acquisition and, at the time of acquisition,
having a rating of at least A 1 or the equivalent thereof by Standard &
Poor’s or at least P 1 or the equivalent thereof by Moody’s, (iii) time
deposits and certificates of deposit maturing within 90 days from the date of
issuance and issued by a bank or trust company organized under the laws of the
United States of America or any state thereof that has combined capital and
surplus of at least $500,000,000 and that has (or is a subsidiary of a bank
holding company that has) a long-term unsecured debt rating of at least A or
the equivalent thereof by Standard & Poor’s or at least A2 or the
equivalent thereof by Moody’s, (iv) repurchase obligations with a term not
exceeding seven (7) days with respect to underlying securities of the types
described in clause (i) above entered into with any bank or trust company
meeting the qualifications specified in clause (iii) above, and (v) money
market funds at least 95% of the assets of which are continuously invested in
securities of the type described in clauses (i) through (iv) above.

“Change
in Law” means the occurrence after the date of this Agreement of: (a) the
adoption or effectiveness of any law, rule, regulation, judicial ruling,
judgment or treaty, (b) any change in any law, rule, regulation or treaty or in
the administration, interpretation, implementation or application by any
Governmental Authority of any law, rule, regulation or treaty, or (c) the
making or issuance by any Governmental Authority of any request, rule,
guideline or directive, whether or not having the force of law; provided that
notwithstanding anything herein to the contrary, (i) the Dodd-Frank Wall Street
Reform and Consumer Protection Act and all requests, rules, guidelines or
directives thereunder or issued in connection therewith and (ii) all requests,
rules, guidelines or directives concerning capital adequacy promulgated by the
Bank for International Settlements, the Basel Committee on Banking Supervision
(or any successor or similar authority) or the U.S. federal or foreign
regulatory authorities shall, in each case, be deemed to be a “Change in Law,”
regardless of the date enacted, adopted or issued.

“Closing
Date” means February 23, 2021.

“Code”
means the Internal Revenue Code of 1986, and the rules and regulations
promulgated thereunder.

“Collateral”
means all the assets, property and interests in property that shall from time
to time be pledged or be purported to be pledged as direct or indirect security
for the Obligations pursuant to any one or more of the Security Documents.

 2  

 

“Collateral Value” for any Business
Day shall be calculated as set forth on Attachment A to Exhibit B.

“Collateral
Value Certificate” means a certificate substantially in the form attached
as Exhibit B.

“Commitment”
means the obligation of Bank to Issue Letters of Credit for the account of the
Account Party hereunder in an aggregate principal amount at any time
outstanding not to exceed $50,000,000, as such amount may be reduced from time
to time pursuant to the terms hereof.

“Commitment
Fee” has the meaning specified in Section 2(i) hereto.

“Commitment
Termination Date” means the earliest to occur of (a) February 22,
2022, (b) the date of termination of the entire Commitment by the Account Party
pursuant to Section 2(h), and (c) the date of termination of the Commitment
pursuant to Section 11(a).

“Control
Agreement” means the control agreement among Custodian, Bank and the
Account Party, as amended, supplemented or restated from time to time, pursuant
to which a lien on one or more Custodial Accounts and the contents thereof and
all security entitlements related thereto securing the Obligations is perfected
in favor of Bank.

“Covenant
Compliance Worksheet” means a fully completed worksheet in the form of Annex
A to Exhibit A. 

“Credit
Documents” means, collectively, this Agreement, the Letter of Credit
Documents and each Security Document.

“Custodial
Account” means each custodial, brokerage or similar account of the Account
Party maintained by the Custodian as a “securities account” within the meaning
of Section 8-501(a) of the UCC for the Account Party as the “entitlement
holder” within the meaning of Section 8-102(7) of the UCC pursuant to a
custodial agreement, on which (and on the contents of which) a lien has been
granted as security for the Obligations.

“Custodian”
means The Bank of New York Mellon (in its capacity as custodian of the
Custodial Accounts).

“Default”
means any of the events specified in Section 10 which with the passage of time,
the giving of notice or any other condition, would constitute an Event of
Default.

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

 3  

 

“Dollar Amount” means, at any time,
(i) with respect to any amount denominated in Dollars, such amount, and (ii)
with respect to any amount denominated in any Foreign Currency, the equivalent
amount thereof in Dollars as determined by the Bank at such time on the basis
of the Spot Rate (determined in respect of the most recent Revaluation Date)
for the purchase of Dollars with such Foreign Currency.

“Dollars”
or “$” means dollars of the United States of America.

“Draw
Date” has the meaning specified in Section 2(b)(i).

“Due
Date” has the meaning specified in Section 2(b)(i).

“ERISA”
means the Employee Retirement Income Security Act of 1974, and the rules and
regulations thereunder.

“Event
of Default” has the meaning specified in Section 10.

“Exchange
Act” means the Securities Exchange Act of 1934.

“FATCA”
means (a) Sections 1471 through 1474 of the Code, as of the date of this
Agreement (or any amended or successor version that is substantively comparable
and not materially more onerous to comply with), any current or future
regulations or official interpretations thereof, and any agreements entered
into pursuant to Section 1471(b)(1) of the Code, (b) any treaty, law,
regulation or other official guidance enacted in any other jurisdiction, or
relating to an intergovernmental agreement between the United States and any
other jurisdiction with the purpose (in either case) of facilitating the
implementation of (a) above, or (c) any agreement pursuant to the
implementation of paragraphs (a) or (b) above with the IRS, the United States
government or any governmental or taxation authority in the United States.

“Final
Expiry Date” means the date when the Final Maturity Date has occurred, all
Letters of Credit have expired or terminated and all Obligations owing
hereunder and in the other Credit Documents have been paid in full. 

“Final
Maturity Date” means the first anniversary of the Commitment Termination
Date.

“Financial
Strength Rating” means, as to any Person, the rating that has been most
recently announced by A.M. Best as the “financial strength rating” of such
Person.

“Fiscal
Year” means the fiscal year of the Account Party and its Subsidiaries.

“Foreign
Currency” means Canadian dollars.

“Foreign
Currency Equivalent” means, at any time, with respect to any amount
denominated in Dollars, the equivalent amount thereof in the applicable Foreign
Currency as determined by the Bank at such time on the basis of the Spot Rate
(determined in respect of the most recent Revaluation Date) for the purchase of
such Foreign Currency with Dollars.

 

 4  

 

“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 any nation or any political subdivision
thereof, whether at the national, state, territorial, provincial, municipal or
any other level, 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).   

“Hedge
Agreement” means any interest or foreign currency rate swap, cap, collar,
option, hedge, forward rate or other similar agreement or arrangement designed
to protect against fluctuations in interest rates or currency exchange rates,
including any swap agreement (as defined in 11 U.S.C. § 101).

“Hedge
Termination Value” means, in respect of any one or more Hedge Agreements,
after taking into account the effect of any legally enforceable netting
agreement relating to such Hedge Agreements, (a) for any date on or after the
date such Hedge Agreements 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 Hedge Agreements, as determined based upon
one or more mid-market or other readily available quotations provided by any
recognized dealer in such Hedge Agreements (which may include Bank or any
affiliate of Bank).

 5  

 

“Indebtedness” means, with respect to
any Person (without duplication), (i) all indebtedness of such Person for
borrowed money or in respect of loans or advances, (ii) all obligations of such
Person evidenced by notes, bonds, debentures or similar instruments, (iii) all
reimbursement obligations of such Person with respect to surety bonds, letters
of credit and bankers’ acceptances (in each case, whether or not drawn or
matured and in the stated amount thereof), (iv) all obligations of such Person
to pay the deferred purchase price of property or services, (v) all
indebtedness created or arising under any conditional sale or other title
retention agreement with respect to property acquired by such Person, (vi) all
obligations of such Person as lessee under leases that are or are required to
be, in accordance with GAAP, recorded as capital or finance leases, to the
extent such obligations are required to be so recorded, (vii) all obligations
and liabilities of such Person incurred in connection with any transaction or
series of transactions providing for the financing of assets through one or
more securitizations or in connection with, or pursuant to, any synthetic lease
or similar off-balance sheet financing, (viii) all Disqualified Capital Stock
issued by such Person, with the amount of Indebtedness represented by such
Disqualified Capital Stock being equal to the greater of its voluntary or involuntary
liquidation preference and its maximum fixed repurchase price, but excluding
accrued dividends, if any (for purposes hereof, the “maximum fixed repurchase
price” of any Disqualified Capital Stock that does not have a fixed repurchase
price shall be calculated in accordance with the terms of such Disqualified
Capital Stock as if such Disqualified Capital Stock were purchased on any date
on which Indebtedness shall be required to be determined pursuant to this
Agreement, and if such price is based upon, or measured by, the fair market
value of such Disqualified Capital Stock, such fair market value shall be
determined reasonably and in good faith by the board of directors or other
governing body of the issuer of such Disqualified Capital Stock), (ix) the
Hedge Termination Value of such Person under any Hedge Agreements, calculated
as of any date as if such agreement or arrangement were terminated as of such
date, (x) all Contingent Obligations of such Person in respect of Indebtedness
of other Persons and (xi) all indebtedness referred to in clauses (i) through
(x) above secured by any Lien on any property or asset owned or held by such
Person regardless of whether the indebtedness secured thereby shall have been
assumed by such Person or is nonrecourse to the credit of such Person.

“Instructions”
has the meaning set forth in Section 2(a).

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

“Investment
Company Act” means the Investment Company Act of 1940 (15 U.S.C. §
80(a)(1), et seq.).

“IRS”
means the United States Internal Revenue Service.

“Issue”
means, with respect to any Letter of Credit, to issue, to amend or to extend
the expiry of, or to renew or increase the stated amount of, such Letter of
Credit.  The terms “Issued”, “Issuing” and “Issuance” have
corresponding meanings.

“Letters
of Credit” means the collective reference to standby letters of credit
Issued pursuant to Section 2.

 6  

 

“Letter of Credit Documents” means,
with respect to any Letter of Credit, collectively, any Applications,
agreements, instruments, guarantees or other documents (whether general in
application or applicable only to such Letter of Credit) governing or providing
for the rights and obligations of the parties concerned or at risk with respect
to such Letter of Credit.   

“Letter
of Credit Fee” has the meaning specified in Section 2(i)(iii) hereto.

“Lien”
means any mortgage, pledge, hypothecation, assignment, security interest, lien
(statutory or otherwise), preference, priority, charge or other encumbrance of
any nature, whether voluntary or involuntary, including the interest of any
vendor or lessor under any conditional sale agreement, title retention agreement,
capital lease or any other lease or arrangement having substantially the same
effect as any of the foregoing.

“Material
Adverse Effect” means a material adverse effect upon (i) the financial
condition, operations, business, properties or assets of the Account Party and
its Subsidiaries, taken as a whole, (ii) the ability of the Account Party to
perform its respective payment or other material obligations under this
Agreement or any of the other Credit Documents or (iii) the legality, validity
or enforceability of this Agreement or any of the other Credit Documents or the
rights and remedies of Bank hereunder and thereunder.

“Non-Extension
Notice Date” has the meaning given to such term in Section 2(g).

“Notice
of Non-Extension” has the meaning given to such term in Section 2(g).

“Obligations”
means all obligations and liabilities (including any interest and fees accruing
after the filing of a petition or commencement of a case by or with respect to
the Account Party seeking relief under any applicable Bankruptcy Laws, whether
or not the claim for such interest or fees is allowed in such proceeding),
including without limitation, reimbursement and other payment obligations and
liabilities, of the Account Party to Bank arising under, or in connection with,
the applicable Credit Document, including, without limitation, Section 5 below,
any Application or any Letter of Credit, in each case whether matured or
unmatured, absolute or contingent, now existing or hereafter incurred.

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

“Officer’s
Compliance Certificate” means a certificate of the chief executive officer,
the chief financial officer, vice president—finance, principal accounting
officer, treasurer or assistant treasurer of the Account Party substantially in
the form attached as Exhibit A, together with a Covenant Compliance Worksheet.

“Other
Taxes” has the meaning specified in Section 2(c).

“Outstanding
Letters of Credit” means, as of any date, the sum of (a) the Stated Amount
of all outstanding Letters of Credit at such time and, without duplication, (b)
all reimbursement obligations in respect of Letters of Credit at such time.

“PATRIOT
Act” means the USA PATRIOT Act (Title III of Pub. L. 107-56 (signed into
law October 26, 2001)).

“Payment
Date” has the meaning specified in Section 2(b)(i).

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

 7  

 

“Pledge Agreement” means the Pledge
and Security Agreement, dated as of the date hereof, made by the Account Party
in favor of Bank, as amended, supplemented or restated from time to time.

“Prime
Rate” means that rate of interest most recently announced within Bank at
its principal office as its “Prime Rate”, with the understanding that the Prime
Rate is one of Bank’s base rates and serves as the basis upon which effective
rates of interest are calculated for those loans making reference thereto, and
evidenced by the recording thereof in such publication or publications as Bank
may designate. Each change in the Prime Rate shall be effective from and
including the date such change is publicly announced as being effective.

“Quarterly
Statement” means, with respect to the Account Party for any fiscal quarter,
the quarterly financial statements of the Account Party as required to be filed
with the Insurance Regulatory Authority of its jurisdiction of domicile,
together with all exhibits, schedules, certificates and actuarial opinions
required to be filed or delivered therewith.

“Requirement
of Law” means, with respect to any Person, the charter, articles,
constitution or certificate of organization or incorporation and bye-laws or
other organizational or governing documents of such Person, and any statute,
law, treaty, rule, regulation, order, decree, writ, injunction or determination
of any arbitrator or court or other Governmental Authority, in each case
applicable to or binding upon such Person or any of its property or to which
such Person or any of its property is subject or otherwise pertaining to any or
all of the transactions contemplated by this Agreement and the other Credit
Documents.

“Responsible
Officer” means, as to any Person, the chief executive officer, president, chief
financial officer, controller, treasurer or assistant treasurer of such Person
or any other officer of such Person designated in writing by the Account Party
and reasonably acceptable to Bank; provided that, to the extent requested
thereby, Bank shall have received a certificate of such Person certifying as to
the incumbency and genuineness of the signature of each such officer.  Any
document delivered hereunder or under any other Credit Document that is signed
by a Responsible Officer of a Person shall be conclusively presumed to have
been authorized by all necessary corporate, limited liability company,
partnership and/or other action on the part of such Person and such Responsible
Officer shall be conclusively presumed to have acted on behalf of such Person.

“Revaluation
Date” means with respect to any Letter of Credit, each of the following: 
(i) each date of issuance of a Letter of Credit denominated in a Foreign
Currency, (ii) each date of an amendment of any such Letter of Credit having
the effect of increasing or decreasing the Stated Amount thereof, (iii) each
date of any payment by the Bank under any Letter of Credit denominated in a
Foreign Currency and (iv) each such additional date as the Bank shall determine
or require.

“Sanctions”
means any and all economic or financial sanctions, sectoral sanctions,
secondary sanctions, trade embargoes and anti-terrorism laws, including but not
limited to those imposed, administered or enforced from time to time by the
U.S. government (including those administered by OFAC or the U.S. Department of
State), the United Nations Security Council, the European Union, Her Majesty’s
Treasury, or other relevant sanctions authority. 

“Sanctioned
Country” means at any time, a country, territory or region which is itself
the subject or target of any Sanctions.

 8  

 

“Sanctioned Person” means, at any
time, (a) any Person listed in any Sanctions-related list of designated Persons
maintained by OFAC (including, without limitation, OFAC’s Specially Designated
Nationals and Blocked Persons List and OFAC’s Consolidated Non-SDN List), the
U.S. Department of State, the United Nations Security Council, the European
Union, Her Majesty’s Treasury, or other relevant sanctions authority, (b) any
Person located, operating, organized or resident in a Sanctioned Country or (c)
any Person owned or controlled by any such Person or Persons described in
clauses (a) and (b), including a Person that is deemed by OFAC to be a
Sanctions target based on the ownership of such legal entity by Sanctioned Peron(s).

“Security
Documents” means, collectively, (a) the Pledge Agreement and (b) the
Control Agreement and (c) each other document, agreement, certificate and/or
financing statement, executed, delivered, made or filed pursuant to the terms
of the documents specified in foregoing clauses (a) and (b).

“Spot
Rate” means, with respect to any Foreign Currency, the rate quoted by the
Bank as the spot rate for the purchase by the Bank of such Foreign Currency
with Dollars through its principal foreign exchange trading office at
approximately 11:00 a.m., London time, on the date two Business Days prior to
the date as of which the foreign exchange computation is made; provided that
the Bank may use such spot rate quoted on the date as of which the foreign
exchange computation is made in the case of any Letter of Credit denominated in
an Foreign Currency.

“Standard
Letter of Credit Practice” means, for Bank, any U.S. federal or state or
foreign law or letter of credit practices applicable in the city in which Bank
Issued the applicable Letter of Credit or for its branch or correspondent
banks, such laws and practices applicable in the city in which it has advised,
confirmed or negotiated such Letter of Credit, as the case may be.  Such
practices shall be (i) of banks that regularly issue letters of credit in the
particular city, and (ii) required or permitted under the ISP (as defined
below) or UCP (as defined below), as chosen in the applicable Letter of
Credit.  “ISP” means, International Standby Practices 1998 (International
Chamber of Commerce Publication No. 590) and any subsequent revision thereof
adopted by the International Chamber of Commerce on the date such Letter of
Credit is issued.  “UCP” means, Uniform Customs and Practice for Documentary
Credits 2007 Revision, International Chamber of Commerce Publication No. 600
and any subsequent revision thereof adopted by the International Chamber of
Commerce on the date such Letter of Credit is issued.  

“Stated
Amount” means, with respect to any Letter of Credit at any time, the
aggregate Dollar Amount available to be drawn thereunder at such time
(regardless of whether any conditions for drawing could then be met).

“Subsidiary”
means as to any Person, any corporation, partnership, limited liability company
or other entity of which more than fifty percent (50%) of the outstanding
Capital Stock having ordinary voting power to elect a majority of the board of
directors (or equivalent governing body) or other managers of such corporation,
partnership, limited liability company or other entity is at the time owned by
(directly or indirectly) such Person (irrespective of whether, at the time,
Capital Stock of any other class or classes of such corporation, partnership,
limited liability company or other entity shall have or might have voting power
by reason of the happening of any contingency).  Unless otherwise qualified,
references to “Subsidiary” or “Subsidiaries” herein shall refer to those of the
Account Party.

“Taxes”
has the meaning specified in Section 2(c).

 9  

 

“Threshold Amount” means $50,000,000.

“UCC”
means the Uniform Commercial Code as in effect from time to time in the State
of New York.

“Upfront
Fee” has the meaning specified in Section 2(i) hereto.

“U.S.”
means United States of America.

(b)           Exchange Rates; Currency
Equivalents. 

(i)            The
Bank shall determine the Spot Rates as of each Revaluation Date to be used for
calculating Dollar Amounts of Letters of Credit denominated in Foreign
Currencies.  Such Spot Rates shall become effective as of such Revaluation Date
and shall be the Spot Rates employed in converting any amounts between the
applicable currencies until the next Revaluation Date to occur.  Except for
purposes of financial statements required to be delivered hereunder or
calculating financial covenants hereunder and except as otherwise provided
herein, the applicable amount of any currency (other than Dollars) for purposes
of the Credit Documents shall be such Dollar Amount as so determined by the
Bank.

(ii)           Wherever
in this Agreement in connection with the issuance, amendment or extension of a
Letter of Credit, an amount, such as a required minimum or multiple amount, is
expressed in Dollars, but such Letter of Credit is denominated in a Foreign
Currency, such amount shall be the relevant Foreign Currency Equivalent of such
Dollar amount (rounded to the nearest unit of such Foreign Currency, with 0.5
of a unit being rounded upward), as determined by the Bank.

2.            LETTER
OF CREDIT FACILITY.   

(a)           General.  At the request of the
Account Party, Bank agrees, on and subject to the terms and conditions of this
Agreement, to issue standby Letters of Credit for the account of the Account
Party in U.S. dollars or a Foreign Currency from time to time during the period
from the Closing Date to but not including the Commitment Termination Date. 
Letters of Credit may only be issued on Business Days.  The request to issue a
Letter of Credit (an “Application”) shall be in such form as Bank shall
from time to time require or agree to accept (including any type of electronic
form or means of communication acceptable to Bank) and, upon the receipt of any
Application, Bank shall process such Application in accordance with its
customary procedures and shall, subject to Section 4, promptly issue the Letter
of Credit requested thereby (but in no event shall Bank be required to issue
any Letter of Credit earlier than three Business Days after its receipt of the
Application therefor) by issuing the original of such Letter of Credit to the
beneficiary thereof or as otherwise may be agreed by Bank and the Account
Party.  Inquiries, communications and instructions (whether written, facsimile
or in other electronic form approved by Bank) regarding a Letter of Credit, an
Application and this Agreement are each referred to herein as “Instructions”. 
Bank’s records of the content of any Instruction will be conclusive, absent
manifest error.  

(b)           General Payment Obligations.  For
each Letter of Credit, the Account Party shall, as to clause (i) below,
reimburse Bank, and as to all other clauses below, pay Bank, in each case in
U.S. dollars or a Foreign Currency:

 10  

 

(i)            with
respect to a drawing under any Letter of Credit, the amount of each drawing
paid by Bank thereunder (such date of payment hereinafter referred to as the “Draw
Date”) no later than the first succeeding Business Day after the Account
Party’s receipt of notice of such payment by Bank (the “Due Date”), with
interest as provided below on the amount so paid by Bank (to the extent not
reimbursed prior to 2:00 p.m. Eastern Time on the Draw Date) for the period
from the Draw Date to the date the reimbursement obligation created thereby is
satisfied in full (the “Payment Date”).  If the Payment Date is on or
prior to the Due Date, such interest shall be payable at the Prime Rate as in
effect from time to time during the period from the Draw Date to the Payment
Date.  If the Payment Date is after the Due Date, such interest shall be
payable (x) as provided in the preceding sentence during the period from and
including the Draw Date to and not including the Due Date, and (y) at the Prime
Rate as in effect from time to time plus 2% from and including the Due Date to
and not including the Payment Date; 

(ii)           the fees payable by the Account Party at
such times and in such amounts as are set forth in Section 2(i).

(iii)          except as otherwise provided in clause (i)
above and clause (iv) below, interest on each amount payable by the Account
Party under the applicable Credit Documents for each day from and including the
date such payment is due to and not including the date of payment, on demand,
at a rate per annum equal to the Prime Rate as in effect from time to time plus
2%; 

(iv)          within ten (10) days of demand, Bank’s
documented out-of-pocket costs and expenses (including the reasonable and
documented legal fees, charges and disbursements of outside counsel to Bank
incurred in connection with the protection or enforcement of Bank’s rights
against the Account Party under this Agreement and the other applicable Credit
Documents and any correspondent bank’s documented charges related thereto),
with interest from the date of demand by Bank to and not including the date of
payment by the Account Party, at a rate per annum equal to the Prime Rate as in
effect from time to time plus 2%;

(v)           if as a result of any Change in Law, Bank
determines that the cost to Bank of Issuing or maintaining any Letter of Credit
is increased (excluding, for purposes of this clause (a)(v), any such increased
costs resulting from (A) income taxes, franchise taxes and similar taxes
imposed on Bank by any taxing authority, any U.S. federal withholding taxes
imposed under FATCA and Other Taxes (in each case as to which Section 2(c)
shall govern) and (B) changes in the basis of taxation of overall net income or
overall gross income by the U.S. or by the foreign jurisdiction or state under
the laws of which Bank is organized or has its lending office or any political
subdivision thereof), then the Account Party will pay to Bank, from time to
time, within ten (10) days after demand by Bank, which demand shall include a
statement of the basis for such demand and a calculation in reasonable detail
of the amount demanded, additional amounts sufficient to compensate Bank for
such increased cost.  A certificate as to the amount of such increased cost,
submitted to the Account Party by Bank, shall be conclusive and binding for all
purposes, absent manifest error; and

 11  

 

(vi)          if Bank
determines that any Change in Law affecting Bank or any lending office of Bank
or Bank’s holding company regarding capital or liquidity requirements has or
would have the effect of reducing the rate of return on Bank’s capital or on
the capital of Bank’s holding company as a consequence of this Agreement or the
Letters of Credit issued by Bank to a level below that which Bank or Bank’s
holding company could have achieved but for such Change in Law (taking into
consideration Bank’s or its holding company’s policies with respect to capital
adequacy), then from time to time the Account Party will pay to Bank within ten
(10) days after demand by Bank, which demand shall include a statement of the
basis for such demand and a calculation in reasonable detail of the amount
demanded, such additional amount or amounts as will compensate Bank or Bank’s
holding company for any such reduction suffered.  A certificate as to such
amounts submitted to the Account Party by Bank shall be conclusive and binding
for all purposes, absent manifest error.

Bank
shall use reasonable efforts to designate a different lending office if such
designation will avoid (or reduce the cost to the Account Party of) any event
described in the preceding sentence and such designation will not, in Bank’s
good faith judgment, subject Bank to any unreimbursed cost or expense and would
not otherwise be disadvantageous to Bank.

Notwithstanding
the provisions of clause (v) or (vi) above or Section 2(c) below (and without
limiting the immediately preceding paragraph), Bank shall not be entitled to
compensation from the Account Party for any amount arising prior to the date
which is 180 days before the date on which Bank notifies the Account Party of
such event or circumstance (except that if such event or circumstance is
retroactive, then such 180-day period shall be extended to include the period
of retroactive effect thereof).

Any
payments received by Bank pursuant to the Credit Documents after 1:00 p.m.
Eastern shall be deemed to have been made on the next succeeding Business Day
for all purposes under the Credit Documents.

(c)           Immediately Available Funds; No
Withholding.  All reimbursements and payments by or on behalf of the
Account Party shall be made in immediately available funds, free and clear of
and without deduction for any present or future Taxes, set-off or other
liabilities, to such location as Bank may reasonably designate from time to
time.  The Account Party shall pay all withholding taxes and Other Taxes
imposed by any taxing authority on reimbursement or payment under any Letter of
Credit and any Credit Document, and shall indemnify Bank against all
liabilities, costs, claims and expenses resulting from Bank having to pay or
from any omission to pay or delay in paying any such taxes, except to the
extent that such taxes 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 Bank.  Any such indemnification payment shall be made
within ten (10) days from the date Bank makes written demand therefor.  “Taxes”
means all taxes, fees, duties, levies, imposts, deductions, charges or
withholdings of any kind (other than income taxes, franchise taxes and similar
taxes imposed on Bank by any taxing authority and any U.S. federal withholding
taxes imposed under FATCA).  “Other Taxes” means all present or future
stamp, documentary, excise, property or similar taxes, charges or levies that
arise from any payment made hereunder or from the execution, delivery or
registration of, performance under, or otherwise with respect to, this
Agreement or any other Credit Document.

 12  

 

(d)           Automatic
Debit and Set-Off.  Upon the occurrence and during the continuance of any
Event of Default with respect to the Account Party, Bank may (but shall not be
required to), without demand for reimbursement or payment or notice to the Account
Party, and in addition to any other right of set-off that Bank may have, debit
any account or accounts maintained by the Account Party with any office of Bank
(now or in the future) and set-off and apply (i) any balance or deposits
(general, special, time, demand, provisional, final, matured or absolute) in
the account(s) and (ii) any sums due or payable from Bank, to the payment of
any and all Obligations owed by the Account Party to Bank, irrespective of
whether Bank shall have made any demand under this Agreement and although such
Obligations may be contingent or unmatured.  Bank agrees promptly to notify the
Account Party after any such set-off and application; provided, however, that
the failure to give such notice shall not affect the validity of such set-off
and application.  

(e)           Obligations Absolute.  The Account
Party’s reimbursement and payment obligations under this Section 2 are
absolute, unconditional and irrevocable and shall be performed strictly in
accordance with the terms of this Agreement under any and all circumstances
whatsoever, including, without limitation:

(i)            any lack of validity, enforceability or
legal effect of any Letter of Credit or any Credit Document or any term or
provision therein; 

(ii)           payment against presentation of any draft,
demand or claim for payment under any Letter of Credit or other document
presented for purposes of drawing under any Letter of Credit (individually, a “Drawing
Document” and collectively, the “Drawing Documents”) that does not
comply in whole or in part with the terms of the applicable Letter of Credit or
which proves to be fraudulent, forged or invalid in any respect or any
statement therein proving to be untrue or inaccurate in any respect, or which
is signed, issued or presented by a Person or a transferee of such Person
purporting to be a successor or transferee of the beneficiary of such Letter of
Credit; 

(iii)          Bank or any of its branches or affiliates
being the beneficiary of any Letter of Credit;

(iv)          Bank or any correspondent bank honoring a
drawing against a Drawing Document up to the amount available under any Letter
of Credit even if such Drawing Document claims an amount in excess of the
amount available under such Letter of Credit; 

(v)           the existence of any claim, set-off,
defense or other right that Account Party or any other Person may have at any
time against any beneficiary or any assignee of proceeds, Bank or any other
Person; or

(vi)          any other event, circumstance or conduct
whatsoever, whether or not similar to any of the foregoing that might, but for
this Section 2(e), constitute a legal or equitable defense to or discharge of,
or provide a right of set-off against, the Obligations, whether against Bank,
the beneficiary or any other Person;

provided, however,
that subject to Section 5(b) below, the foregoing shall not release Bank
from such liability to the Account Party as may be determined by a court of
competent jurisdiction by a final and nonappealable judgment against Bank
following reimbursement and/or payment of the Obligations.  

 13  

 

(f)            Computation
of Interest and Fees; Maximum Rate.  All computations of interest and fees
to be made hereunder and under any other Credit Document shall be made on the
basis of a year consisting of (i) in the case of interest determined with reference
to the Prime Rate, 365/366 days, as the case may be, or (ii) in all other
instances, 360 days; and in each case under (i) and (ii), for the actual number
of days elapsed (including the first day but excluding the last day) occurring
in the period for which such interest or fee is payable.  In no contingency or
event whatsoever shall the aggregate of all amounts deemed interest under this
Agreement charged or collected pursuant to the terms of this Agreement exceed
the highest rate permissible under any applicable law which a court of
competent jurisdiction shall, in a final determination, deem applicable
hereto.  In the event that such a court determines that Bank has charged or
received interest hereunder in excess of the highest applicable rate, the rate
in effect hereunder shall automatically be reduced to the maximum rate
permitted by applicable law and Bank shall at its option (i) promptly refund to
the Account Party any interest received by Bank in excess of the maximum lawful
rate or (ii) apply such excess to any outstanding Obligations.  It is the
intent hereof that the Account Party not pay or contract to pay, and that Bank
not receive or contract to receive, directly or indirectly in any manner
whatsoever, interest in excess of that which may be paid by the Account Party
under applicable law.

(g)           Expiry Date of Letters of Credit. 
Each Letter of Credit shall expire at or prior to the earlier of (a) the close
of business on the date one year after the date of the Issuance of such Letter
of Credit (or, in the case of any renewal or extension thereof, one year after
such renewal or extension), or (b) the Final Maturity Date; provided, however,
if the Account Party so requests in any applicable Application, Bank agrees to
issue a Letter of Credit that provides for the automatic renewal for successive
periods of one year or less until Bank shall have delivered prior written
notice of nonrenewal to the beneficiary of such Letter of Credit (a “Notice of
Non-Extension”) no later than 60 days prior to the stated maturity date
specified in such Letter of Credit (such time, the “Non-Extension Notice
Date”).  The Account Party acknowledges that Bank shall not be required to
extend any Letter of Credit if Bank has determined that it would have no
obligation at such time to issue such Letter of Credit (as extended) under the
terms hereof.

(h)           Permanent Reduction of Commitment.
The Account Party shall have the right at any time and from time to time, upon
at least three Business Days’ prior irrevocable written notice to Bank, to
permanently reduce, without premium or penalty, (i) the entire Commitment at
any time or (ii) portions of the Commitment, from time to time, in an aggregate
principal amount not less than $3,000,000 or any whole multiple of $1,000,000
in excess thereof.  All Commitment Fees accrued until the effective date of any
termination of the Commitment shall be paid on the effective date of such
termination.  

(i)            Fees. The Account Party agrees to
pay the following amounts:

(i)            a non-refundable upfront fee (the “Upfront
Fee”), in an aggregate amount equal to 0.025% of the Commitment.  The
entire amount of the Upfront Fee will be fully earned and shall be due and
payable in full in cash on the Closing Date;

(ii)           a non-refundable commitment fee (a “Commitment
Fee”), for each calendar quarter (or portion thereof) at a per annum rate
equal to 0.125% of the actual daily aggregate unused portion of the Commitment,
payable in arrears (A) on the last Business Day of each calendar quarter,
beginning with the first such day to occur after the Closing Date through the
Commitment Termination Date and (B) on the Commitment Termination Date; and

 14  

 

(iii)          a
non-refundable letter of credit fee (the “Letter of Credit Fee”) for
each calendar quarter (or portion thereof) in respect of all Letters of Credit
issued for the account of the Account Party and outstanding during such
quarter, at a per annum rate equal to 0.425% of the actual daily aggregate
Stated Amount of such Letters of Credit.  The Letter of Credit Fee shall be due
and payable quarterly in arrears (A) on the last Business Day of each calendar
quarter, commencing with the first such date to occur after the Closing Date
through the Final Maturity Date, (B) on the Final Maturity Date and (C) on the
Final Expiry Date.

3.            ACCOUNT
PARTY’S RESPONSIBILITY.  The Account Party is responsible for approving the
final text of any Letter of Credit Issued by Bank for its account, irrespective
of any assistance Bank may provide such as drafting or recommending text or by
Bank’s use or refusal to use text submitted by the Account Party.  The Account
Party is solely responsible for the suitability of the Letter of Credit for the
Account Party’s purposes.  The Account Party will examine the copy of each
Letter of Credit Issued for its account and any other documents sent by Bank in
connection with such Letter of Credit and shall promptly notify Bank of any
non-compliance with the Account Party’s Instructions and of any discrepancy in
any document under any presentment or other irregularity.  The Account Party
understands that the final form of any Letter of Credit may be subject to such
revisions and changes as are deemed necessary or appropriate by Bank in
accordance with standard industry practice and the Account Party hereby
consents to such revisions and changes.   

4.            CONDITIONS
OF CLOSING AND ISSUANCE.  

(a)           Conditions Precedent to Closing. The
obligation of Bank to close this Agreement and to Issue any Letters of Credit
on the Closing Date is subject to the satisfaction of each of the following
conditions:

(i)            Executed Credit Documents.  This
Agreement, together with any other applicable Credit Documents, shall have been
duly authorized, executed and delivered to Bank by the parties thereto, shall
be in full force and effect and no Default or Event of Default shall exist
hereunder or thereunder.

(ii)           Closing Certificates; Etc.  Bank
shall have received each of the following in form and substance reasonably
satisfactory to Bank:

(A)   Officer’s Certificate.  A certificate from a
Responsible Officer of the Account Party to the effect that (A) all
representations and warranties of the Account Party contained in this Agreement
and the other Credit Documents are true, correct and complete in all material
respects (except to the extent any such representation and warranty is
qualified by materiality or reference to Material Adverse Effect, in which
case, such representation and warranty shall be true, correct and complete in
all respects); and (B) as of the Closing Date, no Default or Event of Default
has occurred and is continuing.

(B)   Certificate of Secretary of the Account Party. 
A certificate of a Responsible Officer of the Account Party certifying as to
the incumbency and genuineness of the signature of each officer of the Account
Party executing Credit Documents to which it is a party and certifying that
attached thereto is a true, correct and complete copy of (A) the memorandum of
association (or equivalent), as applicable, of the Account Party and all
amendments thereto, certified as of a recent date by the appropriate
Governmental Authority in its jurisdiction of incorporation, organization or
formation (or equivalent), as applicable, (B) the bye-laws or other governing
document of the Account Party as in effect on the Closing Date, (C) resolutions
duly adopted by the board of directors (or other governing body) of the Account
Party authorizing and approving the transactions contemplated hereunder and the
execution, delivery and performance of this Agreement and the other Credit
Documents to which it is a party, and (D) each certificate required to be
delivered pursuant to Section 4(a)(ii)(C).

 15  

 

(C)   Certificates
of Good Standing.  Certificates as of a recent date of the good standing of
the Account Party under the laws of its jurisdiction of incorporation,
organization or formation (or equivalent), as applicable, and, to the extent
requested by Bank, each other jurisdiction where the Account Party is qualified
to do business.

(D)   Opinions of Counsel.  Opinions of counsel to
the Account Party addressed to Bank with respect to the Account Party, the
Credit Documents and such other matters as Bank shall request (which such
opinions shall expressly permit reliance by permitted successors and assigns of
Bank).

(iii)          Lien Search.  Bank shall have
received the results of a Lien search, in form and substance reasonably
satisfactory to Bank, indicating among other things that the Collateral is free
and clear of any Lien.

(iv)          Consents; Defaults. 

(A)   Governmental and Third Party Approvals.  The
Account Party shall have received all material governmental, shareholder and
third party consents and approvals necessary (or any other material consents as
determined in the reasonable discretion of Bank) in connection with the
transactions contemplated by this Agreement and the other Credit Documents and
all applicable waiting periods shall have expired without any action being
taken by any Person that would reasonably be expected to restrain, prevent or
impose any material adverse conditions on the Account Party or such other
transactions or that could seek or threaten any of the foregoing, and no law or
regulation shall be applicable which in the reasonable judgment of Bank would
reasonably be expected to have such effect.

(B)   No Injunction, Etc.  No action, proceeding
or investigation shall have been instituted, threatened in writing or proposed
in writing before any Governmental Authority to enjoin, restrain, or prohibit,
or to obtain substantial damages in respect of, or which is related to or
arises out of this Agreement or the other Credit Documents or the consummation
of the transactions contemplated hereby or thereby, or which, in Bank’s sole
discretion, would make it inadvisable to consummate the transactions
contemplated by this Agreement or the other Credit Documents or the
consummation of the transactions contemplated hereby or thereby.

(v)           Payments at Closing.  The Account
Party shall have paid to Bank (i) the Upfront Fee and (ii) all other fees and
reasonable and documented expenses of Bank required hereunder or under any
other Credit Document to be paid on or prior to the Closing Date (including
reasonable fees and expenses of counsel) in connection with this Agreement, the
other Credit Documents and the transactions contemplated hereby.

(vi)          Miscellaneous. 

(A)   PATRIOT Act, etc.  The Account Party shall
have provided to Bank the documentation and other information requested by Bank
in order to comply with requirements of any Anti-Money Laundering Laws,
including, without limitation, the PATRIOT Act and any applicable “know your
customer” rules and regulations.

(B)   Other Documents.  All opinions, certificates
and other instruments and all proceedings in connection with the transactions
contemplated by this Agreement shall be satisfactory in form and substance to
Bank.  Bank shall have received copies of all other documents, certificates and
instruments reasonably requested thereby, with respect to the transactions
contemplated by this Agreement.

 16  

 

(b)           Conditions
Precedent to Issuance of Letters of Credit. The obligation of Bank to Issue
Letters of Credit (including any Letters of Credit Issued on the Closing Date)
is subject to the satisfaction of each of the following conditions:

(i)            Continuation of Representations and
Warranties.  The representations and warranties contained in this Agreement
and the other Credit Documents shall be true and correct in all material
respects, except for any representation and warranty that is qualified by
materiality or reference to Material Adverse Effect, which such representation
and warranty shall be true and correct in all respects, on and as of such
issuance with the same effect as if made on and as of such date (except for any
such representation and warranty that by its terms is made only as of an
earlier date, which representation and warranty shall remain true and correct
in all material respects as of such earlier date, except for any representation
and warranty that is qualified by materiality or reference to Material Adverse
Effect, which such representation and warranty shall be true and correct in all
respects as of such earlier date).

(ii)           No Existing Default.  No Default or
Event of Default shall have occurred and be continuing on the Issuance date
with respect to such Letter of Credit or after giving effect to the issuance of
such Letter of Credit on such date.

(iii)          Notice and Collateral Value Certificate. 
Bank shall have received an Application from the Account Party and a Collateral
Value Certificate pursuant to Section 7(e)(iii).

(iv)          Miscellaneous.  In addition to the
foregoing, Bank shall be under no obligation to Issue any Letter of Credit if:

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

(B)   Bank shall have delivered a Notice of Non-Extension
with respect to such Letter of Credit;

(C)   the expiry date of such Letter of Credit would
occur more than twelve months after the date of issuance or last extension
unless Bank has approved such expiry date in writing;

(D)   the expiry date of such Letter of Credit occurs
after the Final Maturity Date, unless Bank has approved such expiry date in
writing;

(E)   such Letter of Credit is not substantially in form
and substance reasonably acceptable to Bank; or

(F)   immediately after giving effect thereto, the amount
of Outstanding Letters of Credit would exceed the Commitment or the Collateral
Value of the Collateral at such time.

5.            INDEMNIFICATION; LIMITATION
OF LIABILITY.  

 17  

 

(a)           Indemnification. 
The Account Party agrees to indemnify and hold harmless Bank (including its branches
and affiliates), its correspondent banks and each of their respective
directors, officers, employees, attorneys and agents (each, including Bank, an
“Indemnified Person”) from and against any and all claims, suits,
judgments, liabilities, losses, fines, damages, penalties, interest, costs and
expenses (including expert witness fees and reasonable out-of-pocket legal
fees, charges and disbursements of any counsel (including outside counsel fees
and expenses), and all expenses of arbitration or litigation and in preparation
thereof), in each case, which are documented and may be incurred by or awarded
against any Indemnified Person (collectively, the “Costs”), and which
arise out of or in connection with or by reason of this Agreement, the other
Credit Documents, the actual or proposed use of the proceeds of the Letters of
Credit or any of the transactions contemplated thereby, including, without
limitation, any Costs which arise out of or in connection with, or as a result
of:  

(i)            any Letter of Credit or any pre-advice of
its Issuance; 

(ii)           any transfer, sale, delivery, surrender or
endorsement of any Drawing Document at any time(s) held by any Indemnified
Person in connection with any Letter of Credit; 

(iii)          any actual or prospective action or proceeding
arising out of, or in connection with, any Letter of Credit or any Credit
Document (whether administrative, judicial or in connection with arbitration,
whether based on contract, tort or any other theory, and whether brought by a
third party or by the Account Party or any Subsidiary thereof, and regardless
of whether any Indemnified Person is a party thereto), including any action or
proceeding to compel or restrain any presentation or payment under any Letter
of Credit, or for the wrongful dishonor of, or honoring a presentation under,
any Letter of Credit; 

(iv)          any independent undertakings issued by the
beneficiary of any Letter of Credit;

(v)           any unauthorized Instruction or error in
computer or electronic transmission in connection with any Letter of Credit
Issued hereunder; 

(vi)          an adviser, confirmer or other nominated
person seeking to be reimbursed, indemnified or compensated in connection with
any Letter of Credit Issued hereunder;

(vii)         any third party seeking to enforce the
rights of the Account Party, beneficiary, nominated person, transferee,
assignee of Letter of Credit proceeds or holder of an instrument or document in
connection with any Letter of Credit Issued hereunder; 

(viii)        the fraud, forgery or illegal action of
parties other than any Indemnified Person in connection with any Letter of
Credit Issued hereunder;

(ix)          Bank’s performance of the obligations of a
confirming institution or entity that wrongfully dishonors a confirmation in
connection with any Letter of Credit Issued hereunder; or

(x)           the acts or omissions, whether rightful or
wrongful, of any present or future de jure or de facto Governmental Authority
or cause or event beyond the control of such Indemnified Person in connection
with any Letter of Credit Issued hereunder; 

 18  

 

in each case, including that resulting from
Bank’s own negligence; provided, however,  that such indemnity shall not be
available to any Person claiming indemnification under this Section 5(a) to the
extent that such Costs (A) 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 Person, (B) are determined by a court
of competent jurisdiction by a final and nonappealable judgment to have
resulted from a claim by the Account Party against an Indemnified Person for
breach in bad faith of the obligations of such Indemnified Person hereunder or
under any other Credit Document, or (C) result from any dispute solely between
or among Indemnified Parties.  The Account Party hereby agrees to pay Bank
within fifteen (15) days after demand from time to time all amounts owing under
this Section 5(a).  This indemnity provision shall survive termination
of this Agreement and all Letters of Credit.

(b)           Direct Damages; No Punitive Damages. 
The liability of Bank (or any other Indemnified Person) under, in connection
with and/or arising out of any Credit Document or any Letter of Credit (or
pre-advice), regardless of the form or legal grounds of the action or
proceeding, shall be limited to direct damages suffered by the Account Party
that are determined by a court of competent jurisdiction by a final and
nonappealable judgment to have been caused directly by Bank’s gross negligence,
willful misconduct or breach in bad faith in (i) honoring a presentation under
a Letter of Credit that on its face does not at least substantially comply with
the terms and conditions of such Letter of Credit, (ii) failing to honor a
presentation under a Letter of Credit that strictly complies with the terms and
conditions of such Letter of Credit or (iii) retaining Drawing Documents
presented under a Letter of Credit.  Bank shall be deemed to have acted with
due diligence and reasonable care if Bank’s conduct is in accordance with
Standard Letter of Credit Practice or in accordance with any Credit Document. 
No Indemnified Person shall be liable for any damages arising from any errors,
omissions, interruptions or delays in transmission or delivery of any message,
advice or document (regardless of how sent or transmitted) in connection with
this Agreement or the other Credit Documents, except to the extent that any
losses, claims, damages, liabilities or expenses result from the gross
negligence or willful misconduct of such Indemnified Person in making any such
transmission as determined by a final nonappealable judgment of a court of
competent jurisdiction.

(c)           Notwithstanding anything to the contrary in
this Agreement or in any other Credit Document, no Indemnified Person shall be
liable in contract, tort or otherwise for any punitive, exemplary,
consequential, indirect or special damages or losses regardless of whether or
not such party or Indemnified Person shall have been advised of the possibility
thereof or the form of action in which such damages or losses may be claimed. 
The Account Party shall take commercially reasonable action to avoid and
mitigate the amount of any damages claimed against Bank or any other
Indemnified Person, including by enforcing its rights in appropriate
proceedings diligently pursued in the underlying transaction.  

(d)           No Responsibility or Liability.  
Without limiting any other provision of this Agreement or any other Credit
Document, Bank and each other Indemnified Person (if applicable) shall not be
responsible to the Account Party for, and/or Bank’s rights and remedies against
the Account Party and the Obligations shall not be impaired by:  

(i)            honor of a presentation under any Letter
of Credit that on its face substantially complies with the terms and conditions
of such Letter of Credit, even if the Letter of Credit requires strict
compliance by the beneficiary;

(ii)           acceptance as a draft of any written or
electronic demand or request for payment under a Letter of Credit, even if
nonnegotiable or not in the form of a draft; 

 19  

 

(iii)          the
identity or authority of any presenter or signer of any Drawing Document or the
form, accuracy, genuineness or legal effect of any Drawing Document (other than
Bank’s determination that such Drawing Document appears on its face to
substantially comply with the terms and conditions of the Letter of Credit); 

(iv)          acting upon any Instruction that it in good
faith believes to have been given by a Person authorized to give such
Instructions;

(v)           any errors in interpretation of technical
terms or in translation;

(vi)          any acts, omissions or fraud by, or the
solvency of, any beneficiary, any nominated person or entity or any other
Person, other than an Indemnified Person; 

(vii)         any breach of contract between the
beneficiary and the Account Party or any of the parties to the underlying
transaction;

(viii)        payment to any paying or negotiating bank
(designated or permitted by the terms of the applicable Letter of Credit)
claiming that it rightfully honored or is entitled to reimbursement or
indemnity under Standard Letter of Credit Practice applicable to it; 

(ix)          acting as required or permitted, or failing
to act as permitted, in each case under Standard Letter of Credit Practice
applicable to where it has issued, confirmed, advised or negotiated such Letter
of Credit, as the case may be; 

(x)           honor of a presentation after the
expiration date of any Letter of Credit notwithstanding that a presentation was
made prior to such expiration date and dishonored by Bank if subsequently Bank
or any court or other finder of fact determines such presentation should have
been honored; 

(xi)          dishonor of any presentation that does not
strictly comply or that is fraudulent, forged or otherwise not entitled to
honor; or

(xii)         honor of a presentation that is
subsequently determined by Bank to have been made in violation of
international, federal, state or local restrictions on the transaction of
business with certain prohibited Persons.

6.            REPRESENTATIONS
AND WARRANTIES. 
The Account Party hereby represents and warrants to Bank (all of which
representations and warranties will be repeated as of the date of each new
Application submitted by the Account Party to Bank and as of the date of
Issuance of any Letter of Credit requested in each such Application) as
follows:

(a)           Organization, etc.  The Account
Party is duly organized or formed, validly existing and (to the extent
applicable under the laws of the relevant jurisdiction) in good standing under
the laws of the jurisdiction of its organization or formation, and is duly
qualified or licensed to do business (and in good standing as a foreign
corporation or entity, if applicable) in all jurisdictions in which such
qualification or licensing is required or in which the failure to so qualify or
to be so licensed would have a Material Adverse Effect.

(b)           Power and Authority.  The Account
Party has the requisite power and authority to execute and deliver this
Agreement and each other Credit Document to which it is a party and to perform
and observe the terms and conditions stated herein and therein, and the Account
Party has taken all necessary corporate or other action to authorize its
execution, delivery and performance of each such Credit Document.

 20  

 

(c)           Valid
and Binding Obligation.  This Agreement constitutes, and each other Credit
Document when signed and delivered by the Account Party to Bank will
constitute, its legal, valid and binding obligation, enforceable against it in
accordance with its terms, except as enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting creditors’ rights against the Account Party generally, by general
equitable principles or by principles of good faith and fair dealing, and
assuming that this Agreement and each such other Credit Document have been validly
executed and delivered by each party thereto other than the Account Party.

(d)           No Violation or Breach.  The Account
Party’s execution, delivery and performance of each Credit Document to which it
is a party and the payment of all sums payable by it under each such Credit
Document do not and will not: (i) violate or contravene its memorandum of
association, bye-laws or other organizational documents; (ii) violate or
contravene any order, writ, law, treaty, rule, regulation or determination of
any Governmental Authority, in each case applicable to or binding upon it or
any of its property, the violation or contravention of which would have a
Material Adverse Effect; or (iii) result in the breach of any provision of, or
in the imposition of any lien or encumbrance (except for liens or encumbrances
created under the Credit Documents) under, or constitute a default or event of
default under, any agreement or arrangement to which it is a party or by which
it or any of its property is bound, the contravention of which agreement or
arrangement would have a Material Adverse Effect.

(e)           Approvals.  No authorization,
approval or consent of, or notice to or filing with, any Governmental Authority
is required to be made by the Account Party in connection with the execution
and delivery by the Account Party of any Credit Document to which it is a party
or the Issuance by Bank of any Letter of Credit for the account of the Account
Party pursuant to this Agreement and the related Application, except for those
which have been duly obtained, taken, given or made and are in full force and
effect; and except where failure to obtain the foregoing could not reasonably
be expected to have a Material Adverse Effect.

(f)            Compliance with Laws.  The Account
Party is in compliance with all applicable laws and regulations, except where
the noncompliance with which would not have a Material Adverse Effect, and no
Application, Letter of Credit or transaction of the Account Party under any
Credit Document to which it is a party will contravene any laws, treaties,
rules or regulations of any Governmental Authority, including, without
limitation, any foreign exchange control laws or regulations, U.S. foreign
assets control laws or regulations or currency reporting laws and regulations,
now or hereafter applicable to it, except where the noncompliance with which
would not have a Material Adverse Effect.

(g)           No Default Under Other Agreements. 
The Account Party is not in default under any agreement, obligation or duty to
which it is a party or by which it or any of its property is bound, which would
have a Material Adverse Effect.

(h)           No Arbitration Proceeding or Litigation. 
There is no pending or, to the knowledge of the Account Party, threatened
arbitration proceeding, litigation or action against it which (i) is reasonably
likely to have a Material Adverse Effect or (ii) may affect the legality,
validity or enforceability of this Agreement or the other Credit Documents.

(i)            Anti-Corruption Laws; Anti-Money
Laundering Laws and Sanctions.

 21  

 

(i)            None
of (i) the Account Party or any of its Subsidiaries, or, to the knowledge of
the Account Party and its Subsidiaries, any of their respective directors,
officers, or employees, or (ii) any agent or representative of the Account
Party or any of its Subsidiaries that will act in any capacity in connection
with this Agreement, (A) is a Sanctioned Person or currently the subject or
target of any Sanctions, (B) is controlled by or is acting on behalf of a
Sanctioned Person or (C) is located, organized or resident in a country or
territory that is, or whose government is, the subject of Sanctions, in a
manner that would result in the violation of applicable Sanctions by any party
hereto.

(ii)           The Account Party and its Subsidiaries
have implemented and maintain in effect policies and procedures designed to
ensure compliance by the Account Party and its Subsidiaries and their
respective directors, officers and employees with all applicable
Anti-Corruption Laws, Anti-Money Laundering Laws and Sanctions.

(iii)          The Account Party and its Subsidiaries,
and, to the knowledge of the Account Party and its Subsidiaries, each director,
officer, employee and agent of the Account Party and each such Subsidiary, is
in compliance with all applicable Anti-Corruption Laws, Anti-Money Laundering
Laws and Sanctions in all material respects.

(iv)          No proceeds of any Letter of Credit have
been used, directly or indirectly, by the Account Party or any of its
Subsidiaries or, to the knowledge of the Account Party and its Subsidiaries,
any of its or their respective directors, officers, employees and agents in
violation of Section 7(i).

(j)            Filed All Tax Returns and Paid All
Taxes.  The Account Party has filed all required tax returns, and all
Taxes, assessments and other governmental charges due from it have been fully
paid, except for Taxes which are being contested in good faith or those which
the failure to file or pay would not have a Material Adverse Effect.  The
Account Party has established on its books reserves adequate for the payment of
all federal, state and other income tax liabilities, including those being
contested in good faith.

(k)           Financial Statements.  The financial
statements most recently furnished to Bank by the Account Party, if any, fairly
present in all material respects the financial condition of the Account Party
as at the date of such financial statements and for the periods then ended in
accordance with GAAP (except as disclosed therein and, in the case of interim
financial statements for any fiscal quarter, subject to normal year-end
adjustments and except that footnote and schedule disclosure may be
abbreviated), and there has been no material adverse change in the Account
Party’s business or financial condition or results of operations since the date
of the Account Party’s most recent annual financial statements.

(l)            Collateral.  On the date of
Issuance of any Letter of Credit for the account of the Account Party, both
immediately before and after giving effect to such Issuance, the amount of
Outstanding Letters of Credit does not exceed the Collateral Value of the
Collateral.

(m)          Margin Stock.  Neither the Account
Party nor any Subsidiary thereof is engaged principally or as one of its
activities in the business of extending credit for the purpose of “purchasing” or
“carrying” any “margin stock” (as each such term is defined or used, directly
or indirectly, in Regulation U of the Board of Governors of the Federal Reserve
System).  No part of the proceeds of any Letters of Credit will be used for
purchasing or carrying margin stock or for any purpose which violates, or which
would be inconsistent with, the provisions of Regulation T, U or X of such
Board of Governors.

 22  

 

(n)           No
Material Adverse Effect. There has been no Material Adverse Effect since
December 31, 2019, and there exists no event, condition or state of facts
that could reasonably be expected to result in a Material Adverse Effect.

(o)           Investment Company.  The Account
Party is not an “investment company” or a company “controlled” by an
“investment company” (as each such term is defined or used in the Investment
Company Act).  

7.            AFFIRMATIVE
COVENANTS. 
Until all of the Obligations (other than contingent indemnification obligations
not then due) have been paid and satisfied in full in cash, all Letters of
Credit have been terminated or expired and the Commitment terminated, the
Account Party shall: 

(a)           GAAP Financial Statements.  Deliver
to Bank, in form and detail satisfactory to Bank:

(i)            As soon as available and in any event
within 55 days after the end of each of the first three fiscal quarters of each
fiscal year, beginning with the fiscal quarter ending March 31, 2021, the
Quarterly Statement prepared for its board of directors in accordance with
GAAP, in each case applied on a basis consistent with that of the preceding
quarter or containing disclosure of the effect on the financial condition or
results of operations of any change in the application of accounting principles
and practices during such quarter; and

(ii)           As soon as available and in any event
within 90 days after the end of each fiscal year, beginning with the fiscal
year ending December 31, 2020, the Annual Statement prepared for its board
of directors in accordance with GAAP, in each case applied on a basis
consistent with that of the preceding year or containing disclosure of the
effect on the financial condition or results of operations of any change in the
application of accounting principles and practices during such year.

(b)           Certificates; Other Reports. 
Deliver to Bank:

(i)            at each time financial statements are
delivered pursuant to Section 7(a), a duly completed Officer’s Compliance
Certificate signed by the chief executive officer, chief financial officer,
vice president—finance, principal accounting officer, treasurer or assistant
treasurer of the Account Party, together with a Covenant Compliance Worksheet
reflecting the computation of the respective financial covenants set forth in
such Covenant Compliance Worksheet;

(ii)           promptly upon receipt thereof, copies of
all reports, if any, submitted to the Account Party, or any of its respective
boards of directors by its respective independent public accountants in
connection with their auditing function, including, without limitation, any
management report and any management responses thereto;

(iii)          promptly upon the request thereof, such
other information and documentation required by bank regulatory authorities
under applicable Anti-Money Laundering Laws (including, without limitation, any
applicable “know your customer” rules and regulations and the PATRIOT Act), as
from time to time reasonably requested by Bank; and

(iv)          such other information regarding the
operations, business affairs and financial condition of the Account Party or
any Subsidiary thereof as Bank may reasonably request.

 23  

 

(c)           Notice
of Litigation and Other Matters.  Promptly (but in no event later than ten
(10) days after any Responsible Officer of the Account Party becoming aware
thereof) notify Bank in writing of:

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

(ii)           the commencement of all proceedings and
investigations by or before any Governmental Authority and all actions and
proceedings in any court or before any arbitrator against or involving the
Account Party or any of its respective properties, assets or businesses in each
case that if adversely determined would reasonably be expected to result in a Material
Adverse Effect;

(iii)          any attachment, judgment, lien, levy or
order exceeding the Threshold Amount that has been assessed against the Account
Party or any Subsidiary thereof; and

(iv)          any announcement by A.M. Best of any change
in the Financial Strength Rating of the Account Party.

Each
notice pursuant to Section 7(d) shall be accompanied by a statement of a
Responsible Officer of the Account Party setting forth details of the
occurrence referred to therein and stating what action the Account Party has
taken and proposes to take with respect thereto and shall describe with
particularity any and all provisions of this Agreement and any other Credit
Document that have been breached.

(d)           Collateral. 
Comply with the following:

(i)            Pursuant to the Security Documents and as
collateral security for the payment and performance of its Obligations, the
Account Party shall grant and convey to Bank a security interest in the
Collateral charged and pledged by it, prior and superior to all other liens,
except for liens in favor of the Custodian securing payment of amounts advanced
to settle authorized transactions or pay income or distributions in respect of
Collateral.  The Account Party shall cause the Collateral charged and pledged
by it to be made subject to the Security Documents (in form and substance
reasonably acceptable to Bank) necessary for the perfection of the security
interest in the Collateral and for the exercise by Bank of its rights and
remedies with respect thereto.  The Account Party shall promptly after the date
hereof file a charge against the Collateral with the Bermuda Registrar of
Companies and deliver evidence of such filing to Bank no later than thirty (30)
days after the date hereof.

(ii)           The Account Party shall at all times cause
the Collateral Value of the Collateral pledged by the Account Party to equal or
exceed the amount of Outstanding Letters of Credit at such time.  If on any
date the Outstanding Letters of Credit shall exceed the Collateral Value of the
Collateral pledged by the Account Party, the Account Party agrees to pay or
deliver within three (3) Business Days to the Custodian Collateral having an
aggregate Collateral Value of not less than the amount of such excess, with any
such Collateral to be held in the Account Party’s Custodial Account as security
for all Obligations hereunder.

 24  

 

(iii)          The
Account Party shall deliver to Bank a Collateral Value Certificate, setting
forth the Outstanding Letters of Credit, the fair market value of the
Collateral by category and in the aggregate, the calculation of each Collateral
Value and such other information as Bank may reasonably request (A) not later
than 11:00 a.m. on the Business Day immediately preceding the date on which any
Letter of Credit is to be Issued, (B) within ten (10) Business Days after the
end of each calendar month, (C) at and as of such other times as Bank may
reasonably request and (D) at such other times as the Account Party may desire.

(iv)          The Account Party shall cause the Custodian
to provide to Bank, in a manner and at times consistent with the terms of the
Control Agreement, information with respect to each of its Custodial Accounts,
in a format to be agreed by Bank (acting reasonably), which information shall
provide, without limitation, a detailed list of the assets in each such
Custodial Account (including the amount of cash and a detailed description of
the Collateral (including a breakdown listing the name of each issuer, and the
fair market value of the assets held of such issuer)), the fair market value of
those assets and the pricing source of such valuation.

(e)           Payment of Taxes and Other Obligations. 
Except where the failure to pay or perform such items described in this Section
would not reasonably be expected to have a Material Adverse Effect or impact the
Collateral, the Account Party will pay and perform all taxes, assessments and
other governmental charges that may be levied or assessed upon it or any of its
property; provided, that the Account Party may contest any item described in
this Section in good faith so long as adequate reserves are maintained with
respect thereto in accordance with GAAP.

(f)            Compliance with Laws and Approvals. 
Observe and remain in compliance in all material respects with all applicable
laws and maintain in full force and effect all Governmental Approvals, in each
case applicable to the conduct of its business except where the failure to do
so would not reasonably be expected to have a Material Adverse Effect.

(g)           Maintenance of Books and Records;
Inspection.  (i) maintain adequate books, accounts and records, in which
full, true and correct entries in all material respects shall be made of all
financial transactions in relation to its business and properties, and prepare
all financial statements required under this Agreement, in each case in
accordance with GAAP and in compliance with the requirements of any
Governmental Authority having jurisdiction over it, and (ii) permit employees
or agents of Bank, and after the occurrence and during the continuance of an
Event of Default, Bank, to visit and inspect its properties and examine or
audit its books, records, working papers and accounts and make copies and
memoranda of them, and at its own cost and expense (other than after the
occurrence of an Event of Default), and to discuss its affairs, finances and
accounts with its officers and employees and, upon notice to the Account Party,
the independent public accountants of the Account Party (and by this provision
the Account Party authorizes such accountants to discuss the finances and
affairs of the Account Party), all at such times that will not materially
interrupt or interfere with the operation of the Account Party’s business and
from time to time, upon reasonable notice and during business hours, as may be
reasonably requested; provided that except during the continuance of an Event
of Default Bank shall not exercise such rights described in clause (ii) of this
Section more than once per calendar year.

(h)           Use of Proceeds.  Comply with the
following:

(i)            The Account Party shall use the Letters of
Credit to support insurance obligations, obligations under reinsurance
agreements and retrocession agreements and similar risk obligations and for
general corporate purposes. 

 25  

 

(ii)           The
Account Party shall not request or use any Issued Letter of Credit, (i) in
furtherance of an offer, payment, promise to pay, or authorization of the
payment or giving of money, or anything else of value, to any Person in
violation of any Anti-Corruption Laws, (ii) for the purpose of funding,
financing or facilitating any activities, business or transaction of or with
any Sanctioned Person, or in any Sanctioned Country, except to the extent
permitted for a Person required to comply with Sanctions or (iii) in any manner
that would result in the violation of any Sanctions applicable to any party
hereto.

(i)            Compliance with Anti-Corruption Laws;
Anti-Money Laundering Laws and Sanctions.  Maintain in effect and enforce
policies and procedures designed to ensure compliance by the Account Party, its
Subsidiaries and their respective directors, officers, employees and agents
with all applicable Anti-Corruption Laws, Anti-Money Laundering Laws, and
Sanctions.

(j)            Further Assurances.  At the Account
Party’s cost and expense, the Account Party will execute and deliver to Bank
such additional certificates, instruments and/or documents and take such
additional action as may be reasonably requested by Bank to enable Bank to
Issue any Letter of Credit pursuant to this Agreement and the related
Application, to perfect and maintain the validity and priority of the liens
granted pursuant to the Security Documents, to protect, exercise and/or enforce
Bank’s rights and interests under any Credit Document and/or to give effect to
the terms and provisions of any Credit Document.

8.            FINANCIAL
COVENANTS. 
Until all of the Obligations (other than contingent indemnification obligations
not then due) have been paid and satisfied in full in cash, all Letters of
Credit have been terminated or expired and the Commitment terminated, the
Account Party covenants and agrees to the following:

(a)           Minimum Total Shareholder’s Equity. 
The total shareholder’s equity of the Account Party, determined in accordance
with GAAP, shall be at all times an amount not less $2,143,539,163.00.

(b)           Financial Strength Ratings.  The
Account Party shall at all times maintain a financial strength rating by A.M.
Best Company and shall not permit such rating to be lower than “B++.”

9.            NEGATIVE
COVENANTS. 

(a)           [Reserved].

10.          EVENTS
OF DEFAULT. 
Each of the following shall be an “Event of Default” under this Agreement:

(a)           Failure to Reimburse Draws.  The
failure by the Account Party to reimburse or pay any drawing under any Letter
of Credit or accrued interest thereon on the Due Date therefor.

(b)           Failure to Pay Certain Other Amounts. 
The failure by the Account Party to pay any fee or other amount when due under
or in connection with any Credit Document or any Letter of Credit within three
(3) Business Days after the same shall become due and payable.

(c)           Breach of Representation and Warranty. 
Any representation, warranty, certification or statement made or furnished by
the Account Party under or in connection with any Credit Document or as an
inducement to Bank to Issue a Letter of Credit shall be false, incorrect or
misleading in any material respect when made.

 26  

 

(d)           Failure
to Maintain Collateral Value.  The Account Party shall fail to maintain at
any time Collateral in which Bank shall have a perfected first priority
security interest and having a Collateral Value of not less than the
Outstanding Letters of Credit and such failure shall continue or remain
unremedied for more than the three (3) Business Day period provided for in
Section 7(e)(ii). 

(e)           Failure to Perform or Observe Covenants. 
 

(i)            The Account Party’s failure to perform or
observe any term, covenant or agreement contained in Sections 7(d)(i), 7(i)
or 8; or  

(ii)           The Account Party’s failure to perform or
observe any term, covenant or agreement contained in any Credit Document (other
than those referred to in subsections (a), (b), (c), (d) and (e)(i) of this
Section 10), and with respect to any such failure or breach that by its nature
can be cured, such failure or breach shall continue or remain unremedied for
thirty (30) calendar days after the earlier of (1) Bank’s delivery of written
notice thereof to the Account Party and (2) the Account Party having actual
knowledge that such failure or breach has occurred.

(f)            Insolvency Proceedings, Etc.  The
Account Party institutes or consents to the institution of any proceeding under
any Bankruptcy 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 the Account Party, as the case may be, and the
appointment continues undischarged, undismissed or unstayed for sixty (60)
calendar days; or any proceeding under any Bankruptcy Law relating to the
Account Party or to all or any material part of its property is instituted
without the consent of the Account Party, as the case may be, and continues
undischarged, undismissed or unstayed for sixty (60) calendar days; or an order
for relief is entered in any such proceeding; or the Account Party becomes
unable or admits in writing its inability or fails generally to pay its debts
as they become due.   

(g)           Sale of Assets; Merger;
Dissolution.  There shall occur in one or a series of transactions: (i) the
sale, assignment or transfer of all or substantially all of the assets of the
Account Party; (ii) a merger, amalgamation or consolidation of the Account
Party without the prior written consent of Bank, except that (A) the Account
Party may merge, amalgamate or consolidate with a Subsidiary of the Account
Party so long as the Account Party is the surviving entity in any such
transaction and (B) the Account Party may merge, amalgamate or consolidate with
any Person so long as the Account Party is the surviving entity; or (iii) the
dissolution of the Account Party.

(h)           Credit Documents.  Any provision of any
Credit Document to which the Account Party is a party shall for any reason
cease to be valid and binding or enforceable; or the Account Party shall deny
or disaffirm in writing the enforceability of any provision of any Credit
Document to which it is a party.

(i)            Security Documents.  Any Security
Document to which the Account Party is a party shall for any reason (other than
pursuant to the terms thereof) cease to create in favor of Bank a valid and
perfected first priority security interest in the Collateral of the Account
Party purported to be covered thereby; or Bank shall cease for any reason to
hold a perfected first priority security interest in the Collateral of the
Account Party; or the Account Party or any Person acting on its behalf shall
deny or disaffirm in writing the enforceability of any Security Document.

 27  

 

(j)            Indebtedness
Cross-Default.  The Account Party shall (i) default in the payment of any
Indebtedness (other than the Obligations) the aggregate principal amount
(including undrawn committed or available amounts), or with respect to any
Hedge Agreement, the Hedge Termination Value, of which is in excess of the
Threshold Amount beyond the period of grace if any, provided in the instrument
or agreement under which such Indebtedness was created, or (ii) default in the
observance or performance of any other agreement or condition relating to any
Indebtedness (other than the Obligations) the aggregate principal amount
(including undrawn committed or available amounts), or with respect to any Hedge
Agreement, the Hedge Termination Value, of which is in excess of the Threshold
Amount or contained in any instrument or agreement evidencing, securing or
relating thereto or any other event shall occur or condition exist, the effect
of which default or other event or condition is to cause with the giving of
notice and/or lapse of time, if required, any such Indebtedness to (A) 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 (any applicable grace
period having expired) or (B) be cash collateralized (it being understood that
a pledge of cash collateral by the Account Party to secure a Hedge Agreement as
initial or variation margin does not trigger a violation of this clause (B)).

(k)           Judgment.  One or more judgments,
orders or decrees shall be entered against the Account Party by any court and
continues without having been discharged, vacated or stayed for a period of
thirty (30) consecutive days after the entry thereof and such judgments, orders
or decrees are either (i) for the payment of money, individually or in the
aggregate (not paid or fully covered by insurance as to which the relevant
insurance company has acknowledged coverage), equal to or in excess of the
Threshold Amount or (ii) for injunctive relief and could reasonably be
expected, individually or in the aggregate, to have a Material Adverse Effect.

(l)            Employee Benefit Matters.  Any Lien
shall be imposed on the assets of the Account Party or its Subsidiaries under
ERISA or any foreign laws similar to ERISA governing foreign pension plans.  

11.          REMEDIES.  Upon the
occurrence and during the continuance of any Event of Default:

(a)           Bank may terminate the Commitment and
declare all amounts owed to Bank under this Agreement or any of the other
Credit Documents and all other Obligations, to be forthwith due and payable,
whereupon the same shall promptly become due and payable without presentment,
demand, protest or other notice of any kind, all of which are expressly waived
by the Account Party, anything in this Agreement or the other Credit Documents
to the contrary notwithstanding; provided, that upon the occurrence of an Event
of Default specified in Section 10(f), the Commitment shall be
automatically terminated and all Obligations shall automatically become due and
payable without presentment, demand, protest or other notice of any kind, all
of which are expressly waived by the Account Party, anything in this Agreement
or in any other Credit Document to the contrary notwithstanding. 

 28  

 

(b)           Solely
with respect to the occurrence of an Event of Default under Sections 10(a),
(b), (d), or (f), Bank may (i) demand that the Account Party deposit in the
Custodial Account an amount of cash equal to 103% of the aggregate Outstanding
Letters of Credit to be held and applied to the Obligations and/or (ii)
terminate any or all of the Letters of Credit or give Notices of Non-Extension
in respect thereof, in each case if permitted in accordance with their terms;
provided that upon the occurrence of an Event of Default specified in Section
10(f), the requirement to deliver cash collateralize pursuant to the foregoing
clause (i) in respect of all Outstanding Letters of Credit shall automatically
become due without demand or other notice of any kind, all of which are
expressly waived by the Account Party, anything in this Agreement or in any
other Credit Document to the contrary notwithstanding.  Such cash collateral
shall be applied by Bank to the payment of drafts drawn under such Letters of
Credit, and the unused portion thereof after all such Letters of Credit shall
have expired or been fully drawn upon, if any, shall be applied to repay the
other Obligations.  After all such Letters of Credit shall have expired or been
fully drawn upon and all Obligations shall have been paid in full, the balance,
if any, in such Custodial Account shall be returned to the Account Party.

(c)           Bank may exercise from time to time any of
the rights, powers and remedies available to Bank under any Credit Document to
which the Account Party is a party, under any other documents now or in the
future evidencing or securing the Obligations or under applicable law, and all
such remedies shall be cumulative and not exclusive.  

12.          SUBROGATION.  In the event of an
Event of Default, Bank, at its option, shall be subrogated to the Account
Party’s rights against any Person who may be liable to the Account Party on any
transaction or obligation underlying any Letter of Credit, to the rights of any
holder in due course or Person with similar status against the Account Party,
and to the rights of any beneficiary or any successor or assignee of any
beneficiary.

13.          TERM OF AGREEMENT. This Agreement
shall remain in effect from the Closing Date through and including the date
upon which all Obligations (other than contingent indemnification obligations
not then due) arising hereunder or under any other Credit Document shall have
been indefeasibly and irrevocably paid and satisfied in full, all Letters of
Credit have been terminated or expired and the Commitment has been terminated. 
No termination of this Agreement shall affect the rights and obligations of the
parties hereto arising prior to such termination or in respect of any provision
of this Agreement which survives such termination.

 29  

 

14.          USA
PATRIOT ACT; ANTI-MONEY LAUNDERING LAWS.  Bank hereby notifies
the Account Party that pursuant to the requirements of the PATRIOT Act or any
other Anti-Money Laundering Laws, it is required to obtain, verify and record
information that identifies the Account Party, which information includes the
name and address of the Account Party and other information that will allow
Bank to identify the Account Party in accordance with the PATRIOT Act or such
Anti-Money Laundering Laws.

15.          GOVERNING LAW; UCP; ISP;
STANDARD LETTER OF CREDIT PRACTICE.  Each Credit Document and each Letter of
Credit shall be governed by and construed in accordance with (a) in the case of
each Credit Document (other than the Letters of Credit), the substantive laws
of New York and (b) in the case of each Letter of Credit, the governing law
specified in the applicable Letter of Credit as determined by Bank and the
Account Party (which may include the laws of a particular jurisdiction and the
ISP or UCP, if applicable), which is, as applicable, incorporated herein by
reference into this Agreement and which shall control (to the extent not
prohibited by the laws of New York) in the event of any inconsistent provisions
of such law.  Unless the Account Party specifies otherwise in its Application
for a Letter of Credit, the Account Party agrees that Bank may issue a Letter
of Credit subject to the ISP or UCP.  Bank’s privileges, rights and remedies
under the ISP and UCP, as applicable, shall be in addition to, and not in
limitation of, its privileges, rights, and remedies expressly provided for
herein.  The ISP or UCP, as applicable, shall serve, in the absence of proof to
the contrary, as evidence of Standard Letter of Credit Practice with respect to
matters covered therein.  To the extent permitted by applicable law, as between
the Account Party and Bank, (i) this Agreement shall prevail in case of
conflict between this Agreement, the UCC and/or Standard Letter of Credit
Practice, (ii) the ISP shall prevail in case of conflict between the ISP and
the UCC or other Standard Letter of Credit Practice if the Letter of Credit is
governed by the ISP, and (iii) the UCP shall prevail in case of a conflict
between the UCP and the UCC or other Standard Letter of Credit Practice if the
Letter of Credit is governed by the UCP.  

16.          CONSENT TO JURISDICTION AND
VENUE.  THE
ACCOUNT PARTY HEREBY CONSENTS TO THE EXCLUSIVE JURISDICTION OF ANY STATE COURT
WITHIN NEW YORK COUNTY, NEW YORK OR ANY FEDERAL COURT LOCATED WITHIN THE
SOUTHERN DISTRICT OF THE STATE OF NEW YORK OR ANY APPELLATE COURT THEREOF FOR
ANY PROCEEDING INSTITUTED HEREUNDER OR UNDER ANY OF THE OTHER CREDIT DOCUMENTS,
OR ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT OR ANY OF THE OTHER
CREDIT DOCUMENTS, OR ANY PROCEEDING TO WHICH BANK OR THE ACCOUNT PARTY IS A
PARTY, INCLUDING ANY ACTIONS BASED UPON, ARISING OUT OF, OR IN CONNECTION WITH
ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENT (WHETHER ORAL OR WRITTEN)
OR ACTIONS OF BANK OR PROCEEDING TO WHICH BANK OR THE ACCOUNT PARTY IS A
PARTY.  BANK AND THE ACCOUNT PARTY IRREVOCABLY AGREE TO BE BOUND (SUBJECT TO
ANY AVAILABLE RIGHT OF APPEAL) BY ANY JUDGMENT RENDERED OR RELIEF GRANTED
THEREBY AND FURTHER WAIVES ANY OBJECTION THAT IT MAY HAVE BASED ON LACK OF
JURISDICTION OR IMPROPER VENUE OR FORUM NON CONVENIENS TO THE CONDUCT OF ANY
SUCH PROCEEDING.  BANK AND THE ACCOUNT PARTY IRREVOCABLY AGREE THAT SERVICE OF
PROCESS MAY BE DULY EFFECTED UPON IT BY MAILING A COPY THEREOF, BY CERTIFIED
MAIL, POSTAGE PREPAID, TO IT AT ITS ADDRESS SET FORTH IN SECTION 19
BELOW.  NOTWITHSTANDING THE FOREGOING, NOTHING IN THIS AGREEMENT SHALL AFFECT
THE RIGHT OF ANY PARTY TO SERVE LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY
LAW OR THE RIGHT OF BANK TO BRING ANY ACTION OR PROCEEDING AGAINST THE ACCOUNT
PARTY OR ITS PROPERTIES IN THE COURTS OF ANY OTHER JURISDICTION.  

17.          WAIVER OF JURY TRIAL.  TO THE EXTENT
PERMITTED BY APPLICABLE LAW, THE ACCOUNT PARTY AND BANK KNOWINGLY AND
VOLUNTARILY WAIVE ALL RIGHTS TO TRIAL BY JURY WITH RESPECT TO ANY LITIGATION
BASED ON, ARISING OUT OF, OR RELATING TO ANY CREDIT DOCUMENT OR LETTER OF CREDIT,
OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (ORAL OR WRITTEN) OR
ACTIONS OF THE ACCOUNT PARTY OR BANK WITH RESPECT THERETO.  THIS WAIVER IS A
MATERIAL INDUCEMENT FOR BANK TO ISSUE LETTERS OF CREDIT.

 30  

 

18.          BANKRUPTCY
AND FORFEITURE REINSTATEMENT.  If any consideration transferred to Bank
in payment of, or as collateral for, or in satisfaction of the Obligations,
shall be voided in whole or in part as a result of (a) a subsequent bankruptcy
or insolvency proceeding; (b) any forfeiture or seizure action or remedy; (c)
any fraudulent transfer or preference action or remedy; or (d) any other civil,
criminal or equitable proceeding or remedy, then Bank’s claim to recover the
voided consideration shall be a new and independent claim arising under the applicable
Credit Document and shall be due and payable immediately by the Account Party
that is obligated therefor under the terms of the Credit Documents.

19.          NOTICES.  Unless otherwise
expressly provided herein, all notices, Instructions, approvals, requests,
demands, consents and other communications provided for hereunder
(collectively, “notices”) shall be in writing (including by facsimile or other
electronic transmission approved by Bank).  All notices shall be sent by
regular U.S. mail or certified mail prepaid, by facsimile or other electronic
transmission approved by Bank, by hand delivery, by Federal Express (or other
comparable domestic or international delivery service) prepaid to the
applicable address, facsimile number or electronic mail address set forth on
the signature page hereof in the case of the Account Party.  All notices to
Bank shall be directed to (i) the office of Bank issuing the Letter of Credit
and (ii) if Bank approves of receiving notices by email, to the email address
of Bank provided from time to time by Bank to the Account Party, in each case
with a copy to: Wells Fargo Corporate Banking, 550 South Tryon Street, MAC
D1086-330, Charlotte, NC 28202, Attn: William R. Goley, email:
will.goley@wellsfargo.com.  Bank may, but shall not be obligated to, require
authentication of any electronic transmission.  Notices sent by hand, Federal
Express (or other comparable domestic or international delivery service) or
certified mail shall be deemed to have been given when received; notices sent
by regular U.S. mail shall be deemed to have been received five (5) days after
deposit into the U.S. mail; notices sent by facsimile or other electronic
transmission shall be deemed to have been given when sent and receipt has been
confirmed.  The Account Party or Bank may change its address for notices by
notifying the other of the new address in any manner permitted by this
Section.  Unless otherwise agreed by Bank, Bank in its discretion may accept an
Application or seek or receive Instruction from, or give or send notice to, the
Account Party regarding a Letter of Credit issued for its account, including,
without limitation, any amendment thereto or waiver of any discrepancy
thereunder, and the Account Party shall be bound by and hereby affirms the Instructions
of the other.  The Account Party irrevocably consents that service of process
may be made by registered or certified mail directed to it at the address of
its agent for service of process, Seon Place, 4th floor, 141 Front Street,
Hamilton HM19 Bermuda.   

20.          WAIVER AND AMENDMENTS.  No modification,
amendment or waiver of, or consent to any departure by Bank or the Account
Party from, any provision of any Credit Document will be effective unless made
in a writing signed by the Account Party (in the case of Bank) or Bank (in the
case of the Account Party), and then such waiver or consent shall be effective
only in the specific instance and for the purpose for which given.  No party’s
consent to any amendment, waiver or modification shall mean that such party
will consent or has consented to any other or subsequent request to amend,
modify or waive a term of any Credit Document.  No delay by any party in
exercising any of its rights or remedies shall operate as a waiver, nor shall
any single or partial waiver of any right or remedy preclude any other further
exercise of that right or remedy, or the exercise of any other right or remedy.

 31  

 

21.          SUCCESSORS
AND ASSIGNS. 
Each Credit Document to which the Account Party is a party will be binding on
the Account Party’s successors and permitted assigns, and shall inure to the
benefit of the respective successors and permitted assigns of the Account Party
and Bank.  Except as provided in the last sentence of this Section 21, Bank may
assign its rights and obligations under each Credit Document, including its
rights to reimbursement regarding any Letter of Credit, in whole or in part,
with the Account Party’s consent; provided that the Account Party shall be
deemed to have consented to any such assignment unless it objects by written
notice to Bank within ten (10) Business Days after having received notice
thereof; and, provided further, that the Account Party’s consent to an
assignment to any Person shall not be required if (i) the assignment is to an
affiliate of Bank or (ii) an Event of Default has occurred and is continuing. 
Bank may sell to one or more Persons participations in or to all or a portion
of its rights and obligations under the Credit Documents without the Account
Party’s consent.  Any assignment in violation of this Section 21 shall be
void.  The Account Party shall not assign or transfer any of its interests,
rights or remedies related to any Credit Document, in whole or in part, without
the prior written consent of Bank.  Any Person to whom Bank delegates its
obligation to issue a Letter of Credit must be a bank that is on the List of
Qualified U.S. Financial Institutions maintained by the Securities Valuation
Office of the National Association of Insurance Commissioners.  

22.          SEVERABILITY.  Whenever possible,
each provision of each Credit Document shall be interpreted in a manner as to
be effective and valid under applicable law, but if any provision of any Credit
Document shall be prohibited by or invalid under applicable law, such provision
shall be ineffective only to the extent of such prohibition or invalidity
without invalidating the remainder of such provision or any remaining
provisions of such Credit Document.

23.          ENTIRE AGREEMENT.  This Agreement,
together with the other Credit Documents and any other agreement, document or
instrument referred to herein, constitute the final, exclusive and entire
agreement and understanding of, and supersede all prior or contemporaneous,
oral or written, agreements, understandings, representations and negotiations
between, the parties relating to the subject matter of the Credit Documents,
provided that this Agreement shall not supersede any reimbursement agreement
(however titled) that has been entered into specifically with respect to any
“direct pay” standby letter of credit or other similar standby letter of credit
where the terms of such reimbursement agreement have been drafted to
specifically address the particular attributes of, or the particular
circumstances of the underlying transaction supported by, such standby letter
of credit.

 

 32  

 

ACCOUNT PARTY:

 

EVEREST REINSURANCE (BERMUDA), LTD.

 

By:  /S/ CHRISTOPHER S. DOWNEY

       Name: Christopher S. Downey

       Title:  Managing Director and Chief
Executive Officer

 

Address for Notices:            

 

Seon Place, 4th floor

141 Front Street

Hamilton HM19 Bermuda

 

 33  

 

WELLS FARGO BANK, NATIONAL ASSOCIATION

 

 

By:
    /S/ WILLIAM R. GOLEY

      
Name:             William R. Goley

      
Title:                Managing Director

 

 34  

 

SCHEDULE I

 

COLLATERAL BASE

 

	
  Type of Security

  	
  Advance Rates

  
	
  Cash (denominated in USD) or
  Certificate of Deposit

  	
  100%

  
	
  Mutual Funds

  	 
	
  Listed (on a
  nationally recognized U.S. exchange) Money Market Mutual Funds

  	
  90%

  
	
  U.S. Fixed Income
  Mutual Funds (excluding high yield and tax exempt)

  	
  80%

  
	
  U.S. Government Bills, Notes, and
  U.S. Government Sponsored Agency Securities(1)

  	 
	
  Maturing in 5 years
  or less

  	
  95%

  
	
  Maturing in more
  than 5 years

  	
  90%

  
	
  High Grade U.S. Corporate/Municipal/Structured
  Fixed Income Securities (AA/Aa2 or better)

  	 
	
  Maturing in 5 years
  or less

  	
  90%

  
	
  Maturing in more
  than 5 years

  	
  85%

  
	
  Intermediate Grade U.S.
  Corporate/Municipal/Structured Fixed Income Securities (BBB/Baa2 or better
  but worse than AA/Aa2)(2)

  	 
	
  Maturing in 5 years
  or less

  	
  85%

  
	
  Maturing in more
  than 5 years

  	
  80%

  
	
  Commercial Paper

  	 
	
  A1 or P1 Graded
  Commercial Paper

  	
  85%

  
	
  A2 or P2 Graded
  Commercial Paper

  	
  80%

  

 

Notes:

 

(1)          
U.S. Government Bills/Notes/Sponsored Agencies include: U.S. Treasury Bills,
Notes, and Bonds; U.S. Government Agency and U.S. Government Sponsored
Enterprise (GSE) Securities. Also included are Mortgage-Backed Securities
(MBSs). GSE and MBS securities include Fannie Mae, Freddie Mac, Ginnie Mae,
FHLB System Banks, and Federal Farm Credit Banks.

 

(2)
Securities rated BBB or Baa2 shall not comprise greater than 20% of Collateral
Value.

 

  

 

 35  

 

EXHIBIT A

FORM
OF

OFFICER’S COMPLIANCE CERTIFICATE

THIS CERTIFICATE is
given pursuant to Section 7(c)(i) of the Standby Letter of Credit Agreement,
dated as of February 23, 2021 (as amended, restated, modified or
supplemented from time to time, the “Credit Agreement,” the terms defined
therein being used herein as therein defined), among Everest Reinsurance
(Bermuda), Ltd., a company incorporated and existing under the laws of Bermuda
(the “Account Party”), and Wells Fargo Bank, National Association (the “Bank”).

The undersigned
hereby certifies that:

1.             He or
she is the [Chief Executive Officer] [Chief Financial Officer] [Vice
President—Finance] [Principal Accounting Officer] [Treasurer] [Assistant
Treasurer] of the Account Party.

2.             Enclosed
with this Certificate are copies of the financial statements of the Account
Party and its Subsidiaries as of _____________, and for the [________-month
period] [year] then ended, required to be delivered under Section 7(a) of the
Credit Agreement.  Such financial statements have been prepared in accordance
with GAAP [(subject to the absence of notes required by GAAP and subject to
normal year-end adjustments)]  and present fairly, in all material respects,
the financial condition of the Account Party and its Subsidiaries on a
consolidated basis as of the date indicated and the results of operations of
the Account Party and its Subsidiaries on a consolidated basis for the period
covered thereby.

3.             The
undersigned has reviewed the terms of the Credit Agreement and has made, or
caused to be made under the supervision of the undersigned, a review in
reasonable detail of the transactions and condition of the Account Party and
its Subsidiaries during the accounting period covered by such financial
statements.

4.             The
examination described in paragraph 3 above did not disclose, and the
undersigned has no knowledge of the existence of, any Default or Event of
Default during or at the end of the accounting period covered by such financial
statements or as of the date of this Certificate [, except as set forth below.

Describe here or in a separate attachment any
exceptions to paragraph 4 above by listing, in reasonable detail, the nature of
the Default or Event of Default, the period during which it existed and the
action that Everest has taken or proposes to take with respect thereto].

5.             Attached
to this Certificate as Annex A is a covenant compliance worksheet reflecting
the computation of the financial covenants set forth in Section 8 of the Credit
Agreement as of the last day of the period covered by the financial statements
enclosed herewith.

  

IN WITNESS WHEREOF,
the undersigned has executed and delivered this Certificate as of the _______
day of _____________, ____.

EVEREST
REINSURANCE (BERMUDA), LTD.

By:______________________________________

Name:____________________________________

Title:_____________________________________

 36  

 

 

  

ANNEX A

 

COVENANT COMPLIANCE WORKSHEET

 

A.  Minimum Total Shareholder’s Equity

(Section 8(a) of the Credit Agreement)

 

	
  (1)   Total
  Shareholder’s Equity as of the date of determination

  	
   

  	
   

  	
   

  
	
  a)     Required:

  	
   

  	
   

  	
  $2,143,539,163.00

  
	
  b)    Actual:

  	
   

  	
   

  	
  $        
                  

  

 

 

 

 

 37  

 

B. 
Financial Strength Rating

(Section 8(b) of the
Credit Agreement)

 

	
  (1)   Has
  the Account Party maintained a financial strength rating by A.M. Best Company
  at all times from the date of the most recently delivered Officer’s
  Compliance Certificate to and including the date hereof?

  	
  ___  Yes

  	
  ___  No

  
	
  (2)   Has
  the financial strength rating by A.M. Best Company for the Account Party been
  equal to or better than “B++” at all times during the period described in
  line (1) above?

  	
  ___  Yes

  	
  ___  No

  

 

 

 38  

 

EXHIBIT B

 

FORM OF

COLLATERAL VALUE CERTIFICATE

 

____________, 20__

Wells Fargo Corporate Banking

550 South Tryon Street

MAC D1086-330

Charlotte, NC 28202

Attention: William R. Goley

Ladies and Gentlemen:

Reference is made to
the Standby Letter of Credit Agreement, dated as of February 23, 2021,
among Everest Reinsurance (Bermuda), Ltd., a company incorporated and existing
under the laws of Bermuda (the “Account Party”), and Wells Fargo BaPnk,
National Association (the “Bank”) (as amended or otherwise modified from time
to time, the “Credit Agreement”).  Terms defined in the Credit Agreement are,
unless otherwise defined herein or the context otherwise requires, used herein
as defined therein.

This Collateral Value
Certificate is delivered pursuant to Section 7(e)(iii) of the Credit
Agreement.  The date of this Collateral Value Certificate is _____________,
20__ (the “Certificate Date”).  Set forth on Attachment A is the computation of
the Collateral Value of the Collateral and certain other information required
by Section 7(e)(iii) of the Credit Agreement as of ______________, 20__ (the
“Valuation Date”), calculated in accordance with the definition of “Collateral
Value” contained in the Credit Agreement and the other provisions of the Credit
Agreement (including Schedule I thereto).

The undersigned
hereby certifies that (i) the information on Attachment A correctly sets forth
the Collateral Value (in the aggregate and for each category of Collateral) and
the Outstanding Letters of Credit as of the Valuation Date; (ii) the
Outstanding Letters of Credit do not exceed the aggregate Collateral Value as
of the Valuation Date; and (iii) nothing has come to the attention of the
undersigned to cause the undersigned to believe that the Bank does not have a
first priority perfected Lien on and security interest in the Collateral set
forth on Attachment A as of the Certificate Date.

 

[Signature page to follow]

  

 

 39  

 

 

ACCOUNT PARTY:

 

EVEREST REINSURANCE (BERMUDA), LTD.

 

By:  ____________________________________

       Name:

       Title:

 

 

 40  

 

ATTACHMENT A

 

COLLATERAL VALUE OF THE COLLATERAL

 

	
  Type of Security

  	
  Value

  	
  Advance Rates

  	
  Collateral Value

  
	
  Cash (denominated in USD) or Certificate
  of Deposit

  	
  $________

  	
  100%

  	
  $________

  
	
  Mutual Funds

  	
   

  	 	
   

  
	
  Listed (on a
  nationally recognized U.S. exchange) Money Market Mutual Funds

   

  U.S. Fixed Income
  Mutual Funds (excluding high yield and tax exempt)

  	
  $________

   

  $________

  	
  90%

   

  80%

  	
  $________

   

  $________

  
	
  U.S. Government Bills, Notes, and
  U.S. Government Sponsored Agency Securities(1)

  	
   

  	 	
   

  
	
  Maturing in 5 years
  or less

  	
  $________

  	
  95%

  	
  $________

  
	
  Maturing in more
  than 5 years

  	
  $________

  	
  90%

  	
  $________

  
	
  High Grade U.S. Corporate/Municipal/Structured
  Fixed Income Securities (AA/Aa2 or better)

  	
   

  	 	
   

  
	
  Maturing in 5 years
  or less

  	
  $________

  	
  90%

  	
  $________

  
	
  Maturing in more
  than 5 years

  	
  $________

  	
  85%

  	
  $________

  
	
  Intermediate Grade U.S. Corporate/Municipal/Structured
  Fixed Income Securities (BBB/Baa2 or better but worse than AA/Aa2)(2)

  	
   

  	 	
   

  
	
  Maturing in 5 years
  or less

  	
  $________

  	
  85%

  	
  $________

  
	
  Maturing in more
  than 5 years

  	
  $________

  	
  80%

  	
  $________

  
	
  Commercial Paper

  	
   

  	 	
   

  
	
  A1 or P1 Graded Commercial
  Paper

  	
  $________

  	
  85%

  	
  $________

  
	
  A2 or P2 Graded
  Commercial Paper

  	
  $________

  	
  80%

  	
  $________

  
	
  Total Collateral
  Value

  	
   

  	
   

  	
  $________

  

 

 

 

Notes: 

 

(1)          
U.S. Government Bills/Notes/Sponsored Agencies include: U.S. Treasury Bills,
Notes, and Bonds; U.S. Government Agency and U.S. Government Sponsored
Enterprise (GSE) Securities. Also included are Mortgage-Backed Securities
(MBSs). GSE and MBS securities include Fannie Mae, Freddie Mac, Ginnie Mae,
FHLB System Banks, and Federal Farm Credit Banks.

 

(2)
Securities rated BBB or Baa2 shall not comprise greater than 20% of Collateral
Value.

 

 

 

Outstanding Letters
of Credit

	
  Beneficiary

  	
  Issue Date

  	
  Undrawn 

  Amount

  	
  Unreimbursed Drawings

  
	
   

  	
   

  	
  $________

  	
  $________

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Total Outstanding Letters of Credit

  	
   

  	
  $________

  	
  $________

  

 

Ratio of aggregate Collateral Value to
Outstanding Letters of Credit: ____________

 

 

 42

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