Document:

Stock Purchase Agreement

 Exhibit 10.1 
  
  
 STOCK PURCHASE AGREEMENT 
  
 BY AND BETWEEN 
  
 AMERICAN FOUNDERS FINANCIAL CORPORATION 
  
 AND 
  
 SAGICOR USA, INC. 
  
  
 DATED AS OF JUNE 1, 2005 

  

 Execution Copy 

 
STOCK PURCHASE AGREEMENT 
  
 This STOCK PURCHASE AGREEMENT (this “Agreement”), dated as of June 1, 2005, is entered into by and between AMERICAN FOUNDERS FINANCIAL
CORPORATION, an Arizona corporation (“Seller”), SAGICOR USA, INC., a Delaware corporation (“Buyer”), and, for the limited purpose of fully guaranteeing the performance, payment and all other obligations of Seller
contemplated by this Agreement, VESTA FIRE INSURANCE CORPORATION, an Illinois corporation (“Vesta Fire”), and, for the limited purpose of fully guaranteeing the performance, payment and all other obligations of Buyer contemplated by
this Agreement, SAGICOR LIFE INC. (BARBADOS), a Barbados corporation (“SLIB”). Certain initially capitalized terms used herein are defined in Article 12.  
  
 RECITALS 
  
 A. Seller owns, beneficially and of record, all of the issued and outstanding shares of the capital stock of Laurel Life Insurance Company, a Texas
insurance corporation (“Laurel”), and Laurel owns, beneficially and of record, all of the issued and outstanding shares of the capital stock of American Founders Life Insurance Corporation, a Texas insurance corporation (“AFL”
together with Laurel, the “Insurance Companies”); and 
  
 B. Seller desires to sell, and Buyer desires to purchase, all of the issued and outstanding shares of the capital stock of Laurel (the “Shares”) and the Surplus Debentures (defined in Section 12), on the terms and subject to the
conditions set forth in the Agreement. 
  
 AGREEMENT

  
 NOW THEREFORE, in consideration of the foregoing
recitals and of the representations, warranties, covenants, agreements, promises and conditions contained herein, the adequacy of which is hereby acknowledged, and intending to be legally bound hereby, the parties hereto agree as follows:

  
 ARTICLE 1  
 SALE AND PURCHASE OF SHARES; EXCLUDED ASSETS 
  
 Section 1.1 Shares. On the terms and subject to the conditions set forth in this Agreement, at Closing, Seller agrees to sell, transfer and
assign the Shares and the Surplus Debentures to Buyer, and Buyer agrees to purchase the Shares and the Surplus Debentures from Seller, free and clear of all Liens (the “Share Purchase”). 
  
 Section 1.2 Purchase Price. In consideration for the sale by
Seller to Buyer of the Shares and the Surplus Debentures, Buyer shall pay to Seller on the Closing Date an aggregate purchase price (the “Purchase Price”) equal to the Fifty Eight Million Dollars ($58,000,000) (a) plus the amount by which
AFL’s capital and surplus reflected on AFL’s SAP Statement most recently filed with the Texas Department of Insurance prior to the Closing Date exceeds $31,637,770, or (b) minus the amount by which AFL’s capital and surplus reflected
on AFL’s SAP Statement most recently filed with the Texas Department of Insurance prior to the Closing Date is less than $31,637,770. 
  

					
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 Section 1.3 Payment of Purchase Price. The Purchase Price for the Shares shall be paid by
Buyer to Seller on the Closing Date by delivering: (a) a wire transfer of immediately available funds in the amount of Fifteen Million Dollars ($15,000,000) (the “Escrowed Closing Payment”) to the escrow account provided for in the escrow
agreement attached as Exhibit 1.3 (the “Escrow Agreement”); and (b) a wire transfer of immediately available funds in the amount of Forty Three Million Dollars ($43,000,000) (the “Cash Closing Payment”) to an account designated
by Seller prior to the Closing. 
  
 Section 1.4 Transfer
Taxes and Fees. Seller shall pay all Taxes charged to grantors, transferors or assignors under applicable Law in connection with the transactions provided for herein, together with all other transfer, sales, recording and filing fees
resulting from the transfer of the Shares to Buyer. 
  
 ARTICLE
2  
 CLOSING 
  
 Section 2.1 Time and Place of Closing. The closing of the Share Purchase and the transactions provided for in this Agreement (the
“Closing”) shall take place no later than the last day of the month after all conditions to closing have been fully performed or satisfied (or waived) by the respective parties (the “Closing Date”), or at such other time as the
parties may mutually agree. The place of Closing shall be at the offices of Maynard, Cooper & Gale, P.C., in Birmingham, Alabama, or such other place as may be mutually agreed upon by the parties. 
  
 Section 2.2 Closing Obligations. 
  
 (a) At Closing, Seller will deliver to Buyer: 
  
 (i) Certificates representing the Shares, duly endorsed (or
accompanied by duly executed stock powers), for transfer to Buyer or its designee, free of all encumbrances; 
  
 (ii) The officer’s certificate described in Section 7.1(c) of this Agreement, duly executed by an authorized officer of Seller;

  
 (iii) Copies of (x) the resolutions of the
board of directors of Vesta Insurance Group, Inc., Vesta Fire and Seller and the shareholder of Seller, certified as being correct and complete and then in full force and effect, authorizing the execution, delivery and performance of this Agreement
and the other documents provided for herein, and the consummation of the transactions provided for herein and therein and (y) the charter and bylaws of Seller, certified by the Secretary of Seller as being true, correct and complete as of the
Closing Date; 
  
 (iv) The Surplus Debentures,
together with an assignments thereof to Buyer, duly executed by an authorized officer of Seller. 
  
 (v) Resignations of all directors and officers of AFL and Laurel who are not employees of AFL as of the date of this Agreement;

  

					
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 (vi) Termination with respect to the Insurance Companies of Vesta Insurance Group,
Inc.’s consolidated tax allocation agreement disclosed at Section 3.12(p); 
  
 (vii) The third-party waivers or consents listed on Schedule 3.6; 
  
 (viii) The SAP Statements for any quarterly period ending more than 45 days prior to the Closing Date;

  
 (ix) The Escrow Agreement and any other
Ancillary Agreements contemplated by the parties in connection with this transaction to which Seller is a party; and 
  
 (x) Such other documents or approvals as Seller deems reasonably necessary or as Buyer may reasonably request for the purposes of
consummating or facilitating the consummation or performance of any of the transactions provided for herein or contemplated hereby. 
  
 (b) At Closing, Buyer will deliver to Seller: 
  
 (i) The Cash Closing Payment; 
  
 (ii) The officer’s certificate described in Section 6.1(c) of this Agreement, duly executed by an authorized officer of Buyer;

  
 (iii) Copies of (x) the resolutions of the
board of directors of SLIB and Buyer and the shareholders of Buyer, certified as being correct and complete and then in full force and effect, authorizing the execution, delivery and performance of this Agreement and the other documents provided for
herein, and the consummation of the transactions provided for herein and therein and (y) the charter and bylaws of Buyer, certified by the Secretary of Buyer as being true, correct and complete as of the Closing Date; and 
  
 (iv) The Escrow Agreement and any other Ancillary Agreements
contemplated by the parties in connection with this transaction to which Buyer is a party; 
  
 (v) Such other documents as Seller may reasonably request for the purposes of facilitating the consummation or performance of any of the
transactions provided for herein or contemplated hereby. 
  
 (c)
At Closing, Buyer will deliver the Escrowed Closing Payment to the escrow account pursuant to the terms of the Escrow Agreement. 
  

					
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 ARTICLE 3 
 REPRESENTATIONS AND WARRANTIES OF SELLER 
  
 Seller hereby represents and warrants to Buyer as follows: 
  
 Section 3.1 Organization and Standing; Corporate Power; Minute Books. 
  
 (a) Each of Seller and Insurance Companies is a corporation duly organized, validly existing and in good standing under the laws of the state of its
incorporation and has full corporate power and authority to conduct its business as currently conducted and to own, lease and operate all its properties and assets in the manner currently operated by it. Each of Seller and the Insurance Companies is
duly qualified or licensed to do business as a foreign corporation and is in good standing in each jurisdiction in which the nature of its business or the ownership or leasing of its properties or assets makes such qualification or licensing
necessary, except to the extent that failure to be so qualified or licensed would not, individually or in the aggregate, result in a Material Adverse Effect. 
  
 (b) The minute books of the Insurance Companies have previously been made available to Buyer and accurately reflect in all material respects all formal
actions taken at all meetings and all consents in lieu of meetings of the stockholders and of the boards of directors (including all committees thereof) of the Insurance Companies. The stock certificate books and the stock record books of the
Insurance Companies that have previously been made available to Buyer constitute all of the stock ownership records of the Insurance Companies. Each of the Insurance Companies is not in default under or in violation of any provision of its Articles
of Incorporation or By-Laws. Seller has previously made available to Buyer true and complete copies of the Articles of Incorporation and By-Laws of the Insurance Companies. 
  
 Section 3.2 Authorization. Seller has full corporate power and authority to execute and deliver this Agreement
and to perform its obligations hereunder. Each of Seller and the Insurance Companies has full corporate power and authority to execute and deliver each of the Ancillary Agreements to which it is a party and to perform its obligations thereunder. The
execution and delivery of this Agreement by Seller and the performance by Seller of its obligations hereunder have been duly and validly authorized and approved by all requisite corporate action of Seller and no other acts or proceedings on its part
are necessary to authorize the execution, delivery and performance of this Agreement or the transactions contemplated hereby. The execution and delivery by each of Seller and the Insurance Companies of the Ancillary Agreements to be executed by it
and the consummation of the transactions contemplated thereby have been duly and validly authorized and approved by all requisite corporate action of Seller or the Insurance Companies, as applicable, and no other acts or proceedings on the part of
Seller or the Insurance Companies, as applicable, are necessary to authorize the execution, delivery and performance of the Ancillary Agreements to which each of Seller or the Insurance Companies is a party or to consummate the transactions
contemplated thereby. This Agreement constitutes a legal, valid and binding obligation of Seller, and is and will be enforceable against Seller in accordance with its terms, except (i) as enforcement may be limited by applicable bankruptcy,
insolvency, rehabilitation, moratorium or similar laws affecting creditors’ rights generally, including, without limitation, the effect of statutory or other laws regarding fraudulent conveyances and preferential transfers and (ii) for the
limitations 
  

					
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 imposed by general principles of equity. The foregoing exceptions set forth in clauses (i) and (ii) of this Section 3.2
are hereinafter referred to as the “Enforceability Exceptions.” As of the Closing Date, assuming the due authorization and execution of each of the Ancillary Agreements to which Seller or the Insurance Companies is a party, each such
Ancillary Agreement will constitute a legal, valid and binding obligation of Seller or the Insurance Companies, as applicable, and will be enforceable against Seller or the Insurance Companies, as applicable, in accordance with its terms, subject to
the Enforceability Exceptions. 
  
 Section 3.3 Governmental
Consents and Approvals. Except as set forth in Schedule 3.3 hereto, no consent, approval, authorization, ruling, order of, notice to, or registration or filings with, any Governmental Entity, is required on the part of Seller or the
Insurance Companies in connection with (i) the execution and delivery by Seller of this Agreement, (ii) the execution and delivery by each of Seller or the Insurance Companies of the Ancillary Agreements, or (iii) the consummation by Seller or the
Insurance Companies of the transactions contemplated by this Agreement or the Ancillary Agreements. 
  
 Section 3.4 Stock Ownership; Subsidiaries. 
  
 (a) The authorized capital stock of Laurel consists solely of 1,400,000 shares of Common Stock, of which 700,000 shares are issued and outstanding. The
issued and outstanding shares of capital stock described in the preceding sentence constitute the Shares. Seller owns beneficially and of record all of the Shares and Surplus Debentures, free of any Lien or Stock Restriction of any kind or character
whatsoever. The Shares are not subject to any restriction with respect to their transferability other than those regulatory approvals and consents referred to in Section 3.3. All of the Shares are duly authorized, validly issued, fully paid,
nonassessable and free of any preemptive rights. There is no outstanding option, warrant, right, subscription, call, convertible or exchangeable security or other agreement, instrument, commitment or right of any kind (other than this Agreement)
pursuant to which Seller or the Insurance Companies is obligated to issue, sell, purchase, return or redeem any shares of capital stock of, other securities of, or other ownership interests in, Laurel, and there are no equity securities of Laurel
reserved for issuance for any purpose, nor is there any agreement providing for an amendment to Laurel’s Articles of Incorporation so as to increase the amount of authorized capital stock. There are no outstanding or authorized stock
appreciation, phantom stock, profit participation or similar rights with respect to Laurel. There are no voting trusts, proxies or other agreements or understandings with respect to the voting of the capital stock of Laurel. There are no
restrictions on the ability of Laurel after the Closing to declare and pay dividends, other than those imposed by applicable state laws and regulations. 
  
 (b) The authorized capital stock of AFL consists solely of 4,000,000 shares of Common Stock, of which 2,000,000 shares are issued and outstanding (the
“AFL Shares”). Laurel owns beneficially and of record 2,000,000 of the AFL Shares, free of any Lien or Stock Restriction of any kind or character whatsoever. The AFL Shares are not subject to any restriction with respect to their
transferability other than those regulatory approvals and consents referred to in Section 3.3. All of the AFL Shares are duly authorized, validly issued, fully paid, nonassessable and free of any preemptive rights. There is no outstanding option,
warrant, right, subscription, call, convertible or exchangeable security or other agreement, instrument, commitment or right of any kind (other than this Agreement) pursuant to which Seller or the 
  

					
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 Insurance Companies is obligated to issue, sell, purchase, return or redeem any shares of capital stock of, other
securities of, or other ownership interests in, AFL, and there are no equity securities of AFL reserved for issuance for any purpose, nor is there any agreement providing for an amendment to AFL’s Articles of Incorporation so as to increase the
amount of authorized capital stock. There are no outstanding or authorized stock appreciation, phantom stock, profit participation or similar rights with respect to AFL. There are no voting trusts, proxies or other agreements or understandings with
respect to the voting of the capital stock of AFL. There are no restrictions on the ability of AFL after the Closing to declare and pay dividends, other than those imposed by applicable state laws and regulations. 
  
 (c) Except for AFL, Laurel does not own, directly or indirectly, any
Subsidiaries, and except for portfolio investments made in the ordinary course of business consistent with past practices, there are no corporations, partnerships or other entities or Persons in which the Insurance Companies own, of record or
beneficially, any direct or indirect equity interest or any right (contingent or otherwise) to acquire the same. 
  
 Section 3.5 Actions Pending. Except as set forth on Schedule 3.5: 
  
 (a) There are no Actions pending against the Insurance Companies, their respective businesses, properties or Assets
(including investment assets), or, to the Knowledge of Seller, any current or former officer, Employee or director acting in his or her respective capacity as an officer, Employee or director of any of the Insurance Companies; 
  
 (b) To the Knowledge of Seller, there are no Actions or series of related
Actions threatened against the Insurance Companies, their respective businesses, properties or Assets (including investment assets), or, to the Knowledge of Seller, any current or former officer, Employee or director acting in his or her respective
capacity as an officer, Employee or director of the Insurance Companies that could reasonably be expected to have an adverse effect or series of related adverse effects on the business, Assets, liabilities, condition (financial or otherwise) or
results of operations of the Insurance Companies; and 
  
 (c)
There is no injunction, order, judgment, decree, award or regulatory restriction imposed upon Seller or the Insurance Companies or any of their respective properties or Assets which (i) restricts the ability of any of the Insurance Companies to
conduct its business in the ordinary course of business consistent with past practices or (ii) has had or reasonably could be expected to have, individually or in the aggregate, a Material Adverse Effect. 
  
 Section 3.6 No Conflict or Violation. Except as set forth on
Schedule 3.6, the execution, delivery and performance by Seller of this Agreement do not, and the execution, delivery and performance by Seller or any of the Insurance Companies of the Ancillary Agreements to which it is a party will not, and
the consummation by Seller or any of the Insurance Companies of the transactions contemplated by this Agreement and by such Ancillary Agreements in accordance with the terms and conditions hereof and thereof, will not (i) violate any provision of
the Articles of Incorporation or By-Laws of Seller or any of the Insurance Companies; (ii) result in the creation of any Lien on any of the Shares or the Surplus Debentures or on any of the Assets or properties of the Insurance Companies; (iii)
assuming that the consents and approvals referred to in Section 3.3 are duly obtained, result in the breach of the terms and 
  

					
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 conditions or cause an impairment of any Insurance License of the Insurance Companies; (iv) require the consent or other
action by any Person under, violate or result in the breach of any of the terms of, result in any modification of or loss of a benefit under, accelerate or permit the acceleration of the performance required by, otherwise give any other contracting
party the right to terminate or cancel, or constitute (with or without notice or lapse of time, or both) a default under, any Material Contract to which Seller or any of the Insurance Companies is a party or by or to which Seller or the Insurance
Companies or any of their respective Assets or properties is subject; (v) violate any order, judgment, injunction, award or decree of any Governmental Entity or arbitrator against, or binding upon, or any agreement with, or condition imposed by, any
Governmental Entity or arbitrator with respect to Seller or any of the Insurance Companies; or (vi) assuming that the consents and approvals referred to in Section 3.3 are duly obtained, violate any Law. 
  
 Section 3.7 Licenses and Permits. Each of the Insurance
Companies has all Permits necessary to engage in the life insurance and annuities lines of business in each jurisdiction set forth on Schedule 3.7(a) (collectively, the “Insurance Licenses”). Each of the Insurance Companies has all
other Permits necessary to conduct their businesses in the manner and in the areas in which it is conducting its businesses, which Permits are set forth on Schedule 3.7(a). Seller has delivered to Buyer true, correct and complete copies of
all Insurance Licenses and all other material Permits held by the Insurance Companies (and, at the Closing, Seller will deliver, as part of the books and records, the originals or certified copies of all Insurance Licenses and all other Permits held
by the Insurance Companies). Neither of the Insurance Companies has transacted any insurance business in any jurisdiction requiring it to have an Insurance License or other Permit therefor in which it did not possess such Permit. All such Insurance
Licenses and other Permits are in full force and effect without suspension, revocation, restriction, amendment or nonrenewal, and there are no pending or, to the Knowledge of Seller, threatened suits or proceedings with respect to the suspension,
revocation, restriction, amendment or nonrenewal of any Insurance License or other Permit, and, to the Knowledge of Seller, no event which (whether with notice or lapse of time or both) would result in a suspension, revocation, restriction,
amendment or nonrenewal of any such Insurance License or other Permit has occurred. 
  
 Section 3.8 Contracts. 
  
 (a) Schedule 3.8(a) contains a true and complete list of all the following contracts currently in force or terminated but pursuant to which any of the Insurance Companies continues to have liabilities or receive benefits, in each
case excluding Insurance Contracts, to which either of the Insurance Companies is a party or by which any Assets of the Insurance Companies are bound, as such contracts may have been amended to the date hereof (collectively, the “Material
Contracts”): 
  
 (i) all contracts with any
present or former officer, director or trustee of the Insurance Companies (including, but not limited to, employment contracts and contracts evidencing loans or advances to any such Person or any Affiliate of such Person); 
  
 (ii) all contracts with any Person including, but not
limited to, any Governmental Entity, containing any provision or covenant (A) limiting the ability of the Insurance Companies to engage in any line of business, to sell any products or services, 
  

					
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 to compete with any Person in any geographical area, to do business with any Person or in any location or
to employ any Person or (B) limiting the ability of any Person to compete with, or obtain or provide products or services from or to the Insurance Companies in any line of business or in any geographical area; 
  
 (iii) (A) all contracts relating to the borrowing of money
by the Insurance Companies (other than any the Surplus Debentures and intercompany obligations created in the ordinary course of business) or the direct or indirect guarantee by the Insurance Companies of any obligation of any Person for borrowed
money or other financial obligation of any Person or other liability of the Insurance Companies in respect of indebtedness for borrowed money or other financial obligations of any Person, including, but not limited to, lines of credit or similar
facilities and (B) any contract involving the deferred purchase price of property in excess of $10,000; 
  
 (iv) all contracts (other than Insurance Contracts) with any person containing any provisions or covenant relating to the indemnification
or holding harmless by the Insurance Companies which have had or reasonably could be expected to have, individually or in the aggregate, a Material Adverse Effect; 
  
 (v) all contracts relating to the future disposition (including, but not limited to, restrictions on
transfer or rights of first refusal) of any Assets of the Insurance Companies other than in the ordinary course of business, or for the grant to any person of any preferential rights to purchase or use any Assets of the Insurance Companies other
than, in the case of each of the foregoing, any contracts for the sale of investment assets in the ordinary course of business; 
  
 (vi) any partnership, joint venture, joint marketing, strategic alliance or similar contracts; 
  
 (vii) any form of contract that any of the Insurance
Companies has entered into with a Producer, provided that all contracts entered into with Producers are materially comparable to the forms of Producer contracts set forth on Schedule 3.23; 
  
 (viii) any contract for the provision of any administrative
services with respect to any Insurance Contract, including any such contracts with third party administrators or managing general agents; 
  
 (ix) all outstanding powers of attorney or similar delegations of authority of the Insurance Companies; 
  
 (x) all contracts relating to the acquisition by the
Insurance Companies of any operating business or the capital stock of any other Person entered into on or after January 1, 2000; 
  
 (xi) all contracts under which either of the Insurance Companies has made advances or loans to any other Person other than (1) the Surplus
Debentures and intercompany obligations created in the ordinary course of business and (2) mortgage loans generated in the ordinary course of business; 
  

					
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 (xii) all contracts providing for severance, retention, change of control or other
similar payments; and 
  
 (xiii) all other
contracts (other than (i) contracts regarding the purchase or sale of investment assets entered into in the ordinary course of business, (ii) contracts otherwise required to be set forth on Schedule 3.8(a) with respect to Sections 3.8(i)
through (xii) or Schedule 3.23 and (iii) other contracts which are expressly excluded under any other subsection of this Section 3.8) that (A) involve or are reasonably likely to involve the payment pursuant to the terms of such contracts by
or to the Insurance Companies of $10,000 or more within any 12 month period or $100,000 in the aggregate during the terms of such contracts and are not terminable on 30 days or less notice without the payment of any penalty by, or any other material
adverse consequence to, the Insurance Companies, or (B) are otherwise material to the business of the Insurance Companies. 
  
 (b) Each of the Material Contracts constitutes a legal, valid and binding obligation of each Insurance Company to the extent that it is party thereto,
and, to the Knowledge of Seller, of each other Person that is a party thereto. Each of the Insurance Companies is not, and to the Knowledge of Seller, no other party to such Material Contract is, in material breach or default of any such Material
Contract or, with or without notice or lapse of time or both, would be, in material breach or default of any such Material Contract. None of such Material Contracts have been terminated or threatened in writing to be terminated, except for those
Material Contracts that terminate in the ordinary course. 
  
 (c)
True and complete copies of each of the Material Contracts, including all amendments, supplements and modifications to each Material Contract, have been provided to Buyer. In the case of any Material Contract which is not written, Seller has
provided to Buyer a written description of such Material Contract. 
  
 Section 3.9 Compliance with Law. Except as set forth on Schedule 3.9, to the Knowledge of Seller, each of the Insurance Companies has conducted its business in material compliance with all Law in each jurisdiction in
which it has conducted its business and is in material compliance with the requirements of each applicable Governmental Entity to file reports, registrations, filings or submissions with respect to the conduct of its business in each such
jurisdiction. Since January 1, 2002, neither Seller nor the Insurance Companies has received any written notice of any material violation of Law with respect to the Insurance Companies’ business. 
  
 Section 3.10 Intellectual Property. 
  
 (a) Schedule 3.10(a) contains a list of all patents and patent
applications, registered trademarks and trademarks normally used by Seller or the Insurance Companies with a notice of trademark usage (whether federal, state, common law or otherwise), registered copyrights and software applications (other than
commercially available off-the-shelf software applications which have not been modified as used in the business of the Insurance Companies except as permitted by the relevant license) owned by the Insurance Companies and licensed or otherwise used
by or for the benefit of the Insurance Companies, to the extent such licenses or use are material or necessary to carry on the business of the Insurance Companies, as currently conducted, which list shall include the product names and the licensor
or grantors of use. 
  

					
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 (b) The business and operations of the Insurance Companies as currently conducted do not infringe upon
any Intellectual Property rights of any third party. There are no present infringement suits pending or, to the Knowledge of Seller, threatened infringements or violations by an third party with respect to any Intellectual Property that is owned by
the Insurance Companies. 
  
 (c) Each of Seller and the Insurance
Companies are subject to internal policies and practices regarding the protection of trade secrets and other confidential information and proprietary know-how, ideas and information used or necessary for the businesses of Seller and its Affiliates
(including the Insurance Companies). Each Employee of Seller and the Insurance Companies is notified of such policies and has agreed to be bound by them. To the Knowledge of Seller, no Employee is in breach of any such policies. 
  
 (d) To the Knowledge of Seller, all computer programs owned by the Insurance
Companies and all software that is not owned by the Insurance Companies is free of all viruses, worms, Trojan horses, back doors, spyware, malware and other infections or harmful routines and contains no bugs, errors, or problems in each case that
would be likely to disrupt its operation or have an adverse impact on the operation of other software programs or operating systems. 
  
 (e) The Insurance Companies have complied with and are in compliance with the terms of all privacy policies adopted by the Insurance Companies and
applicable to personal, customer and other information received, processed or maintained by the Insurance Companies. 
  
 (f) Except for software used in the preparation of Tax Returns, there are no computer programs, software tools, data or databases owned by Seller or any
Affiliate or Subsidiary of Seller (other than the Insurance Companies) which is used by, for or in support of, the business of the Insurance Companies. 
  
 Section 3.11 Financial Statements; Liabilities. 
  
 (a) Seller has previously made available to Buyer true, complete and correct copies of the statutory financial statements and all amendments thereto of
the Insurance Companies as audited by PriceWaterhouseCoopers LLP and filed with the Texas Department of Insurance for the years ended December 31, 2004, 2003 and 2002 and the unaudited statutory financial statements as of and for the quarterly
period ended March 31, 2005, together with all exhibits and schedules thereto (collectively, the “SAP Statements”). Each of the SAP Statements presents, in all material respects, the statutory financial condition of the Insurance
Companies, at the respective dates thereof, and the statutory results of operations for the periods then ended in accordance with SAP, applied on a consistent basis by the Insurance Companies throughout the periods indicated except as otherwise
specifically noted therein. 
  
 (b) There are no liabilities or
obligations of the Insurance Companies required to be reflected as liabilities in financial statements prepared in accordance with SAP other than (i) liabilities or obligations reflected or reserved against in the March 31, 2005 balance sheet

  

					
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 included in the March 31, 2005 SAP Statements, not heretofore discharged, or (ii) policyholder benefits payable or other
liabilities arising after March 31, 2005 in the ordinary course of business consistent with past practice and in amounts consistent with past practice, none of which has had or is reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect. All reserve liabilities reflected in the SAP Statements (w) were determined in accordance with commonly accepted actuarial standards consistently applied except as noted therein, (x) were fairly stated in accordance with
sound actuarial principles, (y) met the requirements of the insurance Laws of the state of domicile, and, in the aggregate, each other jurisdiction in which any of the Insurance Companies is licensed to write insurance and (z) reflected or will
reflect, as applicable, the related reinsurance, coinsurance and other similar agreements of the Insurance Companies. 
  
 (c) The Insurance Companies have paid in full or established reserves reflected in the SAP Statements for all guaranty or other similar state governmental
fund assessments required by any Governmental Entity to be paid by them prior to the date of this Agreement. As of the date of this Agreement and except as and to the extent paid prior to March 31, 2005 or reserved against in the SAP Statements, the
Insurance Companies have not received any guaranty fund assessments. 
  
 Section 3.12 Taxes. Except as provided in Schedule 3.12: 
  
 (a) (i) All Tax Returns required to be filed on or before the Closing Date by or with respect to the Insurance Companies have been or will be timely filed (taking into account permitted extensions) with the
appropriate Governmental Entity in the manner prescribed by Law; (ii) such Tax Returns are true, correct and complete in all material respects and will be true, correct and complete in all material respects for the periods covered thereby; (iii)
Seller and the Insurance Companies have timely paid (or there has been paid on their behalf) all Taxes shown as due and payable on any such Tax Return or that are otherwise due and payable, in each case, in the manner prescribed by Law; (iv) no
Liens (other than Permitted Liens) for Taxes on the Shares or the Insurance Companies’ assets exist; (v) neither Seller nor the Insurance Companies has requested nor is any of them currently the beneficiary of any extension of time within which
to file any Tax Return; (vi) as of the date of the SAP Statements, to the extent that any material Tax liabilities and assessments have accrued but not yet become payable, such Tax liabilities and assessments have been reflected as liabilities in
accordance with SAP on the SAP Statements and adequate reserves have been established for the payment thereof and no difference exists between the amount recorded on the SAP Statements and the amount of such Tax liability as determined by the
appropriate Governmental Entity; (vii) no written claim has ever been made by a Governmental Entity in a jurisdiction where any of the Insurance Companies does not file Tax Returns that any of the Insurance Companies is or may be subject to taxation
by that jurisdiction; (viii) there is no action, suit, investigation, audit, claim, administrative or court proceeding, or assessment (“Audits”) pending or, to Seller’s Knowledge, proposed or threatened with respect to Taxes of any of
the Insurance Companies’ or Seller’s Consolidated Group; (ix) all material deficiencies asserted or assessments made as a result of any examination of the Tax Returns of the Seller’s Consolidated Group or the Insurance Companies have
been paid in full; (x) except as required by applicable Law, since December 31, 2003, none of the Insurance Companies has: (A) made or changed any election concerning any Taxes, (B) filed any amended Tax Return, (C) settled any Tax Claim or
assessment, or (D) surrendered any right to claim a 
  

					
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 refund of any Taxes, in each case, to the extent such action would materially affect the Taxes or any Tax benefit of the
Insurance Companies following the Closing Date; (xi) there are no Tax rulings, request for Tax rulings, or Closing Agreements relating to the Insurance Companies’ or Seller’s Consolidated Group which could affect Buyer’s (or any
Affiliate thereof) or the Insurance Companies’ liability for Taxes for any period (or portion thereof) commencing after the Closing Date; (xii) none of the Insurance Companies (or any Person on behalf of the Insurance Companies): (A) has agreed
to or is required to make any adjustments pursuant to Sections 481(a) or 807(f) of the Code (or any predecessor provision) or any similar provision of foreign, state or local law by reason of a change in accounting method initiated by any such
person, (B) has Knowledge that any Governmental Entity has proposed in writing any such adjustment or change in accounting method, or (C) has made any written application pending with any Governmental Entity requesting permission for any change in
accounting method that relates to the business or operations of the Insurance Companies; (xiii) as a result of any agreement with a Governmental Entity, none of the Insurance Companies will be required to include any material item of income in, or
exclude any material Tax credit or item of deduction from, any taxable period beginning on or after the Closing Date; (xiv) no intercompany obligation (as described in Treas. Reg. § 1.1502-13(g)) between the Insurance Companies, on the one
hand, and any other member of Seller’s Consolidated Group (including any of the Insurance Companies), on the other hand, will remain outstanding following the Closing and the Insurance Companies have not engaged in any transaction with Seller
or any of its Affiliates which could result in the recognition of income by the Insurance Companies with respect to such transaction for any period ending on or after the Closing Date; (xv) no power of attorney currently in force has been granted
with respect to any matter relating to the Taxes of the Insurance Companies; (xvi) no indebtedness of the Insurance Companies is “corporate acquisition indebtedness” within the meaning of Code Section 279(b); (xvii) no property of the
Insurance Companies is property that the Insurance Companies or any party to this transaction is or will be required to treat as being owned by another person pursuant to the provisions of Code Section 168(f)(8) (as in effect prior to its amendment
by the Tax Reform Act of 1986) or is tax-exempt use property within the meaning of Code Section 168; (xviii) none of the Insurance Companies has (A) filed a consent pursuant to Code Section 341(f) or (B) agreed to have Code Section 341(f)(2) apply
to any disposition of a subsection (f) asset (as such term is defined in Code Section 341(f)(4)) owned by the Insurance Companies and (xix) except as disclosed in Schedule 3.12, none of the Insurance Companies has been at any time a partner
or member of any entity that is classified as a partnership for U.S. Tax purposes, a joint venture or the holder of a beneficial interest in any trust for any period for which the statute of limitations for any Tax has not expired. 
  
 (b) The Insurance Companies are members of an affiliated group of which
Seller is a member, within the meaning of Section 1504(a) of the Code (the “Seller’s Consolidated Group”). The Insurance Companies became members of the Seller’s Consolidated Group beginning with the tax year beginning on January
1, 2003. Except with respect to any liability under Treasury Regulation Section 1.1502-6 (or any similar provision of state, local or foreign law) that directly results from the Insurance Companies being a member of Seller’s Consolidated Group,
the Insurance Companies will not have as of the Closing Date any liability for Taxes of any other Person (i) as a transferee or successor, (ii) by contract (including any Tax Sharing Agreements), (iii) by operation of Law, or (iv) otherwise.

  

					
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 (c) The Insurance Companies have complied (and until Closing will comply) with all Law relating to the
payment and withholding of Taxes and each of them has withheld and paid all Taxes required to have been withheld and paid in connection with amounts paid or owing to any Employee, independent contractor, creditor, stockholder, foreign person, or
other third party. 
  
 (d) Seller has delivered or made available
to Buyer correct and complete copies of all Tax Returns filed by or relating to Laurel or AFL (separate return included in consolidated returns) or the Seller’s Consolidated Group and all examination reports and other relevant written materials
with respect to Audits (whether pending or concluded or, to Seller’s Knowledge, proposed or threatened) related to the three taxable years ending prior to the Closing Date. 
  
 (e) Neither of the Insurance Companies has engaged in any transaction that may result in the recognition of income by the
Insurance Companies in any Tax period (or portion thereof) beginning after the Closing Date (including, but not limited to, transactions subject to Code Section 355). 
  
 (f) None of the Insurance Companies has executed any waiver or comparable consents regarding any statute of limitations in
respect of Taxes or requested or agreed to any extension of time with respect to a Tax assessment or deficiency. 
  
 (g) None of the Insurance Companies (or Seller with respect to the Insurance Companies) has participated, within the meaning of Treasury Regulation
Section 1.6011-4(c), in (i) any “reportable transaction” within the meaning of Section 6011 of the Code and the Treasury Regulations thereunder (without regard to any cumulative or aggregate effect), (ii) any “confidential corporate
tax shelter” within the meaning of Section 6111 of the Code and the Treasury Regulations thereunder, or (iii) any “potentially abusive tax shelter” within the meaning of Section 6112 of the Code and the Treasury Regulations
thereunder. 
  
 (h) The Insurance Companies each satisfy the
definition of a “life insurance company” for purposes of the Code and all reinsurance contracts entered into by the Insurance Companies are insurance contracts for U.S. federal income tax purposes. 
  
 (i) The insurance reserves set forth in the Tax Returns filed by or including
the Insurance Companies have been determined in all material respects in accordance with Section 807 or 846 of the Code, as applicable. 
  
 (j) To the Knowledge of Seller, with respect to reinsurance contracts to which any of the Insurance Companies is a party, no facts, circumstances or basis
exists under which the IRS could make any reallocation, recharacterization or other adjustment under Section 845(a) of the Code, or make any adjustment arising from a determination that any reinsurance contract had or has a significant tax avoidance
effect under Section 845(b) of the Code. 
  
 (k) None of the
Insurance Companies has any existing policyholder surplus accounts as defined in Code Section 815. 
  
 (l) All Insurance Contracts issued, assumed, modified, exchanged or sold by the Insurance Companies which are subject to Sections 101(f) or 7702 of the
Code qualify (and have 
  

					
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 qualified since issuance) as “life insurance contracts” within the meaning of Sections 101(f) or 7702(a) of the
Code, as applicable. No Life Insurance Contract issued, assumed, modified, exchanged or sold by the Insurance Companies is a “modified endowment contract” within the meaning of Section 7702A of the Code. 
  
 (m) To the Knowledge of Seller, all Annuity Contracts issued, assumed,
modified, exchanged or sold by the Insurance Companies that are subject to Section 72(s) of the Code contain (and have contained since issuance) all of the necessary provisions of Section 72(s) of the Code and all Annuity Contracts that are
represented as qualifying under Sections 130, 403(a), 403(b) or 408(b) of the Code contain (and have contained since issuance) all provisions required for qualification under such sections of the Code. 
  
 (n) All Life Insurance Contracts and Annuity Contracts marketed by the
Insurance Companies, their agents, or any Person from which the Insurance Companies acquired such contract, as, or in connection with, plans that are intended to qualify under sections 401, 403, 408, or 457 of the Code (“Qualified Plans”)
comply (and have complied since issuance) with the requirements of such sections. All Qualified Plans marketed or administered by the Insurance Companies are marketed and administered in compliance with relevant provisions of the Code. 

 
 (o) In providing record keeping and administrative services in the
ordinary course with respect to customers’ Insurance Contracts whether individual or group retirement or deferred compensation plans or arrangements, and with respect to any Life Insurance Contracts or Annuity Contracts issued, assumed,
modified, exchanged or sold by the Insurance Companies as of the Closing Date, the Insurance Companies are in compliance with the applicable administrative requirements of the Code, including sections 72, 401(a), 401(k), 403(b), 408(k), 408(p),
457(b), 345, 647, 7702 and 7702A of the Code and the rules and regulations hereunder, and, to the extent applicable, the requirements of Parts 2, 3 and 4 of Title I of ERISA. 
  
 (p) Other than the Tax Sharing Agreement between the Insurance Companies and the Seller’s Consolidated Group, none of
the Insurance Companies is a party to any Tax Sharing Agreement with any other person or entity. The total tax liability of the Insurance Companies under the Tax Sharing Agreement with the Seller’s Consolidated Group does not exceed $25,000.

  
 Section 3.13 Employee Benefit Matters.

  
 (a) Set forth in Schedule 3.13(a) is a complete and
correct list of any retirement, pension, savings, profit-sharing, bonus, incentive compensation, deferred compensation, stock option or stock compensation, welfare benefit, severance or termination, retiree medical, dental, life or disability
insurance, supplemental retirement, or other material employee benefit plans, programs, or arrangements, including but not limited to “employee benefit plans” within the meaning of Section 3(3) of ERISA (each, a “Plan,” and
collectively, “Plans”) as to which Seller or the Insurance Companies has any liability for current or former employees or directors of the Insurance Companies (the “Covered Employees”). Seller has previously provided to Buyer a
true and correct list of the Covered Employees, along with their current compensation, dates of hire and dates of termination, if applicable. 
  

					
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 (b) Set forth on Schedule 3.13(b) is a complete and correct list of all Plans covering the Covered
Employees that are currently in effect. With respect to all such Plans, true and complete copies of all documents and summary plan descriptions relating to each Plan have heretofore been provided to Buyer. No Plans are maintained or sponsored by the
Seller or Laurel. 
  
 (c) No liability under Subtitle C or D of
Title IV of ERISA has been incurred and not satisfied, and no condition exists that presents a material risk that liability would be incurred by the Insurance Companies, with respect to any ongoing, frozen, or terminated Plan currently or formerly
maintained or contributed to by the Insurance Companies, or any Person that would be now or at the applicable time considered a member of the Insurance Companies’ “controlled group” within the meaning of Section 414(b), 414(c), 414(m)
or 414(o) of the Code or Section 4001(a)(14) of ERISA (an “ERISA Affiliate”), and no withdrawal liability has been incurred and not satisfied under Subtitle E of Title IV of ERISA or is anticipated that could result in a liability to the
Insurance Companies. No Notice of Reportable Event (within the meaning of Section 4043 of ERISA) has been filed or required to be filed for any Plan within the six years preceding the date of this Agreement. No Plan is a “multiemployer
plan” within the meaning of Section 4001(a)(3) of ERISA. Neither Seller nor the Insurance Companies are entering into the transactions contemplated by this Agreement for the principal purpose of evading liability within the meaning of Section
4069 of ERISA. 
  
 (d) No Plan of an ERISA Affiliate has an
“accumulated funding deficiency” (within the meaning of Section 302 of ERISA or Section 412 of the Code), and none of the Insurance Companies or any ERISA Affiliate has any outstanding funding waiver. 
  
 (e) Except as set forth on Schedule 3.13(a), none of the Insurance
Companies has any formal plan or express or implied commitment to employ any Covered Employees or to create any Plan that would be maintained by them or to contribute to or participate in any Plan maintained by any ERISA Affiliate. 
  
 (f) Each Plan that is intended to be qualified under Section 401(a) or
Section 401(k) of the Code has received a favorable determination letter or opinion letter, as applicable, from the Internal Revenue Service, and to the Knowledge of Seller, no event or condition has occurred that would reasonably be expected to
have an adverse effect on the qualified status of any such Plan. Each Plan complies in all material respects with its terms and with the requirements prescribed by any and all Law, including but not limited to the Code and ERISA. 
  
 (g) No liability, claim, investigation, audit, action or litigation has been
incurred, made, commenced or, to the Knowledge of Seller, threatened (other than routine claims for benefits) with respect to any Plan. 
  
 (h) None of Seller or the Insurance Companies, any ERISA Affiliate, any of the Plans, any trust created thereunder, nor, to the Knowledge of Seller, any
trustee or administrator thereof has engaged in a transaction or has taken or failed to take any action in connection with which Seller, the Insurance Companies or any ERISA Affiliate could be subject to any material liability for either a civil
penalty assessed pursuant to Section 409 or 502(i) of ERISA or a tax imposed pursuant to Section 4975, 4976 or 4980B of the Code with respect to any Plans. 
  

					
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 (i) No Plan provides medical, surgical, hospitalization, death or similar benefits (whether or not
insured) for the Covered Employees for periods extending beyond their retirement or other termination of service, other than (i) coverage mandated by Law, (ii) death benefits under any “pension plan” or (iii) benefits the full cost of
which is borne by the Employee or former employee or director of the Insurance Companies (or his beneficiary). 
  
 (j) None of the Insurance Companies (i) has made any payments, (ii) is obligated to make any payments, or (iii) is a party to any agreement, contract or
arrangement that under certain circumstances could obligate it to make any payments that have resulted or will result, separately or in the aggregate, in the payment of any “excess parachute payments” within the meaning of Section 280G of
the Code. 
  
 (k) The consummation of the transactions
contemplated by this Agreement will not (i) entitle any Covered Employee to severance pay, unemployment compensation, retention pay or any other payment from the Insurance Companies, except as expressly provided in this Agreement, or (ii) except to
the extent, if any, required by law, with respect to any Plan that is intended to be qualified under Section 401(a) or 401(k) of the Code, accelerate the time of payment or vesting, or increase the amount of compensation from the Insurance Companies
due to any such Covered Employee. 
  
 Section 3.14 No
Brokers. Other than Sagent Advisors, Inc. and William Blair & Company, all the fees and expenses of which will be paid by Seller, no investment banker, broker, finder or other intermediary has acted directly or indirectly for Seller or
the Insurance Companies or their Affiliates, and the Insurance Companies have not and will not incur any obligation to pay any brokerage or finder’s fee or other commission, in connection with the transactions contemplated by this Agreement.

  
 Section 3.15 Insurance Issued by the Insurance
Companies. 
  
 (a) Since January 1, 2002, all benefits
claimed by any Person under any Insurance Contract have in all material respects been paid (or provision for payment thereof has been made) in accordance with the terms of the contracts under which they arose and such payments were not materially
delinquent and were paid (or will be paid) without fines or penalties, except for any such claim for benefits for which any of the Insurance Companies reasonably believes that there is a reasonable basis to contest payment and is taking such action.

  
 (b) Seller has made available to Buyer true, complete and
correct copies of all underwriting manuals (including each amendment thereto) utilized by the Insurance Companies with respect to the Insurance Contracts. The underwriting standards utilized and rates and rating factors and criteria applied by the
Insurance Companies with respect to the Insurance Contracts outstanding as of the date hereof conformed in all material respects to those contained in the Insurance Companies’ applicable underwriting manuals as in effect at the times such
Insurance Contracts were underwritten and, with respect to any Insurance Contract reinsured in whole or in part, conform in all material respects to the standards and ratings required pursuant to the terms of the related reinsurance, coinsurance,
modified coinsurance or other similar contracts. 
  

					
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 (c) To the Knowledge of Seller: (i) each Producer, at the time such Producer solicited, negotiated,
wrote, sold or produced business for the Insurance Companies, to the extent required by Law as then in effect, was duly and appropriately appointed by the Insurance Companies to act as a Producer for the Insurance Company and was duly and
appropriately licensed as a Producer (for the type of business solicited, negotiated, written, sold or produced by such Producer), in each case, in the particular jurisdiction in which such Producer solicited, negotiated, wrote, sold or produced
such business for the Insurance Companies; (ii) no such Producer violated any material term or provision of any Law as then in effect applicable to any aspect (including, but not limited to, the soliciting, negotiating, marketing, sale or
production) of the Insurance Companies’ products; (iii) no such Producer has materially breached the terms of any agency or broker Contract with or for the benefit of the Insurance Companies (excluding engaging in “twisting”
activities); and (iv) no Producer designated by any of the Insurance Companies as a General Agent has engaged in “twisting” activities. 
  
 (d) Each Insurance Contract policy or certificate form, as well as any related application form, written advertising material (including such material
placed on any of the Insurance Companies’ websites) and rate or rule currently or previously marketed, filed or otherwise utilized by the Insurance Companies, the use or issuance of which requires filing or approval, has been appropriately
filed and, if required, approved by the applicable Governmental Entities in each jurisdiction requiring such filing or approval. To the Knowledge of Seller, all such policies and certificates, forms, applications, advertising materials and rates or
rules are or were, as applicable, in compliance with, and utilized in compliance with Law and within the scope of the approvals received therefor. 
  
 (e) No provision in any in-force Insurance Contract gives the holder thereof or any other Person the right to receive dividends, distributions or other
benefits based on the revenue, earnings or profits of the Insurance Companies, except for traditional participating policies and charter policies. Neither of the Insurance Companies is a party to any agreement providing for the collection of
insurance premiums payable to the Insurance Companies by any other Person other than agreements that allow the Producer to collect the initial premium payment in the form of a remittance made payable to the Insurance Companies. 
  
 (f) Since December 31, 2002, no customer or related group of customers, and
no Producer, in either case which accounted for (i) one percent or more of the aggregate annuity considerations or deposits collected by the Insurance Companies during the 12 month period ended December 31, 2004 or during the years ended December
31, 2003 or 2002, or (ii) one percent or more of the aggregate reserves of the Insurance Companies under Annuity Contracts as reflected on the SAP Statements for the years ended December 31, 2004, 2003 or 2002, has or have at its or their
initiative, terminated or threatened in writing to terminate its or their relationship with the Insurance Companies. 
  
 (g) The financial strength or claims-paying ability of (i) Laurel is rated “B” and (ii) AFL is rated “B,” in each case by A.M. Best
Company, Inc. as of the date hereof. 
  

					
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 Section 3.16 Assets. 
  
 (a) Except for Assets disposed of since March 31, 2005 in the ordinary course of business or otherwise in accordance with
the terms of this Agreement, the Insurance Companies have good and marketable title to all Assets that are disclosed or otherwise reflected in the March 31, 2005 SAP Statements and all Assets acquired thereafter, and all such Assets are owned by the
Insurance Companies free and clear of all Liens, other than Permitted Liens. 
  
 (b) Except as set forth on Schedule 3.16(b), with respect to investment assets disclosed or otherwise reflected in the March 31, 2005 SAP Statements or acquired thereafter: 
  
 (i) to the Knowledge of Seller, all are realizable in
accordance with their terms except to the extent otherwise appropriately reflected as an impairment or an investment reserve in such SAP Statements; 
  
 (ii) there are no Payment Defaults, or to the Knowledge of Seller, any other defaults with respect to which the prospect of a Payment
Default is reasonably likely (as used herein, “Payment Default” shall mean a default (or an event which, with notice or lapse of time or both, would constitute a default) in the payment on any of the bonds, notes, mortgages, debentures and
other evidences of indebtedness that constitute investment assets); 
  
 (iii) Seller does not have any Knowledge of any pending or threatened bankruptcy, reorganization, insolvency, moratorium or similar event or proceeding by any issuer, guarantor or other Person responsible for making
payment with respect to any such investment asset as of the date hereof; and 
  
 (iv) neither Seller, the Insurance Companies nor any Person on its or their behalf, has taken, or omitted to take, any action which would cause any such Investment Asset to be subject to any valid offset, defense or
counterclaim against the right of the Insurance Companies to enforce the terms of such investment asset. 
  
 (c) As fully disclosed on Schedule 3.16(c), the Insurance Companies own, have a valid leasehold interest in or have a valid right under contract to
use, all tangible personal property that is material to the conduct of their respective businesses, free and clear of all Liens, other than Permitted Liens. 
  
 (d) The Assets (other than Intellectual Property which is covered by Section 3.10) owned or leased by the Insurance Companies are sufficient for the
Insurance Companies to conduct their business from and after the Closing without interruption and in the ordinary course of business as they are being conducted on the date hereof. 
  
 Section 3.17 Environmental Matters. Except as set forth on Schedule 3.17: (i) The Insurance Companies
have operated their current and former businesses in compliance, in all material respects, with all applicable Environmental Laws and Permits required thereunder; (ii) there are no events, conditions or circumstances that would result in any action,
claim or allegation by any Person against the Insurance Companies under applicable Environmental Laws or related to Hazardous Substances nor has Seller or the Insurance Companies received any 
  

					
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 notice that any of the Insurance Companies’ businesses or Assets is in material violation of any Environmental Laws
or that any of the Insurance Companies is responsible (or potentially responsible) for the investigation, cleanup, monitoring or other remediation of any Hazardous Substances on, at or under any property; (iii) the Insurance Companies have not
assumed or retained, contractually or by operation of law, from any Person any liability under Environmental Laws or related to Hazardous Substances; and (iv) Seller has made available to Buyer all environmental reports, assessments, audits or
studies of the Insurance Companies in its possession or control. 
  
 Section 3.18 Regulatory Filings. Seller has made available for inspection by Buyer all reports, statements, documents, registrations, filings and submissions made by or with respect to the Insurance Companies with any
Governmental Entity, and reports of examinations issued by any such Governmental Entity, since December 31, 2002, in addition to correspondence with the Florida Insurance Department regarding the suspension of new writings in the State of Florida.
The Insurance Companies have timely filed, or caused to be timely filed, all material reports, statements, documents, registrations, filings, applications or submissions required to be filed by or on behalf of the Insurance Companies with any
Governmental Entity in connection with the business conducted by the Insurance Companies, the Insurance Companies are acting in compliance in all material respects with all such reports, statements, documents, registrations, filings, applications
and submissions, and all required regulatory approvals in respect thereof are in full force and effect. All such reports, statements, documents, registrations, filings, applications and submissions were in compliance in all material respects with
Law when filed or as amended or supplemented and there were no material omissions therefrom, and no material deficiencies have been asserted by any Governmental Entity with respect to such reports, statements, documents, registrations, filings,
applications or submissions that have not been satisfied. 
  
 Section 3.19 Real Property; Leases. 
  
 (a) Schedule 3.19(a) hereto sets forth a summary description of the real property owned by the Insurance Companies (the “Owned Real Property”) all of which is presently in material compliance with all Law relating to the
use and operation of the Owned Real Property (including but not limited to building codes and zoning laws). All material Permits required by any Governmental Entity in order to own and operate the Owned Real Property have been obtained and are in
full force and effect and the certificates of occupancy for the Owned Property permit its current uses in all material respects. The Insurance Companies have good and marketable fee title to all Owned Real Property, free and clear of all Liens,
other than Permitted Liens. 
  
 (b) Schedule 3.19(b) hereto
sets forth a true and complete list and summary description of all real property leased by any of the Insurance Companies (the “Leased Real Property”), including whether any consent of the lessor or other third party is required to
maintain the effectiveness of the Leases in connection with the transactions contemplated hereby. Seller has delivered to Buyer true, correct and complete copies of the Leases. All of such Leases are valid and in full force and effect in all
material respects and all rents and additional rents and other material assessments due to date on each such Lease have been paid. Neither of the Insurance Companies is in default in any material respect under any of such 
  

					
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 Leases and, to the Knowledge of Seller, no lessor is in default under any of such Leases. No material waiver, indulgence
or postponement of the obligations of any of the Insurance Companies under such Leases has been granted by the lessor, and no event has occurred which, with the passage of time or the giving of notice, or both, would constitute a default thereunder
by any of the Insurance Companies. To the Knowledge of Seller, no event has occurred which, with the passage of time or the giving of notice or both, would constitute a default thereunder by any lessor. The Owned Real Property together with the
Leased Real Property constitutes all interests in real property currently used or currently held for use in connection with the business of the Insurance Companies and which are necessary for the continued operation of the business of the Insurance
Companies as it is now being conducted. 
  
 (c) The Insurance
Companies enjoy peaceful and undisturbed possession in all material respects under all Leases, none of which contain any provisions that will materially impair or adversely affect its ability to continue to use the premises leased thereunder as it
currently does, and (i) no notice of violation of any law, ordinance or administrative regulation (including any zoning or building law) has been received by Seller or the Insurance Companies with respect to any Leased Real Property or Owned Real
Property and (ii) none of the Insurance Companies has received notice that any Lease will not be renewed upon its expiration date, or notice that such Lease will be renewed but upon terms and conditions which, taken as a whole, will differ in a
material adverse manner from existing terms under such Lease. If the consents specified in Schedule 3.19(b) are obtained, the continuation, validity and effectiveness of such Leases under the current terms thereof will not be materially
affected by the consummation of the transactions contemplated herein. The property leased or subleased by the Insurance Companies in respect of their respective businesses is in a state of reasonable maintenance and repair, ordinary wear and tear
excepted. To the Knowledge of Seller, neither the whole nor any portion of any real property leased or subleased by the Insurance Companies in respect of their respective businesses is being condemned or otherwise taken by any public authority, nor,
to the Knowledge of Seller, is any such condemnation or taking threatened or contemplated. Neither the whole nor any portion of any real property leased or subleased by the Insurance Companies in respect of their respective businesses has been
damaged in any material respect or destroyed by fire or other casualty. All work required to be performed by the lessor at any premises leased or subleased by the Insurance Companies is materially complete. 
  
 Section 3.20 Conduct of Business; Absence of Certain Changes.
Except as set forth on Schedule 3.20 or as permitted or contemplated by this Agreement, since March 31, 2005, (i) the Insurance Companies have conducted their respective businesses in the ordinary course of business consistent with past
practices and the Insurance Companies have not taken any action that would have constituted a violation of Section 5.1, if Section 5.1 had applied since March 31, 2005 and (ii) the Insurance Companies have not experienced any event or occurrence
outside the ordinary course of business which has or reasonably could be expected to have a Material Adverse Effect; provided, for purposes of clarity, that ordinary course of business events or occurrences include claims made on Insurance Contracts
and changes in the value of investment assets of the Insurance Companies. 
  
 Section 3.21 Insurance Coverage. Schedule 3.21 sets forth a true, complete and correct list of insurance policies and fidelity bonds covering the Insurance Companies, including the amounts and
coverages. All such policies and fidelity bonds are in full force and effect as of 
  

					
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 the date of this Agreement. Neither Seller nor the Insurance Companies nor any of their Affiliates are in default under
any such policy or bond and, to the Knowledge of Seller, no other party to such policy or bond is in default thereof. There are no claims under such insurance policies as to which the insurers have denied liability. 
  
 Section 3.22 Market Conduct. To the Knowledge of Seller,
neither Seller, the Insurance Companies nor the Producers have engaged in any Market Conduct Activities which violate Law or otherwise enable any third party to recover damages from the Insurance Companies. 
  
 Section 3.23 Producers. The Insurance Companies enjoy good
relations, and are not involved in any material dispute, with any of their respective agents, general agents, brokers, reinsurance intermediaries, consultants, producers, financial institutions or other Persons which market its products as of the
date of this Agreement (collectively, “Producers”). Schedule 3.23 contains the standard form of contract with such Producers entered into since December 31, 2001 and compensation schedules for such Producers. Except as set forth on
Schedule 3.23, there are no other compensation agreements with such Producers. 
  
 Section 3.24 Labor and Employment Matters. 
  
 (a) With respect to the employees of the Insurance Companies (the “Employees”): (i) there is no labor strike, dispute, slowdown, stoppage or lockout actually pending or, to the Knowledge of Seller,
threatened against the Insurance Companies, (ii) no union claims to represent the Employees and, to the Knowledge of Seller, there are no current union organizing activities among such Employees, and (iii) none of Seller or the Insurance Companies
is a party to or bound by any collective bargaining, labor union contract or similar agreement with any labor organization applicable to any Employees. 
  
 (b) Except as set forth on Schedule 3.24(b) hereto, with respect to the Employees, to the Knowledge of Seller, each of Seller and the Insurance
Companies is and has been in material compliance with all Law respecting employment and employment practices, terms and conditions of employment, age and sex discrimination, wages and hours, and none of the Insurance Companies has engaged in or is
engaged in any unfair labor practices. Except as set forth on Schedule 3.24(b) hereto, with respect to the Employees, no unfair labor practice complaints have been filed against the Insurance Companies with any Governmental Entity and neither
of the Insurance Companies has received any notice or communication reflecting an intention or threat to file any such complaint. Except as set forth on Schedule 3.24(b) hereto, no Person has made any claim against the Insurance Companies
arising out of any statute, ordinance or regulation relating to discrimination with respect to the Employees, or employment practices with respect to the Employees. 
  
 (c) To the Knowledge of Seller, the Insurance Companies have at all times properly classified each of their respective
Employees as employees and as exempt or non-exempt for overtime pay, and have properly classified each of their independent contractors as independent contractors, as applicable, and have treated each person classified by them consistently with such
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 (d) Schedule 3.24(d) contains a complete list of the each officer and employee of the Insurance
Companies with the following information: employer, department, name, job grade and/or title, current salary, performance review dates, health and life insurance information, and 401(k) plan information. 
  
 Section 3.25 Third Party Reinsurance. Schedule 3.25 sets
forth a true, complete and correct list of (a) all reinsurance and retrocession treaties and agreements in force as of the date of this Agreement to which either of the Insurance Companies is either a ceding or an assuming party, and (b) any such
treaty or agreement that is terminated or expired but under which the Insurance Companies may be either obligated to make payments or eligible to continue to receive benefits (collectively, the “Third Party Reinsurance Agreements”), copies
of which have been made available to Buyer. Each Third Party Reinsurance Agreement is in full force and effect to the respective dates noted on the Schedule and is a valid and binding obligation of the Insurance Companies and, to the Knowledge of
Seller, each other party thereto, subject to the Enforceability Exceptions. The Insurance Companies are not in default in any material respect as to any provision of any Third Party Reinsurance Agreement, and have not failed to meet in any material
respect the underwriting standards required for any business reinsured thereunder, and there are no material outstanding disputes with regard to any Third Party Reinsurance Agreement. No Third Party Reinsurance Agreement contains any provision
providing that the other party thereto may terminate such treaty or agreement by reason of the transactions contemplated by this Agreement or the Ancillary Agreements. 
  
 Section 3.26 Improper Payments. Since December 31, 2002: 
  
 (a) no funds or Assets of the Insurance Companies have been used for any
illegal purpose; 
  
 (b) no unrecorded fund of the Insurance
Companies has been established for any purpose and no unrecorded material Asset of the Insurance Companies exists; 
  
 (c) no accumulation or use of the corporate funds of the Insurance Companies has been made without being properly accounted for on the Books and Records
of the Insurance Companies; 
  
 (d) all payments by or on behalf
of the Insurance Companies have been duly and properly recorded and accounted for on the Books and Records of the Insurance Companies; 
  
 (e) no false or artificial entry has been made on the Books and Records of the Insurance Companies for any purpose or reason whatsoever; 
  
 (f) no payment has been made by or on behalf of the Insurance Companies with
the understanding that all or any part of such payment is to be used for a purpose other than as described in the documents supporting such payment; 
  
 (g) none of the Insurance Companies has made, directly or indirectly, any illegal contribution to a political party or candidate, either domestic or
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 (h) none of the Insurance Companies has made any improper foreign payment as that term is defined in the
Foreign Corrupt Practices Act. 
  
 Section 3.27 Security
Deposits. Schedule 3.27 sets forth a true, complete and correct list of all securities deposited by the Insurance Companies with Governmental Entities as of the date hereof. 
  
 Section 3.28 Bank Accounts. Schedule 3.28 sets forth a
true, complete and correct list of bank accounts and investment accounts maintained by the Insurance Companies, including the name of each bank or other institution, account numbers and a list of signatories to such account. Neither of the Insurance
Companies has commingled any such account with Seller or any Affiliate of Seller. 
  
 Section 3.29 Books and Records. The Books and Records are true, complete and correct in all material respects, have been maintained in accordance with sound business practices and accurately present and
reflect in all material respects all of the transactions and actions therein described. 
  
 Section 3.30 Solvency. Seller is not insolvent, as such term is defined in Title 11 of the United States Code, and will not be insolvent at any time during the 90 days immediately preceding the Closing
Date. 
  
 Section 3.31 Full Disclosure. Neither the
representations or warranties made by Seller in this Agreement or in any Schedule hereto, nor any certificate, report, statement, memorandum or other document furnished or required to be furnished to Buyer pursuant hereto contains any untrue
statement of a material fact or, omits to state a material fact necessary in order to make the statements contained therein or herein not misleading in light of the circumstances in which they were made. 
  
 ARTICLE 4  
 REPRESENTATIONS AND WARRANTIES OF BUYER 
  
 Buyer hereby represents and warrants to Seller as follows: 
  
 Section 4.1 Organization and Authority of Buyer. Buyer is a corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware and, Buyer has all requisite corporate power and corporate authority to execute and deliver this Agreement and to consummate the transactions provided for herein. The execution, delivery and performance of this Agreement and
the consummation of the transactions provided for herein have been duly and validly authorized by all necessary corporate action on the part of Buyer. This Agreement represents a legal, valid and binding obligation of Buyer, enforceable against
Buyer in accordance with its terms (except in all cases as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar Laws affecting the enforcement of creditors’ rights generally and except
that the availability of the equitable remedy of specific performance or injunctive relief is subject to the discretion of the court before which any proceeding may be brought). 
  

					
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 Section 4.2 Consents and Approvals; No Violation. Except as set forth in Schedule
4.2, and except for applicable requirements of the HSR Act, neither the execution and delivery of this Agreement by Buyer, nor the consummation by Buyer of the transactions provided for herein, nor compliance by Buyer with any of the provisions
hereof, will (a) conflict with or result in any breach of any provision of the charter or bylaws of Buyer or any of its respective Affiliates, (b) require any filing by Buyer with, or the obtaining by Buyer of any Consent of, any Governmental
Entity, (c) result in a default (or give rise to any right of termination, cancellation or acceleration) under any of the terms, conditions or provisions of any note, bond, mortgage, indenture, license, agreement, lease or other instrument or
obligation to which Buyer, any of its respective Affiliates or any of their respective assets may be bound, except for such defaults (or rights of termination, cancellation or acceleration) as to which requisite waivers or consents have been
obtained, or (d) violate any order, writ, injunction, decree, statute, rule or regulation applicable to Buyer or any of its respective Affiliates, excluding from the foregoing clauses (b), (c) and (d) such requirements, defaults or violations which
would not have a Material Adverse Effect on Buyer. 
  
 Section
4.3 Litigation. No claim, action, suit, proceeding or investigation is pending or, to the Knowledge of Buyer, threatened against Buyer or any of its respective Affiliates, by or before any Governmental Entity or by or on behalf of any
third-party which, if adversely determined, would have a Material Adverse Effect on any transactions provided for herein. 
  
 Section 4.4 Financing. Buyer has on the date of execution of this Agreement and will have at all times through the Closing Date access to
cash funds sufficient to pay the Purchase Price and consummate the transactions provided for herein. 
  
 Section 4.5 Investment Purpose. Buyer is acquiring the Shares for its own account, for the purpose of investment only, and not with a view
to the resale or distribution of all or any part of the Shares; provided, however, that the foregoing representation shall in no way limit Buyer’s right to dispose of all or any portion of the Shares in one or more transactions registered under
or exempt from the registration requirements of the Securities Act of 1933, as amended, at any time and in Buyer’s sole discretion. 
  
 Section 4.6 Investment Company. Buyer is not an investment company subject to registration and regulation under the Investment Company Act
of 1940, as amended. 
  
 Section 4.7 Broker’s and
Finder’s Fees. Other than LMC Capital LLC, all of the fees and expenses of which will be paid by Buyer, neither Buyer nor any of its Affiliates or representatives has incurred or will incur, directly or indirectly, any liability for
investment banking, brokerage or finders’ fees or agents’ commissions or any similar charges in connection with this Agreement or any transaction provided for herein. 
  
 ARTICLE 5  
 COVENANTS OF THE PARTIES 
  
 Section 5.1
Conduct of the Business of Seller. Except as otherwise provided in or contemplated by this Agreement, the Schedules hereto or on Schedule 5.1, prior to the Closing Date, Seller shall and shall cause each of the Insurance Companies
to (a) conduct the businesses 
  

					
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 of each of the Insurance Companies in accordance with present policies (including existing underwriting standards) and
operate only in the ordinary course of business, (b) use commercially reasonable efforts to preserve each of the Insurance Companies’ business organizations intact and keep available the services of AFL’s present executive officers and key
employees (including not allowing such executive officers and key employees of AFL (other than Bob Nolen) to transfer to Seller or an affiliate of Seller other than AFL without the written consent of Buyer, (c) consistent with the exercise of
reasonable business judgment, retain the goodwill of each of the Insurance Companies and preserve the business relationships of each of the Insurance Companies with policyholders and others, including employees, agents, lenders, suppliers, licensors
and licensees, insurance departments, and others having material business dealings with the Insurance Companies, (d) maintain all existing business permits, licenses and authorizations, (e) perform all of its obligations under all contracts relating
to or affecting its assets or its business, and (f) maintain its books and records in the usual manner consistent with past practice. From and after the date hereof, and prior to the Closing Date, except as otherwise provided in or contemplated by
this Agreement or the Schedules hereto, Seller shall not and shall not cause any of the Insurance Companies to, without the prior written approval of Buyer, which consent shall not be unreasonably withheld or delayed: 
  
 (a) declare, pay or make, or set aside for payment or make, any dividend or
other distribution (whether in cash or in kind) in respect of the capital stock of any of the Insurance Companies or redeem, purchase or otherwise acquire any of its capital stock; 
  
 (b) guaranty the obligation of any person, firm, corporation or other entity, except by the endorsement of negotiable
instruments for deposit or collection in the ordinary course of business; 
  
 (c) mortgage, pledge, lease, or subject to any lien, charge or other encumbrance any of the assets, properties or business of any of the Insurance Companies (except for any mortgage, pledge, lien, charge or other
encumbrance incurred, in the ordinary course of business, in the acquisition of such asset, property or business of such Insurance Company) in an amount in excess of $100,000; 
  
 (d) sell or otherwise transfer any asset, property or business or cancel any debt or claim or waive any right, other than in
the ordinary course of business of such Insurance Company, with a value in excess of $100,000; 
  
 (e) amend or cancel or agree to the amendment or cancellation of any reinsurance agreement, treaty or arrangement; 
  
 (f) permit to lapse any right with respect to any trademark, trade name, copyright or other intangible asset material to such Insurance Company;

  
 (g) permit any material insurance policy naming it as a
beneficiary or a loss payable payee to be canceled or terminated or any of the coverage thereunder to lapse unless simultaneously with such termination or cancellation replacement policies reasonably satisfactory to Buyer are in full force and
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 (h) except for annual pay raises for any individual employee of less than ten percent (10%) made in the
ordinary course of business and in accordance with past practice, grant any general or uniform increase in the rates of pay of employees of such Insurance Company or any increase in salary payable or to become payable to any such employee, or
increase in any manner the compensation or benefits of any of the directors, officers or other employees of such Insurance Company, or make any promises of employment to existing employees that extend by their terms beyond the Closing Date, or hire
or contract with any new or additional employees with annual salaries in excess of $100,000; 
  
 (i) make any material change in any of its present tax or financial accounting methods and practices, except as required by changes in GAAP or SAP, as the case may be; 
  
 (j) amend its charter or bylaws; 
  
 (k) issue, sell or deliver any shares of the capital stock of any of the
Insurance Companies or issue or sell any securities convertible into, or exchangeable for, or options with respect to, or warrants to purchase or rights to subscribe to, any shares of the capital stock of any of the Insurance Companies; 

 
 (l) effect any recapitalization, reclassification, stock dividend, stock
split or like change in capitalization of any of the Insurance Companies; 
  
 (m) merge with or into, consolidate or otherwise combine with, or acquire all or substantially all of the assets of, any other entity; 
  
 (n) enter into, amend or terminate any contract involving payments in excess of $100,000 during any 12-month period (unless
any such contract terminates by its terms prior to Closing); or 
  
 (o) enter into any agreement or understanding to do any of the things described in clauses (a) through (n) above. 
  
 Section 5.2 Access to Information. 
  
 (a) Between the date of this Agreement and the Closing Date, Seller shall (i) give Buyer and its authorized representatives full access at all reasonable
times, upon advance notice, to all books, records, offices and other facilities and properties of each of the Insurance Companies; (ii) permit Buyer to make such inspections thereof as Buyer may reasonably request; and (iii) cause each of the
Insurance Companies’ officers to furnish Buyer with such financial and operating data and other information with respect to the businesses and properties of such Insurance Company as Buyer may from time to time reasonably request; provided,
however, that any such investigation shall be conducted during normal business hours and in such a manner as not to interfere unreasonably with the operation of the business of such Insurance Company. Seller also agrees that it shall and shall cause
the Insurance Companies and their respective officers, employees, agents and representatives, including their respective counsel and independent public accountants (current and former) to cooperate fully with Buyer in connection with such inspection
including, without limitation, making available relevant accountant work papers. Seller also agrees that Buyer may also discuss the business and operations of the Insurance Companies with such regulators, rating agencies, lenders and Producers upon
reasonable advance notice to Seller and the right of Seller to participate in any such discussion. 
  

					
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 (b) From and after the Closing Date, Buyer shall give Seller and its authorized representatives
reasonable access to all books and records of each of the Insurance Companies to the extent necessary for Seller to fully and adequately prepare tax returns and other financial documents and information, or to respond to audits or other similar
inquiries; provided, however, that any such access shall be during normal business hours and in such a manner as not to interfere unreasonably with the operation of the business of any such Insurance Company. 
  
 (c) All information exchanged between Buyer and Seller and any of the
Insurance Companies (and any of their respective representatives), shall be subject to that certain confidentiality agreement previously executed by and between Buyer and Seller or their affiliates (the “Confidentiality Agreement”).

  
 Section 5.3 Best Efforts; Notification of
Changes. Subject to the terms and conditions of this Agreement, each of Seller and Buyer will use its respective commercially reasonable best efforts to take, or cause to be taken, all action, and to do, or cause to be done, all things
necessary, proper or advisable under applicable Laws to consummate the transactions provided for in this Agreement. From the date hereof through the Closing, each party shall give the other party prompt notice after it has obtained knowledge of any
fact or circumstance which renders untrue, incorrect or misleading any of the representations and warranties made by it in this Agreement as of the date such knowledge was obtained and any failure on its part to comply with or satisfy in any
material respect any covenant, condition or agreement which it is to comply with or satisfy under the Agreement or any event, condition or change affecting its ability to perform its obligations hereunder. 
  
 Section 5.4 HSR Act . Seller and Buyer shall fully cooperate
and use their commercially reasonable best efforts to satisfy all requirements under the HSR Act relating to the consummation of the transactions provided for herein (if applicable), including without limitation making all filings required in
connection therewith; provided, however, that it is expressly understood and agreed to by the parties that Buyer shall pay all filing fees associated with the HSR filing (excluding any attorneys’ fees, accountants’ fees or other
consultants’ fees of Seller), if applicable. 
  
 Section
5.5 Consents. Seller and Buyer shall cooperate, and use their respective commercially reasonable best efforts, to make all filings and provide all notifications (including without limitation all filings and notifications required by the
Texas Department of Insurance, the Federal Trade Commission and the Department of Justice) and obtain all licenses, permits, consents, approvals, authorizations, qualifications and orders of Governmental Entities and other third parties necessary to
consummate this Agreement and the transactions provided for herein and to carry on the business of each of the Insurance Companies substantially in the manner as heretofore conducted. Buyer shall file a “Form A” application with the Texas
Department of Insurance within fifteen (15) business days of the date of this Agreement, it being understood that Buyer’s failure to do so shall entitle Seller to terminate this Agreement pursuant to Section 9.1(d). Except as otherwise provided
herein, Seller and Buyer shall pay their own expenses, including without limitation, legal and accounting fees and expenses, incident to obtaining the consents and approvals required by this Section 5.5; it being expressly understood that all such
expenses incurred by or on behalf of the Insurance Companies shall be paid by Seller. 
  

					
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 Section 5.6 Public Announcements. Prior to the Closing Date, Seller and Buyer will consult
with each other before issuing any report, statement or press releases or otherwise making any public statements with respect to this Agreement and the transactions provided for herein, and neither of them shall issue any such report, statement or
press release or make any such public statement prior to such consultation and obtaining the written approval of the other party, except as in the reasonable judgment of the party may be required by Law or the rules of the New York Stock Exchange,
in which case, to the extent reasonably practicable, such party shall advise and confer with the other party before issuing any such report, statement or press release. 
  
 Section 5.7 Covenant to Satisfy. Seller shall use its commercially reasonable best efforts to ensure that the
conditions set forth in Article 7 hereof are satisfied, insofar as such matters are within the control of Seller, and Buyer shall use its commercially reasonable best efforts to ensure that the conditions set forth in Article 6 hereof are satisfied,
insofar as such matters are within the control of Buyer. Seller and Buyer further covenant and agree, with respect to a threatened or pending preliminary or permanent injunction or other order, decree or ruling or statute, rule, regulation or
executive order that would adversely affect the ability of the parties hereto to consummate the transactions provided for herein, to (i) within three (3) days after learning or obtaining any knowledge concerning or relating to such a threat or
event, notify the other party in writing of such a threat or event, and (ii) use all commercially reasonable efforts to prevent or lift the entry, enactment or promulgation thereof, as the case may be. 
  
 Section 5.8 No Solicitation. Prior to the Closing or earlier
termination of this Agreement, Seller will not, and will not authorize or permit any officer, director or employee of Seller or any of the Insurance Companies, or authorize any investment banker, attorney, accountant or other representative retained
by Seller, to directly or indirectly, without the written consent of Buyer, solicit any Acquisition Proposal by any Person or provide any confidential information to or participate in any discussions or negotiations with, any Person concerning an
Acquisition Proposal. Seller shall promptly notify Buyer orally and in writing in the event it receives any inquiry or proposal relating to any such transaction. 
  
 Section 5.9 Litigation Support. In the event and for so long as Buyer or Seller actively is contesting or
defending against any action, suit, proceeding, hearing, investigation, charge, complaint, claim, or demand in connection with (i) any transaction contemplated under this Agreement or (ii) any fact, situation, circumstance, status, condition,
activity, practice, plan, occurrence, event, incident, action, failure to act, or transaction on or prior to the Closing Date involving any of the Insurance Companies, the other party shall cooperate with it and its counsel in the defense or
contest, make available their personnel, and provide such testimony and access to their books and records as shall be necessary in connection with the defense or contest, all at the sole cost and expense of the contesting or defending party (unless
the contesting or defending party is entitled to indemnification therefor under Article 10 below). 
  
 Section 5.10 COBRA. Seller shall remain responsible for any and all liabilities relating to or arising in connection with the
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 of Title I of ERISA (“COBRA Continuation Coverage”) to provide continuation of health care coverage under any
Plan in respect of employees to the extent related to a qualifying event occurring on or before the Closing Date. After the Closing and with respect to any qualifying event occurring after the Closing, Buyer shall be responsible for any and all
COBRA Continuation Coverage with respect to each employee or former employee of any of the Insurance Companies and any of their “qualified beneficiaries” under COBRA. After the Closing, Buyer shall be responsible for any tax or penalty
arising from its failure to comply with the Code or ERISA with regard to such COBRA Continuation Coverage to the extent related to a qualifying event occurring after the Closing. 
  
 Section 5.11 Supplementation or Amendment of Schedules. Each party (a “Notifying Party”) will give
prompt written notice (the “Notice”) to the other party (the “Notified Party”) of (i) any material breach of any Notifying Party’s representations and warranties in Section 3 or Section 4, as the case may be, and (ii) any
facts, events, circumstances or developments that the Notifying Party discovers or is made aware of between the date of this Agreement and the Closing Date, which, if such Notifying Party had discovered or been made aware of on or prior to the date
of this Agreement, would cause the condition set forth in Section 6.1(a) or Section 7.1(a), as the case may be, not to be satisfied. The Notifying Party shall have ten (10) days from the date of such Notice (or such longer period as the parties may
agree in writing) within which to cure such breach (the “Cure Period”). If such breach is not cured within the Cure Period, the Notified Party may, at its option, either: (1) terminate this Agreement by reason of the aforesaid Notice (in
which case such termination shall be the Notified Party’s sole remedy with respect to such breach and it shall not be entitled to seek or recover damages from the Notifying Party resulting from such breach); or (2) waive said breach and proceed
to close on the terms set forth herein. The Notified Party’s election shall be made by written notice to the Notifying Party within five (5) days from the end of the Cure Period. If the Notified Party elects to waive said breach, the Notice
provided by the Notifying Party pursuant to this Section 5.11 will be deemed to have amended the Schedules, to have qualified the representations and warranties contained in Section 3 or Section 4 (as the case may be), and to have cured any
misrepresentation or breach of warranty that might have existed hereunder with respect to the matters disclosed in the Notice given by the Notifying Party. 
  
 Section 5.12 Transition of Bob Nolen; Severance Payments. After a 30-day transition period following the Closing Date, Seller will assume
responsibility for all salary and benefits of Bob Nolen. If Buyer terminates any employee of an Insurance Company during a 90-day transition period beginning on the Closing Date, Seller shall: (i) be responsible for any severance payable with regard
to any such terminated employee of the Insurance Companies pursuant to any agreement entered into prior to the Closing; and (ii) indemnify and hold Buyer harmless from any Buyer Losses resulting from such agreement. With respect to any such
employees terminated after such 90-day transition period, Buyer shall hold harmless Seller or its Affiliates for, and shall assume and pay all of, Seller’s or Seller’s Affiliate’s severance obligations with regard to any such
terminated employee to the extent such obligations are set forth on Schedule 5.12. 
  
 Section 5.13 Selection of Escrow Agent. On or before Closing, the parties shall jointly select an independent financial institution to serve as escrow agent under the Escrow Agreement. 
  

					
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 ARTICLE 6  
 CONDITIONS TO OBLIGATIONS OF SELLER 
  
 Section 6.1 Conditions. The obligations of Seller to consummate the transactions provided for in this Agreement are subject to the fulfillment, at or prior to the Closing, of each of the following
conditions (any or all of which may be waived in whole or in part by Seller if permitted by applicable law): 
  
 (a) Representations and Warranties. The representations and warranties made by Buyer in this Agreement shall be true in all material respects
(except that representations and warranties qualified by materiality shall be true and correct in all respects) when made and at and as of the Closing as though such representations and warranties were made at and as of the Closing, except for (i)
such representations and warranties which expressly relate to an earlier date, (ii) representations and warranties the inaccuracies of which (without taking into account any materiality qualifiers or similar limitations) relate to matters that have
not had and are not likely to have, individually or in the aggregate, a Material Adverse Effect and (iii) changes permitted or contemplated by the terms of this Agreement 
  
 (b) Performance. Buyer shall have performed and complied, in all material respects, with all agreements, obligations,
covenants and conditions required by this Agreement to be so performed or complied with by Buyer at or prior to the Closing. 
  
 (c) Officer’s Certificate. Buyer shall have delivered to Seller a certificate, dated as of the Closing Date, executed by an authorized officer
of Buyer certifying to the fulfillment of the conditions set forth in Sections 6.1(a), 6.1(b) and 6.1(g). 
  
 (d) No Injunction. There shall not be in effect any judgment, order, injunction or decree of any Governmental Entity enjoining consummation of the
transactions provided for herein. 
  
 (e) No Government
Proceeding or Litigation. There shall not be any suit, action, investigation, inquiry or other proceeding instituted, pending or threatened by any Governmental Entity, which seeks to enjoin or otherwise prevent consummation of the transactions
provided for herein. 
  
 (f) Expiration or Termination of HSR
Act Periods. Any waiting periods applicable to the transactions contemplated by this Agreement under the HSR Act shall have expired or been terminated. 
  
 (g) Governmental Approvals. All Consents from Governmental Entities, including without limitation all insurance regulatory agencies, necessary to
permit Seller to consummate the transactions provided for herein shall have been obtained, and such consents shall be subject to no conditions other than conditions customarily imposed by insurance regulatory agencies in connection with similar
acquisitions. 
  
 (h) Third Party Consents. All consents or
waivers of third parties materially necessary for the consummation of the transactions contemplated by this Agreement shall have been obtained. 
  

					
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 (i) Designation of 401(k) Trustee. At the Closing, Buyer shall execute a document in a form
acceptable to Seller designating a new trustee for the American Founders Life Insurance Company Retirement Savings Plan. 
  
 ARTICLE 7  
 CONDITIONS TO
OBLIGATIONS OF BUYER 
  
 Section 7.1
Conditions. The obligations of Buyer to consummate the transactions contemplated by this Agreement are subject to the fulfillment at or prior to the Closing of each of the following conditions (any or all of which may be waived in whole
or in part by Buyer if permitted by applicable law): 
  
 (a)
Representations and Warranties. The representations and warranties made by Seller in this Agreement shall be true in all material respects (except that those qualified as to materiality shall be true and correct in all respects) when made and
at and as of the Closing as though such representations and warranties were made at and as of the Closing, except for (i) such representations and warranties which expressly relate to an earlier date, (ii) representations and warranties the
inaccuracies of which (without taking into account any materiality qualifiers or similar limitations) relate to matters that have not had and are not likely to have, individually or in the aggregate, a Material Adverse Effect and (iii) changes
permitted or contemplated by the terms of this Agreement. For purposes of clarity, subject to Section 5.11, Buyer shall proceed to Closing despite a failure of the conditions set forth above, but only if all such breaches of representations or
warranties, in the aggregate, have not had and are not likely to have a Material Adverse Effect. 
  
 (b) Performance. Seller shall have performed and complied, in all material respects, with all agreements, obligations, covenants and conditions
required by this Agreement to be so performed or complied with by it at or prior to the Closing. 
  
 (c) Officer’s Certificate. Seller shall have delivered to Buyer a certificate, dated as of the Closing Date, executed by an authorized officer
of Seller certifying to the fulfillment of the conditions set forth in Sections 7.1(a), 7.1(b) and 7.1(g). 
  
 (d) No Injunction. There shall not be in effect any judgment, order, injunction or decree of any Governmental Entity enjoining consummation of the
transactions provided for herein. 
  
 (e) No Government
Proceeding or Litigation. There shall not be any suit, action, investigation, inquiry or other proceeding instituted, pending or threatened by any Governmental Entity which seeks to enjoin or otherwise prevent consummation of the transactions
provided for herein. 
  
 (f) Expiration or Termination of HSR
Act Periods. Any waiting periods applicable to the transactions contemplated by this Agreement under the HSR Act shall have expired or been terminated. 
  

					
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 (g) Governmental Approvals. All Consents from Governmental Entities, including without limitation
all insurance regulatory agencies, necessary to permit the Buyer to consummate the transactions provided for herein shall have been obtained. 
  
 (h) Admitted Assets of AFL. The amount of the Admitted Assets of AFL determined as at the Closing in strict compliance with SAP is no less than
$480,500,000. 
  
 (i) Material Adverse Effect. Except as
specifically authorized in this Agreement, there shall not have occurred since March 31, 2005 a Material Adverse Effect or any change, event or occurrence which would reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect. Without limiting the generality of the foregoing, any downgrade in rating of any Insurance Company by A. M. Best shall constitute a Material Adverse Effect. 
  
 ARTICLE 8 
 OTHER AGREEMENTS 
  
 Section 8.1
Failure to Close. 
  
 (a) Buyer expressly agrees to
consummate the transactions provided for herein upon completion of all conditions to Closing (unless waived as permitted by applicable law) and shall not take any action reasonably calculated to prevent the Closing and shall not unreasonably delay
any action reasonably required to be taken by it to facilitate the Closing. 
  
 (b) Seller expressly agrees to consummate the transactions provided for herein upon completion of all conditions to Closing (unless waived as permitted by applicable law) and shall not take any action reasonably
calculated to prevent the Closing and shall not unreasonably delay any action reasonably required to be taken by it to facilitate the Closing. 
  
 Section 8.2 Certain Tax Matters. 
  
 (a) Responsibility for Insurance Companies Tax Returns. Buyer is responsible for preparing and filing all Tax Returns with respect to the Insurance
Companies for periods that end following the Closing Date. Buyer agrees to provide Seller with copies of any Tax Returns prepared by Buyer prior to filing such returns if such Tax Returns relate to periods prior to the Closing. Any refunds in
respect of Tax Returns with respect to the Insurance Companies filed for all periods commencing prior to and including the Closing Date shall be for the account of Seller unless any such refunds are carried as an asset by the Insurance Companies on
the Closing Date. Any refunds in respect of such Tax Returns filed for all periods after the Closing Date and ending thereafter shall be for the account of the Insurance Companies. 
  
 (b) Tax Liability. Seller shall be solely liable for, shall pay and shall protect, defend, indemnify and hold
harmless the Insurance Companies and Buyer from and against (i) except to the extent that any Tax liabilities are reflected in each of the Insurance Companies’ most recently filed SAP Statement, all Taxes payable with respect to the Insurance
Companies (including without limitation those resulting from any Tax Sharing Agreement) for all periods prior to and including the Closing Date, and Taxes due by any of the Insurance Companies arising out of any transaction that is undertaken at the
direction of or for the benefit of Seller, and (ii) all Taxes 
  

					
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 (including Taxes imposed on the holders of any insurance policy or annuity) incurred by Buyer, any Affiliate of Buyer, or
the Insurance Companies resulting from, arising out of or based upon an inaccuracy or breach by Seller of any representation or warranty in Section 3 or any Ancillary Agreement or any covenant or agreement contained in or provided in this Agreement
or any Ancillary Agreement. 
  
 (c) Insurance Company
Taxes. The parties agree that the Insurance Companies will be required to file a full year Tax Return for the twelve month period from January 1, 2005 through December 31, 2005, and the Insurance Companies will be responsible for the payment of
all Taxes due and owing for such period except as otherwise provided herein. 
  
 (d) Participation in Tax Examinations. Buyer and Seller shall provide to each other prompt notice of any audit or similar investigation or proceeding in which the IRS or any other Governmental Entity makes or
proposes to make a Tax adjustment to any Tax period ending on or before the Closing Date. Seller shall control any such proceeding; provided that Buyer or its representative shall have the right, at its expense, to participate in any such audit or
similar investigation. Seller agrees that it will not settle, compromise or agree to any Tax adjustment without the prior written consent of Buyer, which consent shall not be unreasonably withheld. 
  
 (e) Further Actions. Seller shall not cause to be filed any amended
Tax Return if such Tax Return results in a Tax detriment to Buyer or to the Insurance Companies unless Buyer consents or Seller pays to Buyer the full amount of such expected detriment and agrees in writing to indemnify Buyer against any other
detriment arising out of such amended Tax Return. Buyer and the Insurance Companies shall have the right to carry back the Tax attributes of the Insurance Companies to periods ending on or before the Closing, provided Seller gives written consent or
the Insurance Companies as a matter of Law must first carry back such Tax attributes to pre-Closing periods before Tax attributes can be carried forward and Buyer agrees to indemnify Seller for any Tax detriment that is a direct result of such carry
back. 
  
 (f) Mutual Cooperation. As soon as practicable,
but in any event within fifteen (15) days after either party’s request, the other party shall deliver such information and other data relating to the Tax Returns and Taxes of any of the Insurance Companies as in each case shall have been
reasonably requested in order to enable such party to (i) cause the completion and filing of all Tax Returns for which it has responsibility or liability under this Agreement, (ii) respond to audits or other inquiries by any taxing authorities with
respect to any Tax Returns or taxable periods for which it has any responsibility or liability under this Agreement or (iii) otherwise satisfy its accounting or tax requirements. 
  
 (g) Resolution of Disagreements. If Seller and Buyer disagree as to the amount of Taxes for which each is liable
under this Agreement, Seller and Buyer shall promptly consult each other in an effort to resolve such dispute. If any such dispute cannot be resolved within 45 days after the initial date of consultation (as evidenced by the earliest dated written
notice of such dispute), Seller and Buyer shall use their reasonable best efforts to cause such dispute to be resolved by an independent third party mutually agreeable to each party. 
  
 (h) Indemnification Adjustments. In the event any audit or similar proceeding results in adjustments which would
render any representations made by Seller in Section 3.12 of this 
  

					
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 Agreement inaccurate, and such inaccuracy is the basis for a claim of indemnification under Section 10.2 of this
Agreement, any Loss claimed by Buyer as a result of such adjustment shall be offset by any Tax benefit realized by Buyer or its affiliates as a result of such adjustment. Any such Tax benefit shall be equal to the amount by which the taxable income
of Laurel and its subsidiaries (including AFL) is or will be reduced in any past, present or future period during which Buyer is responsible for Taxes, as a result of the adjustment in issue, without regard to any indemnification payment that may be
made for this purpose. 
  
 ARTICLE 9  
 TERMINATION, AMENDMENT AND WAIVER 
  
 Section 9.1 Termination. This Agreement may be terminated and the transactions provided for herein may be abandoned upon notice by the
terminating party to the other party: 
  
 (a) by mutual written
consent of Seller and Buyer; 
  
 (b) by either party, if any
order, injunction or decree of a Governmental Entity shall be in effect at the Closing which restrains or prohibits the transactions contemplated hereby or if any suit, action, investigation, inquiry or legal or administrative proceeding shall be
pending or threatened at the Closing which has been initiated by a Governmental Entity which challenges consummation of the transactions contemplated hereby; 
  
 (c) by Buyer, if (i) Seller has within the then previous ten (10) business days given or was required to have given Buyer any notice pursuant to Section
5.7 above and (ii) the development that is the subject of the notice has had or could have a Material Adverse Effect on the Insurance Companies or Seller’s ability to indemnify Buyer hereunder; 
  
 (d) by Seller, if (i) Buyer fails to file a “Form A” application
with the Texas Department of Insurance within fifteen (15) business days of the date of this Agreement, or (ii) (A) Buyer has within the then previous ten (10) business days given or was required to have given Seller any notice pursuant to Section
5.7 above and (B) the development that is the subject of the notice has had or could have a Material Adverse Effect on Buyer’s ability to consummate the Share Purchase or other transactions provided for in this Agreement; or 
  
 (e) by either party, if the transactions contemplated by this Agreement shall
not have been consummated on or prior to September 30, 2005, unless such failure of consummation shall be due to the failure of the party seeking such termination to perform or observe in all material respects the covenants and agreements hereof to
be performed or observed by such party. 
  
 Section 9.2
Procedure and Effect of Termination. In the event of the termination and abandonment of this Agreement pursuant to Section 9.1 of this Agreement, this Agreement shall become void and have no effect, except that the provisions of this
Section 9.2 and Article 10 and Section 5.2(c) of this Agreement shall survive any such termination and abandonment. Notwithstanding the preceding sentence or any other provision in this Agreement to the contrary, upon termination of this Agreement
pursuant to Section 9.1 or in the event either party fails to complete the Share Purchase or the other transactions provided for in this Agreement in breach of its obligations hereunder, Seller will remain liable to Buyer for any breach by Seller in
the performance of any of its covenants, agreements, duties or obligations arising under this 
  

					
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 Agreement existing at the time of such termination, and Buyer will remain liable to Seller for any breach by Buyer in the
performance of any of its covenants, agreements, duties or obligations arising under this Agreement existing at the time of termination, and Seller or Buyer may seek remedies or damages against the other with respect to any such breach as are
provided in this Agreement or as are otherwise available in law or equity. 
  
 Section 9.3 Amendment, Modification and Waiver. This Agreement may be amended, modified or supplemented at any time by written agreement of Seller and Buyer. Any failure of Seller or Buyer to comply with
any term or provision of this Agreement may be waived by the other party at any time by an instrument in writing signed by or on behalf of such other party, but such waiver or failure to insist upon strict compliance with such term or provision
shall not operate as a waiver of, or estoppel with respect to, any subsequent or other failure to comply. No delay on the part of any party in exercising any right, power, remedy or privilege nor any partial exercise of same shall preclude any
further exercise thereof or the exercise of any other such right, remedy, power or privilege. 
  
 ARTICLE 10  
 SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION

  
 Section 10.1 Survival of Representations, Warranties
and Covenants. 
  
 (a) Notwithstanding any right of Buyer
to investigate the affairs of the Insurance Companies and notwithstanding any knowledge of facts determined or determinable by Buyer pursuant to such investigation, Buyer has the right to rely upon the representations, warranties, covenants and
agreements of Seller contained in this Agreement. Notwithstanding any right of Seller to investigate the affairs of Buyer and notwithstanding any knowledge of facts determined or determinable by Seller pursuant to such investigation, Seller has the
right to rely upon the representations, warranties, covenants and agreements of Buyer contained in this Agreement. Except for the representations and warranties contained in Sections 3.12 (Taxes) and 3.13 (Employee Benefit Matters), all
representations and warranties made by Seller or Buyer in Articles 3 and 4 of this Agreement or in any document, certificate, Schedule or instrument delivered or executed in connection herewith shall survive the Closing for the period of 540 days
after the Closing Date. The representations and warranties in Sections 3.12 (Taxes) and 3.13 (Employee Benefit Matters) shall survive the Closing until 30 days after the expiration of all relevant statutes of limitations (including all periods of
extension, whether automatic or permissive). The representations and warranties contained in this Agreement shall expire on the last day of the applicable survival period set forth above and all claims for inaccuracy or breach of said
representations and warranties will be deemed waived unless written notice of the inaccuracy or breach thereof shall have been given to the breaching party prior to the expiration of the applicable survival period, in which event such representation
or warranty shall survive to the extent of the claim referred to in the notice until such claim has been resolved. Notwithstanding the foregoing, no time limits shall be applicable with regard to any Action listed on Schedule 10.2.

  
 (b) All covenants and agreements made by the parties to this
Agreement which contemplate performance following the Closing Date shall survive the Closing Date. All other covenants and agreements shall not survive the Closing Date and shall terminate as of the Closing to the extent that such covenants were
performed in accordance with their terms. 
  

					
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 Section 10.2. Obligation to Indemnify. 
  
 (a) Subject to the expiration of the representations and warranties of the
parties as provided in and the limitations set forth in this Article 10, Seller agrees to indemnify, defend and hold harmless Buyer and its Affiliates (including, after the Closing, the Insurance Companies), and their respective directors, officers,
employees, agents, representatives, successors and assigns, without duplication (the “Buyer Indemnified Parties,” and individually a “Buyer Indemnified Party”), from and against all liabilities including, without limitation, all
costs, expenses, fines, orders, penalties and reasonable outside attorneys’ fees and disbursements (collectively, “Buyer Losses,” and individually a “Buyer Loss”) incurred or suffered by any of the Buyer Indemnified Parties,
directly or indirectly, by reason of or arising out of or in connection with (i) any breach of any of the representations and warranties of Seller contained in this Agreement or in any certificate or other document delivered pursuant hereto (without
regard to any Knowledge, materiality or Material Adverse Effect qualifications contained therein), (ii) any breach of any of the covenants and agreements of Seller contained in this Agreement, and (iii) any Actions set forth on Schedule 10.2;
provided, however, that the Buyer Indemnified Parties shall be entitled to indemnification under Section 10.2(a)(i) for breach of representations and warranties made by Seller in Article 3 only when the amount of all Buyer Losses
arising therefrom exceeds, in the aggregate, $500,000 (the “Deductible Amount”), in which case the Buyer Indemnified Parties shall be entitled to indemnification for all Buyer Losses, subject to the other provisions of this Agreement, in
excess of the Deductible Amount. Notwithstanding anything else contained herein to the contrary, the maximum amount for which Seller shall be liable for Buyer Losses under Section 10.2(a)(i) shall not exceed, in the aggregate, an amount equal to 30%
of the Purchase Price (the “Cap”); provided, however, the Deductible Amount and the Cap shall not apply to limit any Buyer Losses resulting from or arising out of the Actions listed on Schedule 10.2. For the purpose of clarity,
subject to the immediately preceding sentence, nothing in this Section 10.2(a) shall be interpreted to impose liability on Seller for breaches of the representations and warranties of Seller under Article 3 in an aggregate amount greater than the
Cap. 
  
 (b) Subject to the expiration of the representations and
warranties of the parties as provided in and the limitations set forth in this Article 10, Buyer agrees to indemnify, defend and hold harmless Seller and its Affiliates and their respective directors, officers, employees, agents, representatives,
successors and assigns (the “Seller Indemnified Parties,” and individually a “Seller Indemnified Party; and together with the Buyer Indemnified Parties, the “Indemnified Parties,” and individually an “Indemnified
Party”) from and against all liabilities including, without limitation, all costs, expenses, fines, orders, penalties and reasonable outside attorneys’ fees and disbursements (collectively, “Seller Losses,” and together with
Buyer Losses, “Losses,” and individually a “Loss”), incurred or suffered by any of the Seller Indemnified Parties, directly or indirectly, by reason of or arising out of or in connection with (i) any breach of any of the
representations and warranties of Buyer contained in this Agreement or in any certificate or other documents delivered pursuant hereto (without regard to any Knowledge, materiality or Material Adverse Effect qualifications contained therein), and
(ii) any breach of any of the covenants and agreements of Buyer contained in this Agreement; provided, however, that Seller Indemnified 
  

					
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 Parties shall be entitled to indemnification under Section 10.2(b)(i) for breach of representations and warranties made
by Buyer in Article 4 hereof only when the aggregate amount of all Seller Losses arising therefrom exceeds the Deductible Amount, in which case Seller Indemnified Parties shall be entitled to indemnification for all Seller Losses, in excess of the
Deductible Amount. Notwithstanding anything else contained herein to the contrary, the maximum amount for which Buyer shall be liable for Seller Losses under Section 10.2(b)(i) shall not exceed, in the aggregate, an amount equal to the Cap;
provided, however, the Deductible Amount and the Cap shall not apply to limit any Seller Losses resulting from a breach or inaccuracy of the representations or warranties of Buyer in Section 4.4 (Financing; Buyer’s Ability to Consummate
Transaction). For the purpose of clarity, subject to the immediately preceding sentence, nothing in this Section 10.2(b) shall be interpreted to impose liability on Buyer for breaches of the representations and warranties of Buyer under Article 4 in
an aggregate amount greater than the Cap. 
  
 (c) Required
payments by any Indemnifying Party pursuant to Section 10.2(a) or 10.2(b) shall be limited to the amount of any Loss that remains after deducting therefrom (i) any insurance proceeds actually recovered by any Indemnified Party and (ii) any
indemnity, contribution or other similar payment actually recovered by any Indemnified Party from any third party (including, without limitation, reinsurance recoverables), in each case with respect to such Loss. The Indemnified Party shall use
commercially reasonable efforts to collect all such insurance proceeds, reinsurance recoverables and indemnity, contribution and other similar payments. 
  
 Section 10.3. Notice of Third Party Claim. Promptly (and in any event within 30 days) after receipt by an Indemnified Party hereunder of
notice of any demand, claim or circumstances which, with or without the lapse of time, would give rise to a claim or the commencement (or threatened commencement) of any action, proceeding or investigation by an unaffiliated Person (a “Third
Party Claim”) that may result in a Loss, such Indemnified Party shall give notice thereof (the “Claims Notice”) to the Indemnifying Party. The Claims Notice shall describe the Third Party Claim in reasonable detail and shall indicate
the amount (estimated, if necessary) of the Loss that has been or may be suffered by such Indemnified Party and shall include a statement as to the basis for the indemnification sought. Failure to provide a Claims Notice in a timely manner shall not
be deemed a waiver of the Indemnified Party’s right to indemnification other than to the extent that such failure actually prejudices the defense of the claim by the Indemnifying Party. 
  
 Section 10.4. Opportunity to Defend. 
  
 (a) Upon receipt of notice from the Indemnified Party pursuant to Section
10.2, the Indemnifying Party shall have the right, but not the obligation, to assume the defense and control of such Third Party Claims at its own expense by providing notice of such intention to the Indemnified Party. In the event that the
Indemnifying Party elects to assume the defense of a Third Party Claim, the Indemnified Party shall have the right, but not the obligation, to participate in the defense of such Third Party Claims at its own expense. In the event that the
Indemnifying Party elects to assume the defense of a Third Party Claim, the Indemnifying Party shall take all steps reasonably necessary in the defense or settlement of such Third Party Claim; and at all times diligently pursue the resolution of
such Third Party Claim. The Indemnified 
  

					
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 Party shall, and shall cause each of its Affiliates and representatives to, cooperate with the Indemnifying Party in the
defense of any Third Party Claim defended by the Indemnifying Party. The Indemnifying Party shall be deemed to not have assumed the defense of a Third Party Claim unless the Indemnifying Party shall deliver written notice of such election to the
Indemnified Party within 15 Business Days after receipt by the Indemnifying Party of the Indemnified Party’s notice delivered pursuant to Section 10.3. 
  
 (b) If the Indemnifying Party elects to assume the defense of a Third Party Claim, it shall be conclusively established for the purposes of this Agreement
that the claims made in such Third Party Claim are within the scope of and subject to indemnification by the Indemnifying Party. If the Indemnifying Party elects not to assume the defense of a Third Party Claim, the Indemnified Party shall have the
right to defend such claim in such manner as it deems appropriate. 
  
 (c) With regard to any Actions on Schedule 10.2, Seller agrees that the Seller Indemnifying Party will continue defense of these matters at no cost or expense to the Buyer Indemnified Parties, that any such attorneys fees and costs
and any Buyer Losses resulting from such litigation shall not be subject to the Deductible Amount or the Cap, and that no rights of the Buyer Indemnified Parties, including without limitation the right to participation in the defense at its own
expense, shall be restricted. 
  
 (d) The Indemnifying Party shall
be authorized to consent to the settlement of, or the entry of any judgment arising from, any Third Party Claim for which the Indemnifying Party has assumed the defense in accordance with the terms of Section 10.4(a) without the prior consent of the
Indemnified Party, but only to the extent that such settlement or entry of judgment (i) provides solely for the payment of money by the Indemnifying Party, (ii) provides a complete release of the Indemnified Party from all matters that were or could
have been asserted in connection with such Third Party Claim and (iii) does not involve any finding or admission of any violation of law or any violation of the rights of any Person. Except as provided in the immediately preceding sentence, any
settlement or consent to entry of judgment shall require the prior written consent of the Indemnified Party, which consent shall not be unreasonably withheld or delayed. 
  
 Section 10.5. Procedures for Direct Claims. In the event any Indemnified Party shall have a claim for
indemnity against any Indemnifying Party that does not involve a Third Party Claim (a “Direct Claim”), the Indemnified Party shall promptly deliver notice of such claim to the Indemnifying Party. Such notice referred to in the preceding
sentence shall state the relevant facts and include therewith relevant documents and a statement in reasonable detail as to the basis for the indemnification sought. The failure by any Indemnified Party so to notify the Indemnifying Party in a
timely manner shall not be deemed a waiver of the Indemnified Party’s right to indemnification with respect to any claim made pursuant to this Section 10.5, other than to the extent that such failure actually prejudices the Indemnifying Party,
it being understood that notices for claims in respect of a breach of a representation or warranty must be delivered prior to the expiration of the representation or warranty to which such claim relates as provided in this Article 10. 
  

					
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 Section 10.6. Exclusive Remedy. Except as provided in Section 8.2 regarding Taxes and only
to the extent it is in addition to and not inconsistent with this Article 10, the parties hereto expressly acknowledge that from and after the Closing Date, the provisions of this Article 10 shall be the sole and exclusive remedy for damages caused
as a result of breaches of the warranties and representations contained in this Agreement or any Ancillary Agreement. 
  
 Section 10.7. Interpretation of Representations and Warranties. Notwithstanding anything in this Agreement or the Ancillary Agreements to
the contrary, no representation or warranty contained herein shall affect the interpretation or limit the application of any other representation or warranty contained herein or in the Ancillary Agreements. 
  
 Section 10.8 Third Party Beneficiaries. All Indemnified Parties
are, to the extent applicable, intended to be third party beneficiaries of this Article 10. 
  
 Section 10.9 Indemnification from Escrow. Without limiting any other right or remedy of Buyer under this Agreement, Buyer may collect claims for Buyer Losses from the funds deposited with the escrow
agent pursuant to the Escrow Agreement. 
  
 ARTICLE 11

 MISCELLANEOUS 
  
 Section 11.1 Fees and Expenses. Whether or not the transactions provided for herein are consummated pursuant hereto, except as otherwise
provided herein, Seller and Buyer shall pay all fees and expenses incurred by, or on behalf of, such party in connection with, or in anticipation of, this Agreement and the consummation of the transactions provided for herein. 
  
 Section 11.2 Notices. All notices, requests, demands, waivers
and other communications required or permitted to be given under this Agreement shall be in writing and shall be deemed to have been duly given if delivered personally, or mailed (by an overnight delivery service or by certified or registered mail,
postage prepaid, return receipt requested) or sent via telecopy to the parties: 
  

	 	(a)	If to Seller, to: 

  
 Vesta Fire Insurance Corporation 
 3760 River
Run Drive 
 Birmingham, Alabama 35243 
 Attention: General Counsel 
 Facsimile: (205) 970-7022 
  
 and an additional copy to (which shall not constitute notice): 
  
 Maynard, Cooper & Gale, P.C. 
 1901 Sixth Avenue North 
 2400 AmSouth/Harbert Plaza 
 Birmingham, Alabama 35203 
 Attention: Gregory
S. Curran 
 Facsimile: (205) 254-1999 
  
  

					
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	 	(b)	If to Buyer, to: 

  
 Sagicor USA, Inc. 
 1511 North West Shore
Blvd. Suite 420 
 Tampa Fl 33607 
 Attention: Maxine MacLure 
 Facsimile:(813)287-7446 
  
 and an additional copy to (which shall not constitute notice): 
  
 Shutts & Bowen LLP 
 201 S Biscayne Blvd. #1500 
 Miami Fl 33131 
 Attention: Timothy J. Murphy 
 Facsimile: (305) 381-9982 
  
 or to such other person or address as any party shall specify by notice in writing to the
other party. All such notices, requests, demands, waivers and communications shall be deemed to have been received: (a) on the date on which so hand-delivered, (b) on the day following mailing if sent by overnight delivery service on any day other
than Friday, (c) if delivered by facsimile, when sent and confirmation of receipt is received, or (d) on the third business day following the date on which so mailed, except for a notice of change of address, which shall be effective only upon
receipt thereof. 
  
 Section 11.3 Entire Agreement.
This Agreement and the exhibits, Schedules and other documents referred to herein or delivered pursuant hereto which form a part hereof (including, without limitation, the Confidentiality Agreement referred to in Section 5.2(c) hereof) contain the
entire understanding of the parties hereto with respect to their subject matter. This Agreement supersedes all prior agreements and understandings, oral and written, with respect to its subject matter. 
  
 Section 11.4 Binding Effect; Assignment. This Agreement and all
of the provisions hereof shall be binding upon and shall inure to the benefit of Seller and Buyer and their respective successors and permitted assigns. Neither this Agreement nor any of the rights, interests or obligations hereunder shall be
assigned, directly or indirectly, by either Seller or Buyer without the prior written consent of the other party; provided, however, that Seller or Buyer may, without consent of the other, assign their respective rights and interests but not their
obligations hereunder to an Affiliate of such party. 
  
 Section 11.5 No Third Party Beneficiaries. This Agreement is solely for the benefit of Seller and its respective successors and permitted assigns, with respect to the obligations of Buyer under this Agreement, and for the
benefit of Buyer and its successors and permitted assigns, with respect to the obligations of Seller under this Agreement, and this Agreement shall not be deemed to confer upon or give to any other third-party any remedy, claim, liability,
reimbursement, cause of action or other right (except as otherwise provided in Section 10.8). 
  
 Section 11.6 Counterparts; Facsimiles. This Agreement may be executed in counterparts, each of which shall be deemed an original, but both of which collectively shall 
  

					
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 constitute one and the same instrument. This Agreement shall be accepted, effective and binding, for all purposes, when
the Parties shall have signed and transmitted to each other, by telecopier or otherwise, copies of the signature pages hereto. If any Party transmits a signature by telecopier or otherwise, that Party shall promptly send the original signatures to
the transmittee by recognized overnight commercial carrier. 
  
 Section 11.7 Article and Section Headings. The article and section headings contained in this Agreement are solely for the purpose of reference, are not part of the agreement of the parties and shall not in any way affect the
meaning or interpretation of this Agreement. 
  
 Section 11.8
Governing Law. This Agreement shall be governed by the laws of the State of Delaware (regardless of the laws that might otherwise govern under applicable principles of conflicts of law) as to all matters, including but not limited to
matters of validity, construction, effect, performance and remedies. 
  
 Section 11.9 Specific Performance. The parties acknowledge and agree that any breach of the terms of this Agreement would give rise to irreparable harm for which money damages would not be an adequate remedy and accordingly
the parties agree that, in addition to any other remedies, each shall be entitled to enforce the terms of this Agreement by a decree of specific performance without the necessity of proving the inadequacy of money damages as a remedy.
Notwithstanding Section 11.10 hereof, a party may bring an action for specific performance in any court of the United States or any state thereof having jurisdiction over the parties and the matter, in addition to any other remedy it may be
entitled. 
  
 Section 11.10 Jurisdiction; Forum Selection;
Venue; Service of Process. 
  
 (a) Actions by Seller
Due to Buyer’s Failure or Inability to Close. With respect to any Action initiated with respect to or arising out of Buyer’s failure or non-performance with respect to closing the Share Purchase and other transactions contemplated by
this Agreement and the Ancillary Agreements (assuming Seller’s good faith belief that the conditions precedent to Buyer’s obligation to close set forth in Section 7.1 have been satisfied in all material respects) (individually, a
“Seller Agreement Action”), each of Buyer, Seller and each other party signing this Agreement as a guarantor of Buyer’s payment, performance and other obligations under this Agreement: 
  
 (i) Expressly submits to the exclusive jurisdiction and
venue of each state and federal court sitting in Jefferson County, Alabama (collectively the “Alabama Courts”); 
  
 (ii) Expressly agrees that the Alabama Courts shall be the exclusive forum and the only proper place for bringing of any Seller Agreement
Action; and 
  
 (iii) Expressly waives, to the
fullest extent permitted by Law, any objection or defense that such party may now or hereafter have based on improper venue, the lack of personal jurisdiction, inconvenience of forum, or any similar objection or defense to any Seller Agreement
Action brought in any of the Alabama Courts. 
  
 (b) All
Actions by Seller or Buyer Other than Seller Agreement Actions. With respect to any Action other than a Seller Agreement Action which is initiated by Seller or Buyer 
  

					
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 against the other pursuant to this Agreement (individually, an “Agreement Action”), each of Buyer, Seller and
each other party signing this Agreement as a guarantor of the payment, performance and other respective obligations of Buyer or Seller, as the case may be, under this Agreement: 
  
 (i) Expressly submits to the exclusive jurisdiction and venue of each state and federal court sitting in
Miami-Dade County, Florida (collectively the “Florida Courts”); 
  
 (ii) Expressly agrees that the Florida Courts shall be the exclusive forum and the only proper place for bringing of an Agreement Action; and 
  
 (iii) Expressly waives, to the fullest extent permitted by Law, any objection or defense that such party may
now or hereafter have based on improper venue, the lack of personal jurisdiction, inconvenience of forum, or any similar objection or defense to any Agreement Action brought in any of the Florida Courts. 
  
 Section 11.11 Prevailing Parties. In the event any legal
proceeding is initiated between the parties hereto with respect to matters which relate to the interpretation, enforcement or subject matter of this Agreement, to the extent the party substantially prevailing in any such proceeding is not otherwise
entitled to recover its legal expenses (including without limitation attorneys’ fees, expert witness and consulting fees, and court costs) as Losses pursuant to Article 10 (Indemnification) or otherwise under this Agreement, then such
prevailing party shall be entitled to receive payment of all such documented legal expenses (including without limitation attorneys’ fees, expert witness and consulting fees, and court costs) from the non-prevailing party to any such legal
proceeding. In no event, however, shall any such prevailing party be entitled to receive a double-recovery for its legal expenses pursuant to this Section 11.11 and, if applicable, pursuant to Article 10 or otherwise under this Agreement.

  
 Section 11.12 Construction. The parties have
participated jointly in the negotiation and drafting of this Agreement. In the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the parties and no presumption or burden of
proof shall arise favoring or disfavoring any party by virtue of the authorship of any of the provisions of this Agreement. 
  
 Section 11.13 Invalid Provisions. If any provision of this Agreement is held to be illegal, invalid or unenforceable under any present or
future law, and if the rights or obligations of the parties under this Agreement will not be materially and adversely affected thereby, (a) such provision will be fully severable; (b) this Agreement will be construed and enforced as if such illegal,
invalid or unenforceable provision had never comprised a part hereof; and (c) the remaining provisions of this Agreement will remain in full force and effect and will not be affected by the illegal, invalid or unenforceable provision or by its
severance herefrom. 
  
 ARTICLE 12  
 DEFINITIONS 
  
 “AFL” is defined in the recitals to this Agreement. 
  
 “AFL Shares” is defined in Section 3.4(b). 
  

					
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 “Acquisition Proposal” with respect to a party shall mean any proposal for a merger,
acquisition of all of the stock or assets of, other business combination involving such party or any of its subsidiaries or the acquisition of a substantial equity interest in, or a substantial portion of the assets of, such party or any of its
subsidiaries, other than the Share Purchase provided for in this Agreement. 
  
 “Actions” means any action, suit, investigation, claim or other legal or administrative proceeding. 
  
 “Admitted Assets” means Admitted Assets as defined under SAP. 
  
 “Affiliate” means a Person that directly or indirectly through one or more intermediaries controls, is
controlled by or is under common control with the Person specified. For purposes of this definition, the term “control” (including the terms “controlled by” and “under common control with”) of a Person means the
possession, direct or indirect, of the power to (i) vote 50% or more of the voting securities of such Person or (ii) direct or cause the direction of the management and policies of such Person, whether by contract or otherwise. 
  
 “Agreement” is defined in the introductory paragraph of this
Agreement. 
  
 “Agreement Action” is defined in
the Section 11.10(b). 
  
 “Alabama Courts” is
defined in the Section 11.10(a). 
  
 “Ancillary
Agreements” means, except for this Agreement, any and all other agreements, certificates, instruments and documents being, or to be, executed and delivered pursuant to this Agreement or in connection with the transactions provided for in
this Agreement. 
  
 “Annuity Contract” means any
annuity contract, funding agreement, guaranteed investment contract or similar contract, and forms with respect thereto, issued, assumed or reinsured by any of the Insurance Companies. 
  
 “Assets” means all rights, titles, franchises and interests in and to every type of property, real,
personal and mixed, and choses in action thereunto belonging to any of the Insurance Companies, as applicable, including, but not limited to, Books and Records, investment assets, Intellectual Property, contracts, licenses, leaseholds, privileges
and all other assets whatsoever, tangible or intangible, whether or not reflected in the SAP Statements. 
  
 “Audits” is defined in Section 3.12(a). 
  
 “Books and Records” means originals or copies of all or any of the Insurance Companies’ books and records, documents, data and
databases, administrative records, claim records, complaint logs, policy forms and files, sales records and files, records relating to regulatory matters, customer lists, policy information, correspondence with regulatory authorities, reinsurance
records, underwriting records, financial, Tax and accounting records and all other records, data, databases and information (in whatever form maintained, including computer generated, recorded or stored) relating to the assets, properties, business,
conduct and 
  

					
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 operations of any Insurance Company, including all Permits held by any of the Insurance Companies and all such items
relating to any of the Insurance Companies’ legal existence, stock ownership, corporate management or other such corporate records, in each case, to the extent in the possession or under the control of Seller, the Insurance Companies or any
Affiliate of Seller. 
  
 “Buyer” is defined in
the introductory paragraph of this Agreement. 
  
 “Buyer
Indemnified Party” or “Buyer Indemnified Parties” is defined in Section 10.2(a). 
  
 “Buyer Losses” is defined in Section 10.2(a). 
  
 “Cap” is defined in Section 10.2(a). 
  
 “Cash Closing Payment” is defined in Section 1.2. 
  
 “Claims Notice” is defined in Section 10.3. 
  
 “Closing” is defined in Section 2.1. 
  
 “Closing Agreement” means a written and legally binding agreement with a Governmental Entity with respect
to Taxes. 
  
 “Closing Date” is defined in
Section 2.1. 
  
 “COBRA Continuation Coverage” is
defined in Section 5.10. 
  
 “Code” means the
Internal Revenue Code of 1986, as amended through the date hereof. 
  
 “Confidentiality Agreement” is defined in Section 5.2(c). 
  
 “Consent” shall mean any consent, approval, authorization, clearance, exemption, waiver or similar affirmation by any Person pursuant to any applicable Law or agreement to which either of Buyer or
Seller (or any of the Insurance Companies, as applicable) is a party. 
  
 “Covered Employees” is defined in Section 3.13(a). 
  
 “Cure Period” is defined in Section 5.11. 
  
 “Deductible Amount” is defined in Section 10.2(a). 
  
 “Direct Claim” is defined in Section 10.5. 
  
 “Employees” is defined in Section 3.24(a). 
  
 “Environmental Law” means any Federal, state, foreign or local law, statute, ordinance, rule, regulation,
code, license, permit, authorization, approval, consent, common law, legal doctrine, order, judgment, decree, injunction, requirement or agreement with any Governmental Entity, relating to the protection, preservation or restoration of the
environment (including, 
  

					
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 without limitation, air, water, vapor, surface water, groundwater, drinking water supply, surface land, subsurface land,
plant and animal life or any other natural resource), or to human health or safety, or the exposure to, or the use, storage, recycling, treatment, generation, transportation, processing, handling, labeling, production, release or disposal of
Hazardous Substances, in each case as amended and as now in effect. 
  
 “Enforceability Exceptions” is defined in Section 3.2. 
  
 “ERISA” means the Employee Retirement Income Security Act of 1974, as amended. 
  
 “ERISA Affiliate” is defined in Section 3.13(c). 
  

“Escrow Agreement” is defined in Section 1.3. 
  

“Escrowed Closing Payment” is defined in Section 1.3. 
  
 “Florida Courts” is defined in Section 11.10(b). 
  
 “GAAP” means generally accepted accounting principles as
used in the United States of America as in effect at the time any applicable financial statements were prepared or any act requiring the application of GAAP was performed consistently applied throughout the periods involved. 
  
 “Governmental Entity” means any agency, administrative
division or department (or administrative subdivision), commission, regulatory authority, taxing or administrative authority, court or other judicial body, legislature, audit group or procuring office of the government of the United States or any
state, city, municipality, county or town thereof, or of any foreign jurisdiction including the employees or agents of any thereof. 
  
 “Hazardous Substance” shall mean any substance presently listed, defined, designated or classified as hazardous, toxic, radioactive or
dangerous, or otherwise regulated, under any Environmental Law, whether by type or by quantity, including any substance containing any such substance as a component. 
  
 “HSR Act” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended. 
  
 “IRS” means the Internal Revenue Service of the United
States. 
  
 “Indemnified Party” or
“Indemnified Parties” is defined in Section 10.2(b). 
  
 “Indemnifying Party” means the party receiving notice from an Indemnified Party in which the Indemnified Party requests indemnification from such party to this Agreement for a Third Party Claim or Direct Claim as specified
in said notice. 
  
 “Insurance Contracts” means
any contract of insurance or reinsurance (and any certificates thereunder) and forms with respect thereto, including any Life Insurance Contract or Annuity Contract, issued, assumed or reinsured by any of the Insurance Companies. 
  

					
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 “Insurance Companies” is defined in the recitals to this Agreement. 
  
 “Insurance Licenses” is defined in Section 3.7.

  
 “Intellectual Property” means all
intellectual property rights including, but not limited to, patent and patent applications, inventions (whether or not patentable), designs, trademarks, copyrights, copyright registrations and applications, technology, computer programs and software
applications (including source code, object code, executables and utilities, patches, fixes and upgrades and all related documentation including operator and user manuals and training manuals), mask works, trade secrets, know-how, confidential
information, proprietary processes and formulae, algorithms, methods, data, databases and documentation, forms, Internet and intranet content, moral rights (if any), and all similar intellectual and industrial property rights of any sort throughout
the world along with any tangible embodiments of the foregoing. 
  
 “Knowledge” as used in this Agreement means information known by or disclosed to any officer, director or supervisory employee of the relevant Parties or information which any officer, director or supervisory employee of
the relevant Parties knew or reasonably should have known. 
  
 “Laurel” is defined in the recitals to this Agreement. 
  
 “Law” or “Laws” means any United States federal, state, local or foreign statute, law, ordinance, regulation, rule, code, order, permit, other requirement or rule of law. 

 
 “Leased Real Property” is defined in Section 3.19(b).

  
 “Leases” means all leases or subleases of
space at all real property leased or subleased by any of the Insurance Companies, all other occupancy agreements affecting such Leased Real Property, and all amendments, renewals, replacements, extensions, substitutions and modifications of any of
the foregoing, together with any guarantees executed in connection with any such leases or occupancy agreements. 
  
 “Liens” means all mortgages, pledges, security interests, liens, charges, options, conditional sales agreements, claims, restrictions,
covenants, easements, rights of way, title defects or other encumbrances or restrictions of any nature whatsoever. 
  
 “Life Insurance Contract” means any life insurance contract, and forms with respect thereto, issued, assumed or reinsured by any of the
Insurance Companies. 
  
 “Loss” or
“Losses” is defined in Section 10.2(b). 
  
 “Market Conduct Activities” means the marketing, solicitation, application, underwriting, acceptance, sale, purchase, operation, retention, administration, or replacement by means of surrender, partial surrender, loans
respecting, withdrawal and/or termination of any Insurance Contract, including without limitation any or all of the acts, omissions, facts, matters, transactions, occurrences, or any oral or written statements or representations made in connection
with any of the foregoing, including without limitation those relating to: (A) the vanishing premium concept; (B) race based underwriting; (C) “modal” premium claims; (D) the nature, 
  

					
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 characteristics, terms, appropriateness, suitability, descriptions and operation of any Insurance Contract; (E) whether
any Insurance Contract was, would operate or could function as a pension or retirement plan, investment or savings account, tuition-funding or mortgage-protection plan or other type of investment, savings or thrift vehicle; (F) the fact that a part
of the premiums paid would not be credited toward an investment or savings account or the Insurance Contract’s cash value, but would be used to offset the insurer’s commission, sales, administration or mortality expenses; (G) the use of an
existing Insurance Contract’s cash value or cash-surrender value by means of a surrender, withdrawal, partial surrender or loan to purchase or maintain a policy; (H) the insurer’s dividend, interest, crediting and cost of insurance and
administrative charge policies; dividend scales, illustrations of dividend values, cash values or death benefits; or any other matters relating to dividends, interest crediting rates or cost of insurance and administrative charges; (I) the failure
to disclose surrender charges; (J) the providing of tax advice or (K) the providing of Medicaid eligibility advice. 
  
 “Material Adverse Change” means that the Insurance Companies have suffered a material adverse effect in their business, financial
condition or results of operations, taken as a whole. Without limiting the generality of the foregoing, (i) any matter, or series of matters (whether or not related), will be deemed to have a material adverse effect in the event it involves a loss,
singly or in the aggregate, to the Insurance Companies, taken as a whole, involving $5,000,000 or more, and (ii) no matter, or series of matters (whether or not related), will be deemed to be or to have caused a material adverse effect in the event
it involves a loss, singly or in the aggregate, to the Insurance Companies, taken as a whole, involving less than $5,000,000. 
  
 “Material Adverse Effect” on a party shall mean: (a) with respect to the Insurance Companies, a Material Adverse Change; (b) with respect
to Seller, an event, change or occurrence that has a material adverse impact on the ability of Seller to perform its obligations under this Agreement or to consummate the Share Purchase or the other transactions provided for in this Agreement; and
(c) with respect to Buyer, an event, change or occurrence that has a material adverse impact on the ability of Buyer to perform its obligations under this Agreement or to consummate the Share Purchase or the other transactions provided for in this
Agreement. Provided that “material adverse impact” shall not be deemed to include the impact of (x) changes in insurance and similar Laws of general applicability or interpretations thereof by Governmental Entities, (y) changes in GAAP or
SAP and (z) the Share Purchase on the operating performance of the Parties. 
  
 “Material Contracts” is defined in Section 3.8. 
  
 “Notice” is defined in Section 5.11. 
  
 “Notified Party” is defined in Section 5.11. 
  
 “Notifying Party” is defined in Section 5.11. 
  
 “Owned Real Property” is defined in Section 3.19(a). 
  
 “Payment Defaults” is defined in Section 3.16(b)(ii). 
  

					
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 “Permits” means any required licenses, permits, approvals, authorizations or
certificates of any Governmental Entity. 
  
 “Permitted
Liens” means (i) any statutory lien arising out of the operation of law with respect to a liability that is not delinquent, including, without limitation, any lien for taxes not yet due, (ii) any minor imperfection of title or similar lien
which individually or in the aggregate with other such liens does not materially impair the value of the property subject to such lien or the use of such property in the conduct of the business of any of the Insurance Companies, and (iii) Liens
arising or resulting from any action taken by Buyer or any of its Affiliates. 
  
 “Person” means an individual, a partnership, a joint venture, a corporation, a trust, an unincorporated organization, a government or any department or agency thereof or any other entity. 

 
 “Plan” or “Plans” is defined in Section
3.13(a). 
  
 “Policies” shall mean any and all
insurance, annuity or investment policies, plans, or contracts; all financial products, employee benefit plans, individual retirement accounts or annuities; or any similar or related policy, plan or contract, whether individual, group or otherwise
issued, sold or assumed by the Insurance Companies. 
  
 “Producers” is defined in Section 3.23. 
  
 “Purchase Price” is defined in Section 1.2. 
  
 “Qualified Plans” is defined in Section 3.12(n). 
  
 “SAP” means the accounting practices prescribed or permitted for insurance companies pursuant to the insurance regulatory requirements of the Insurance Department of the State of Texas, as in effect
for the accounting period in question, which practices differ from GAAP. 
  
 “SAP Statements” is defined in Section 3.11(c). 
  
 “Schedule” means any disclosure schedule to this Agreement. 
  
 “Seller” is defined in the introductory paragraph of this Agreement. 
  
 “Seller Agreement Action “ is defined in Section
11.10(a). 
  
 “Seller Indemnified Party”
or “Seller Indemnified Parties” is defined in Section 10.2(b). 
  
 “Seller’s Consolidated Group” is defined in Section 3.12(b). 
  
 “Share Purchase” is defined in Section 1.1. 
  
 “Shares” is defined in the recitals to this Agreement. 
  
 “SLIB” is defined in the introductory paragraph to this Agreement. 
  

					
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 “Stock Restriction” means, with respect to the capital stock or other equity securities
of a Person, any option, right of first refusal or restriction of any kind, including any restriction on voting, transfer, alienation, receipt of income or exercise of any other attribute of ownership, but specifically excluding any restrictions
imposed by Law. 
  
 “Subsidiary” means,
with respect to any Person on a given date, any other Person of which a majority of the voting power or the power to otherwise direct the management or policies is held directly or indirectly by such Person. 
  
 “Surplus Debentures” means the surplus debenture made by
Laurel to Seller, dated December 31, 2004, in the principal amount of $5,946,045.13, and the surplus debenture made by Laurel to Seller, dated June 30, 2000, in the principal amount of $25,000,000. 
  
 “Tax” and “Taxes” shall mean all taxes,
however denominated, including any interest, penalties or additions to tax that may become payable in respect thereof, imposed by any Governmental Entity, which taxes shall include, without limiting the generality of the foregoing, all income taxes
(including, but not limited to, United States federal income taxes and state income or franchise taxes), payroll, premium, employment, and other withholding taxes, unemployment insurance, social security, sales and use taxes, excise taxes, franchise
taxes, net worth taxes, gross receipts taxes, occupation taxes, real and personal property taxes, stamp taxes and transfer taxes. 
  
 “Tax Return” means any return, declaration, report, claim for refund, estimated payment return or information return or statement
relating to Taxes, including any schedule or attachment thereto (and including any amendment thereof) and including, where permitted or required, combined, consolidated, unitary or any similar returns for any group of entities. 
  
 “Tax Sharing Agreement” means any written or unwritten
agreement, indemnity or other arrangement for the allocation or payment of Tax liabilities or payment for Tax benefits that may exist as of the Closing Date between any of the Insurance Companies or any Person (other than any indemnity provided
pursuant to this Agreement). 
  
 “Third Party
Claim” is defined in Section 10.3. 
  
 “Third
Party Reinsurance Agreements” is defined in Section 3.25 
  
 “Vesta Fire” is defined in the introductory paragraph to this Agreement. 
  
 [signature page follows on next page] 
  

					
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 IN WITNESS WHEREOF, this Agreement has been duly executed and delivered by the duly authorized
officers of the parties hereto as of the date first above written. 
  

			
	 SELLER:

	
	 AMERICAN FOUNDERS FINANCIAL
     CORPORATION

		
	 By:
	 	 /s/ Hopson B. Nance

	 Name:
	 	Hopson B. Nance
	 Title:
	 	Chief Financial Officer
	
	 BUYER:

	
	 SAGICOR USA, INC.

		
	 By:
	 	 /s/ Maxine MacLure

	 Name:
	 	 Maxine MacLure

	 Title:
	 	 President & CEO

  
 [guaranties
follow on next two pages] 
  

					
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 GUARANTY OF SAGICOR LIFE INC. (BARBADOS) 
  
 For good and valuable consideration, the receipt and adequacy of which is acknowledged and
confessed and as an inducement to Seller to execute, deliver and perform its obligations under the foregoing Stock Purchase Agreement and to Seller’s board of directors to authorize and approve the transactions provided for therein, the
undersigned guarantor, SAGICOR LIFE INC. (BARBADOS), does hereby unconditionally agree to guarantee the payment of all of the payments and performance of all other obligations of Buyer under the foregoing Stock Purchase Agreement and any agreements
ancillary thereto; provided further that Seller shall not be required to exhaust remedies against Buyer before proceeding against the undersigned Guarantor but may do so in its sole discretion. The undersigned represents and warrants to Seller that:
(i) it is a corporation duly organized, validly existing and in good standing under the laws of Barbados; (ii) the execution and delivery of this guaranty by the undersigned and the performance by the undersigned of its obligations hereunder have
been duly and validly authorized and approved by all requisite corporate action of the undersigned and no other acts or proceedings on its part or on the part of any other Person are necessary to authorize the execution, delivery and performance of
this guaranty by the undersigned; and (iii) this guaranty constitutes a legal, valid and binding obligation of the undersigned, and is and will be enforceable against the undersigned in accordance with its terms. 
  

			
	 SAGICOR LIFE INC. (BARBADOS)

		
	 By:
	 	 /s/ Sandra Osborne

	 Name:
	 	Sandra Osborne
	 Title:
	 	Secretary

  

	
	 CITY OF BRIDGETOWN          )

	                                        
               :

	 COUNTRY OF BARBADOS     )

  
 I, the undersigned, a
Notary Public in and for said City in said Country, hereby certify that Sandra Osborne, whose name as Secretary, of Sagicor Life Inc. (Barbados), a corporation existing under the laws of Barbados, is signed to the foregoing instrument, and who is
known to me, acknowledged before me on this day that, being informed of the contents of the instrument, he, as such officer and with full authority, executed the same voluntarily for and as the act of said corporation. 
  
 Given under my hand this 2nd day of June, 2005. 
  

			
	 	 	 /s/ J. Cumberbatch

	 	 	Notary Public
	[Notarial Seal]	 	My Commission expires: Indefinite
		
	 	 	ASST. REGISTRAR AND AS
	 	 	SUCH A NOTARY PUBLIC IN
	 	 	AND FOR BARBADOS.

  

					
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 GUARANTY OF VESTA FIRE INSURANCE CORPORATION 
  
 For good and valuable consideration, the receipt and adequacy of which is acknowledged and
confessed and as an inducement to Buyer to execute, deliver and perform its obligations under the foregoing Stock Purchase Agreement and to Buyer’s board of directors to authorize and approve the transactions provided for therein, the
undersigned guarantor, VESTA FIRE INSURANCE CORPORATION, does hereby unconditionally agree to guarantee the payment of all of the payments and performance of all other obligations of Seller under the foregoing Stock Purchase Agreement and any
agreements ancillary thereto; provided further that Buyer shall not be required to exhaust remedies against Seller before proceeding against the undersigned Guarantor but may do so in its sole discretion. The undersigned represents and warrants to
Buyer that: (i) it is a corporation duly organized, validly existing and in good standing under the laws of the State of Illinois; (ii) the execution and delivery of this guaranty by the undersigned and the performance by the undersigned of its
obligations hereunder have been duly and validly authorized and approved by all requisite corporate action of the undersigned and no other acts or proceedings on its part or on the part of any other Person are necessary to authorize the execution,
delivery and performance of this guaranty by the undersigned; and (iii) this guaranty constitutes a legal, valid and binding obligation of the undersigned, and is and will be enforceable against the undersigned in accordance with its terms.

  

			
	 VESTA FIRE INSURANCE CORPORATION

		
	 By:
	 	 /s/ David W. Lacefield

	 Name:
	 	David W. Lacefield
	 Title:
	 	President

  

	
	 STATE OF ALABAMA          )

	                                        
          :

	 COUNTY OF JEFFERSON    )

  
 I, the undersigned, a
Notary Public in and for said County in said State, hereby certify that David W. Lacefield, whose name as President, of Vesta Fire Insurance Corporation, a corporation existing under the laws of the State of Illinois, is signed to the foregoing
instrument, and who is known to me, acknowledged before me on this day that, being informed of the contents of the instrument, he, as such officer and with full authority, executed the same voluntarily for and as the act of said corporation.

  
 Given under my hand this 1st day of June, 2005. 
  

			
	 	 	 Nancy E. Norred

	 	 	Notary Public
	[Notarial Seal]	 	My Commission expires: May 18, 2008

  

					
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 EXHIBIT 1.3 
  
 POST-CLOSING ESCROW AGREEMENT 
  
 THIS POST-CLOSING ESCROW AGREEMENT (this “Agreement”) is entered into as of
                         , 2005 (the “Effective Date”), by and among SAGICOR USA, INC., a Delaware
corporation (“Buyer”); AMERICAN FOUNDERS FINANCIAL CORPORATION, an Arizona corporation (“Seller”); and
                            , as escrow agent (“Escrow Agent”). 
  
 RECITALS: 
  
 A. Buyer and Seller have entered into a stock purchase agreement (the “Purchase Agreement”) under the terms of
which Buyer purchased from Seller all of the outstanding shares (the “Shares”) of Laurel Life Insurance Company, a Texas insurance corporation. All capitalized terms used in this Agreement and not otherwise defined herein shall have the
meanings assigned to them in the Purchase Agreement. 
  
 B. The
Purchase Agreement provides that a portion of the Purchase Price, equal to $15,000,000 (the “Deposit”), will be deposited by Seller into an escrow account established by Seller with the Escrow Agent (the “Escrow Account”) as
security for Seller’s obligations to indemnify Buyer under the Purchase Agreement. 
  
 C. Buyer and Seller have agreed upon the identity of the Escrow Agent and upon the form of this Agreement. 
  
 D. The Escrow Agent has consented to act under this Agreement for the purposes herein provided. 
  
 TERMS AND CONDITIONS: 
  
 In consideration of the mutual covenants, agreements, warranties, and
representations herein contained, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: 
  
 1. Transfer of the Deposit. At Closing, Seller will deliver to the Escrow Agent the Deposit to be held by the Escrow
Agent under the terms hereof until it is released in accordance with this Agreement. 
  
 2. Investment of the Deposit. Assets maintained in the Escrow Account and investments and reinvestments thereof shall consist only of NAIC 1 or 2 rated securities, provided that such investments are issued by
an institution that is not the parent, subsidiary or affiliate of either Seller or Buyer (“Authorized Investments”). If the rating on any securities so invested is downgraded below NAIC 2, then such securities shall be promptly replaced
with other NAIC 1 or 2 rated securities having the same face amount as the securities so replaced. The responsibility for directing the Escrow Agent to invest and reinvest the assets in the Escrow Account shall be that of Seller or its affiliates,
and the Escrow Agent shall invest and reinvest the assets in the Escrow Account, or any part thereof, in such Authorized Investments as Seller or its affiliates shall direct in writing. Any investment direction by Seller or its affiliates shall

 
constitute certification by Seller to the Escrow Agent that the assets so deposited or to be purchased pursuant to such investment direction or so
substituted are Authorized Investments. The Escrow Agent shall not be responsible for determining whether any assets in the Escrow Account are or continue to be Authorized Investments. 
  
 3. Investment Income. 
  
 (a) Subject to the terms hereof, all dividends, interest and other income resulting from the investment of the assets in the Escrow Account shall be the
property of Seller. To the extent that the Escrow Agent shall collect and receive such income from the Escrow Account, it shall promptly pay over the amount of such income to Seller upon the written direction of Seller; provided,
however, that Seller agrees not to direct the Escrow Agent to pay income to Seller to the extent that such payment would cause the amount of the funds remaining in the Escrow Account to fall below the Baseline Amount existing at the time any
such payment of income is to be made to Seller. 
  
 (b) For
purposes of Section 3(a) above, the “Baseline Amount” shall mean $12,000,000 in the case of the escrow (the “Action Escrow”) available to pay Indemnified Action Disbursement Requests (as defined Section 5(b) below) and $3,000,000
in the case of the escrow (the “General Escrow”) available to pay General Disbursement Requests (as defined in Section 5(b) below), less any funds which have been properly released from Action Escrow or the General Escrow, as the
case may be, in accordance with Section 5 (whether released pursuant to an Indemnified Action Disbursement Request, a General Disbursement Request or upon expiration of the Final Settlement Date or the Outside Date, as the case may be). Seller shall
be responsible for reporting and pay any taxes on the earnings and income paid to Seller from the Escrow Account. 
  
 4. Right to Vote Securities. Seller shall have the full unqualified right to vote and execute consents and to exercise any and all proprietary
rights not inconsistent with this Escrow Agreement with respect to any securities or other property forming a part of the Escrow Account. 
  
 5. Releases of Deposit. 
  
 (a) Subject to the time limitations set forth in subsection (b) below, Buyer may request one or more distributions of all or any portion of the Deposit at
any time and from time to time after the Closing Date, in order to satisfy any indemnification claims of Buyer under the Purchase Agreement. Buyer’s request(s) for distribution shall be made by written notice (a “Disbursement
Request”) to the Escrow Agent, which notice shall describe the amount claimed and the disbursement instructions, and contain a certification that such instructions comply with the terms of the Purchase Agreement. Each Disbursement Request shall
be accompanied by a description of the events or circumstances giving rise to Buyer’s indemnity claim. 
  
 (b) Disbursement Requests for indemnification claims relating to or arising from any Action set forth on Schedule 10.2 of the Purchase Agreement
(an “Indemnified Action Disbursement Request”) may be made for an aggregate amount of up to $12,000,000, and must be made at any time on or before the Final Settlement Date, as defined below. Disbursement Requests for all other
indemnification claims (a “General Disbursement Request”) may be made for an aggregate amount of up to $3,000,000, and must be made on or before 540 days after the Closing Date (the “Outside Date”). 
  

 -2- 

 (c) The “Final Settlement Date” means the date on which all liabilities and obligations of the
Insurance Companies relating to or arising from the Actions set forth on Schedule 10.2 of the Purchase Agreement are fully and finally satisfied and released, whether through settlement, payment or final conclusion of all legal proceedings
and appeals (the “Final Settlement”). 
  
 (d) Upon
receipt of a Disbursement Request, the Escrow Agent shall deliver a copy of the Disbursement Request to Seller. Seller shall have a period of thirty (30) days after receipt of the Disbursement Request from the Escrow Agent to object to all or any
portion of the distribution from the Deposit requested in the Disbursement Request. Seller shall object by delivering written notice to the Escrow Agent and Buyer within the aforesaid thirty (30) day period. If Seller fails to object as specified
herein, the portions of the Deposit requested in the Disbursement Request shall be disbursed by the Escrow Agent to Buyer in accordance with the instructions contained in the Disbursement Request. If Seller objects to the distribution from the
Deposit to Buyer, the Escrow Agent shall continue to hold the funds requested by Buyer in escrow until the dispute is resolved as provided in Section 4 hereof. If Seller objects to a portion, but not all, of a distribution, the Escrow Agent shall:
(i) continue to hold in escrow that portion of the distribution to which Seller objected, until the dispute is resolved; and (ii) pay to Buyer the balance of the distribution requested by Buyer which is not objectionable to Seller. 
  
 (e) On the Final Settlement Date, $12,000,000 shall be disbursed to Seller
from the Action Escrow, less the amount of any Indemnified Action Disbursement Requests that have been paid (whether by agreement of Seller or by resolution pursuant to Section 6 below); provided, however, that if at the time any funds
are to be distributed to Seller hereunder, there are Indemnified Action Disbursement Requests that are then pending and in dispute pursuant to subsection (d) above, an amount equal to one-hundred twenty percent (120%) of the amount of such
Indemnified Action Disbursement Request(s) (but in no event more than $12,000,000) shall be retained in the Action Escrow until such claim(s) are resolved pursuant to Section 6. 
  
 (f) On the Outside Date, $3,000,000 shall be disbursed to Seller from the General Escrow, less the amount of any General
Disbursement Requests that have been paid (whether by agreement of Seller or by resolution pursuant to Section 6 below); provided, however, that if at the time any funds are to be distributed to Seller hereunder, there are General
Disbursement Requests that are then pending and in dispute pursuant to subsection (d) above, an amount equal to one-hundred twenty percent (120%) of the amount of such General Disbursement Request(s) (but in no event more the $3,000,000) shall be
retained in General Escrow until such claim(s) are resolved pursuant to Section 6. 
  
 (g) A dispute among the parties shall be deemed resolved hereunder by written agreement of the parties pursuant to Sections 6(a) or 6(b) or, if necessary, a final decision, issued in a legal proceeding pursuant to
Section 6(c) of this Agreement, determining the manner in which the portion of the Deposit in dispute shall be distributed. 
  

 -3- 

 6. Resolution of Disputes. A dispute between Buyer and Seller with respect to the disbursement of
the Deposit shall be resolved in the following manner: (a) first, the parties, through authorized representative, shall meet within 30 days after it becomes apparent that a dispute exists and attempt in good faith to resolve such dispute; (b) if
such meeting of the parties is unsuccessful, then the parties shall mutually select a mediator within 30 days after the date of the parties meeting described in sub-section (a) above and within 30 days after selection of the mediator, the parties
shall participate in good faith in a face-to-face, non-binding mediation before such mediator in Miami, Florida or such other place as the parties may mutually agree; and (c) finally, if such mediation is unsuccessful, either party may then proceed
to seek resolution of the dispute through initiation of legal process in the state or federal courts in Miami-Dade County, Florida, as set forth in Section 11.10(b) of the Purchase Agreement. The parties consent to the jurisdiction of such courts in
any such action arising under this Agreement, and waive any objection or defense to any such action based on improper venue or inconvenience of forum. Each party shall bear separately the cost of their respective attorneys, witnesses and experts in
connection with resolution of the dispute, whether through informal negotiation, meditation or initiation of legal process (except as otherwise provided in Section 16 with respect to any action brought under Section 6(c) hereof). Notwithstanding
anything to the contrary contained in this Agreement, upon receipt of joint written instructions signed by Buyer and Seller, the Escrow Agent shall promptly distribute the Deposit, or any portion thereof, in accordance with such joint written
instructions. 
  
 7. Concerning the Escrow Agent.

  
 7.1 The Escrow Agent undertakes to perform only such duties
as are expressly set forth herein and no implied duties or obligations shall be read into this Agreement against the Escrow Agent. The Escrow Agent is not a party to the Purchase Agreement (or any other agreement between Buyer and Seller) and shall
not be bound by any of the terms thereof. 
  
 7.2 The Escrow Agent
may act in reliance upon any writing or instrument or signature which it, in good faith, believes to be genuine, may assume the validity and accuracy of any statement or assertion contained in such a writing or instrument, and may assume that any
person purporting to give any writing, notice, advice or instructions in connection with the provisions hereof has been duly authorized to do so. The Escrow Agent shall not be liable in any manner for the sufficiency or correctness as to form,
manner and execution, or validity of any instrument provided in accordance with this Agreement, nor as to the identity, authority, or right of any person executing the same; and its duties hereunder shall be limited to the safekeeping of such
certificates, monies, instruments or other documents received by it as such escrow holder, and for the disposition of the same in accordance with the terms hereof. Without limiting the generality of the foregoing: (i) the Escrow Agent may rely on a
copy of the Purchase Agreement purportedly signed by Buyer and Seller as conclusive proof that the Purchase Agreement has been executed and may assume that the Purchase Agreement has not been executed until it receives such a copy; and (ii) the
Escrow Agent will be entitled to rely on the accuracy and effectiveness of any joint instructions, or any instructions as to which a valid objection is not made within the time required under this Agreement, without any obligation to inquire or
investigate whether such instructions are appropriate under the circumstances. 
  

 -4- 

 7.3 Buyer and Seller hereby agree, jointly and severally, to defend and indemnify the Escrow Agent and
hold it harmless from any and all claims, liabilities, losses, actions, suits, or proceedings at law or in equity, and such indemnity and hold harmless shall extend to any other expenses, fees, or charges of any character or nature which it may
incur or with which it may be threatened by reason of its acting as Escrow Agent in accordance with this Agreement (other than those that arise by virtue of a breach of this Agreement by Escrow Agent or as a result of Escrow Agent’s gross
negligence or willful misconduct); and in connection therewith, to indemnify the Escrow Agent against any and all expenses, including attorneys’ fees and costs of defending any such action, suit, or proceeding or resisting any such claim. The
Escrow Agent shall be vested with a lien on all property deposited hereunder, to secure payment of: (i) the Escrow Agent’s fees, (ii) indemnification of attorneys’ fees and court costs regarding any arbitration, action, suit, proceeding or
otherwise, and (iii) any other expenses, fees, or charges of any character or nature, which may be incurred by the Escrow Agent by reason of disputes arising between the makers of this Escrow as to the correct interpretation of this Agreement and
instructions given to the Escrow Agent hereunder, or otherwise. The Escrow Agent has the right, regardless of the parties’ instructions, to hold said property until and unless said expenses, fees, and charges shall be fully paid.
Notwithstanding the generality of the foregoing, the indemnification rights set forth herein shall not extend to or cover a breach by Escrow Agent of this Agreement or Escrow Agent’s gross negligence or willful misconduct. 
  
 7.4 If Seller or Buyer shall be in disagreement about the interpretation of
this Agreement, or about the rights and obligations, or the propriety of any action contemplated by the Escrow Agent hereunder, the Escrow Agent may, at its sole discretion, file an action in interpleader in the state or federal courts sitting in
Miami-Dade County, Florida, to resolve said disagreement, notwithstanding anything to the contrary set forth in Section 4. Buyer and Seller consent to the jurisdiction of such state or federal courts in any such interpleader action. The Escrow Agent
shall be indemnified for all costs, including reasonable attorneys’ fees, in connection with the aforesaid proceeding, and shall be fully protected in suspending all or a part of its activities under this Agreement until a final decision or
other settlement in the proceeding is received. 
  
 7.5 The Escrow
Agent may consult with counsel of its own choice and shall have full and complete authorization and protection for any action taken or suffered by it hereunder in good faith and in accordance with the opinion of such counsel. The Escrow Agent shall
otherwise not be liable for any actions or omissions of any kind, unless caused by its breach of this Agreement, its willful misconduct or its gross negligence. 
  

7.6 The Escrow Agent may resign upon thirty (30) days’ written notice to the parties in this Agreement. If a successor Escrow Agent is not
appointed within this thirty (30) day period, the Escrow Agent may petition the state courts sitting in Miami-Dade County, Florida to name a successor. 
  
 7.7 As compensation for its services hereunder the Escrow Agent shall be entitled to a fee of
$                    , plus reimbursement of out-of-pocket expenses incurred by Escrow Agent in the performance of its duties hereunder. The
Escrow Agent’s fees and expenses hereunder shall be shared equally by Seller and Buyer. 
  

 -5- 

 7.8 The Escrow Agent shall provide to Buyer copies of all account statements and reports issued with
respect to the assets held in escrow at the same time such statements and reports are sent to Seller. 
  
 8. Notices. 
  
 8.1 All notices, requests, demands, or other communications required or permitted hereunder shall be in writing and shall be deemed to have been duly
given upon receipt if delivered in person, or upon the expiration of four (4) days after the date sent, if sent by federal express (or similar overnight courier service) to the parties at the following addresses: 
  

			
	If to Buyer:	 	Sagicor USA, Inc.
	 	 	1511 North West Shore Blvd. Suite 420
	 	 	Tampa Fl 33607
	 	 	Attention: Maxine MacLure
	 	 	Facsimile: (813)287-7446
	
	and an additional copy to (which shall not constitute notice):
		
	 	 	Shutts & Bowen LLP
	 	 	201 S Biscayne Blvd. #1500
	 	 	Miami Fl 33131
	 	 	Attention: Timothy J. Murphy
	 	 	Facsimile: (305) 381-9982
		
	If to Seller:	 	American Founders Financial Corporation
		
	 	 	3760 River Run Drive
	 	 	Birmingham, Alabama 35243
	 	 	Attention: General Counsel
	 	 	Facsimile: (205) 970-7022
	
	and an additional copy to (which shall not constitute notice):
		
	 	 	Maynard, Cooper & Gale, P.C.
	 	 	1901 Sixth Avenue North
	 	 	2400 AmSouth/Harbert Plaza
	 	 	Birmingham, Alabama 35203
	 	 	Attention: Gregory S. Curran
	 	 	Facsimile: (205) 254-1999
		
	 If to the Escrow Agent:
	 	___________________________
		
	 	 	___________________________
		
	 	 	___________________________
		
	 	 	___________________________

  

 -6- 

			
	Attn:	 	___________________________
		
	Fax:	 	___________________________

  
 8.2 Notices may
also be given in any other manner permitted by law, effective upon actual receipt. Any party may change the address to which notices, requests, demands or other communications to such party shall be delivered or mailed by giving notice thereof to
the other parties hereto in the manner provided herein. Notices may be sent on behalf of a party by such party’s counsel. 
  
 9. Representatives. Any notices, waivers or consents issued by Buyer or Seller pursuant to this Agreement shall be effective, validly issued, and
binding on Buyer or Seller (as the case may be) if executed by any one of the following persons, who are hereby appointed irrevocably as attorneys-in-fact for the parties for all purposes hereunder. A party may substitute an authorized
representative under this section by providing the other parties written instructions to such effect from an original signatory together with the signature of the newly authorized signatory. 
  
 FOR BUYER 
  

			
	 Name

	 	 Signature

	  

	 	  

	  

	 	  

  
 Each of the foregoing persons is
herein referred to as a “Buyer’s Representative”. 
  
 FOR SELLER 
  

			
	 Name

	 	 Signature

	  

	 	  

	  

	 	  

  
 Each of the foregoing persons is
herein referred to as a “Seller’s Representative”. 
  
 10. Governing Law; Etc. 
  
 10.1 This Agreement
shall be construed in accordance with the laws of the State of Florida, USA, without regard to any conflict-of-law rule or principle that would give effect to the laws of another jurisdiction. 
  
 10.2 No ambiguity in any provision hereof shall be construed against a party
by reason of the fact it was drafted by such party or its counsel. References to “including” means including without limiting the generality of any description preceding such term. For purposes of this Agreement: “herein”,
“hereby”, “hereunder”, “herewith”, “hereafter”, “hereof” and “hereinafter” refer to this Agreement in its entirety, and not to any particular subsection or paragraph. 
  

 -7- 

 10.3 All of the covenants and obligations contained herein shall be binding upon and shall inure to the
benefit of the respective parties, their heirs, successors and assigns. 
  
 11. Amendment. This Agreement shall not be amended except by written instrument executed by all parties hereto. 
  
 12. Acceptance by Fax. This Agreement shall be accepted, effective and binding, for all purposes, when the parties shall have signed and
transmitted to each other, by telecopier or otherwise, copies of the signature pages hereto. If any party transmits a signature by telecopier or otherwise, that party shall promptly send the original signatures to the transmittee by mail or
overnight commercial carrier. 
  
 13. Counterparts. This
Agreement may be executed in any number of counterparts, each of which shall be deemed an original, and all of which shall constitute one and the same instrument. 
  
 14. Number of Days. In computing the number of days for purposes of this Agreement, all days shall be counted,
including Saturdays, Sundays, and holidays; provided, however, that if the final day of any time period falls on a Saturday, Sunday, or holiday, then the final day shall be deemed to be the next day which is a Business Day. As used herein,
“Business Day” shall mean any day on which commercial banks are not authorized or required to close in Miami, Florida. Time shall be of the essence in complying with all time periods under this Agreement. 
  
 15. No Jury Trial. The parties hereby knowingly, voluntarily and
intentionally waive the right any of them may have to a trial by jury in respect of any litigation based hereon or arising out of, under or in connection with this Agreement and any document contemplated to be executed in conjunction herewith, or
any course of conduct, course of dealing, statements (whether verbal or written) or actions of any party hereto. This provision is a material inducement for the parties’ acceptance of this Agreement. 
  
 16. Prevailing Parties. In the event any legal proceeding is initiated
among Buyer and Seller hereto with respect to matters which relate to the interpretation, enforcement or subject matter of this Agreement, the party substantially prevailing in any such proceeding shall be entitled to receive payment of all its
documented legal expenses (including without limitation attorneys’ fees, expert witness and consulting fees, and court costs) from the non-prevailing party to any such legal proceeding. In no event, however, shall any such prevailing party be
entitled to receive a double recovery for its legal expenses pursuant to this Section 16 and, if applicable, pursuant to Section 10 of, or otherwise under, the Purchase Agreement. 
  
 [Signatures follow on next page] 
  

 -8- 

 IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the Effective Date. 

 

			
	BUYER:
	
	SAGICOR USA, INC.
		
	By:	 	  

	Name:	 	  

	Title:	 	  

	
	ESCROW AGENT:
	
	[                                      
          ]
		
	By:	 	  

	Name:	 	  

	Title:	 	  

	
	SELLER:
	
	AMERICAN FOUNDERS FINANCIAL
    CORPORATION
		
	By:	 	  

	Name:	 	  

	Title:	 	  

  

 -9-Credit Agreement

 Exhibit 4.F 
  

 CREDIT AGREEMENT 
  
 Dated as of June 1, 2005 
  
 among 
  
 MENTOR GRAPHICS CORPORATION, 
  

BANK OF AMERICA, N.A., 
  
 as Agent, 
  
 KEYBANK NATIONAL ASSOCIATION, 
  
 as Documentation Agent, 
  
 and 
  
 THE OTHER FINANCIAL INSTITUTIONS PARTY
HERETO 
  
 BANC OF AMERICA SECURITIES LLC, 

 
 as Sole Lead Arranger and Sole Book Runner 
  

 TABLE OF CONTENTS 
  

					
	 	  	 	  	Page

	 ARTICLE I
	  	    DEFINITIONS	  	1
			
	 1.01
	  	Certain Defined Terms	  	1
			
	 1.02
	  	Other Interpretive Provisions	  	19
			
	 1.03
	  	Accounting Principles	  	19
			
	 1.04
	  	Designation of Unrestricted Subsidiaries	  	20
			
	 ARTICLE II
	  	    THE CREDITS	  	21
			
	 2.01
	  	Amounts and Terms of Commitments	  	21
			
	 2.02
	  	Loan Accounts	  	21
			
	 2.03
	  	Procedure for Borrowing	  	21
			
	 2.04
	  	Conversion and Continuation Elections	  	22
			
	 2.05
	  	Voluntary Termination or Reduction of Commitments	  	23
			
	 2.06
	  	Optional Prepayments	  	24
			
	 2.07
	  	Repayment	  	24
			
	 2.08
	  	Interest	  	24
			
	 2.09
	  	Fees	  	25
			
	 2.10
	  	Computation of Fees and Interest	  	25
			
	 2.11
	  	Payments Generally	  	25
			
	 2.12
	  	Sharing of Payments, Etc.	  	27
			
	 ARTICLE III
	  	    TAXES, YIELD PROTECTION AND ILLEGALITY	  	27
			
	 3.01
	  	Taxes	  	27
			
	 3.02
	  	Illegality	  	28
			
	 3.03
	  	Increased Costs and Reduction of Return	  	29
			
	 3.04
	  	Funding Losses	  	30
			
	 3.05
	  	Inability to Determine Rates	  	30
			
	 3.06
	  	Reserves on Offshore Rate Loans	  	31
			
	 3.07
	  	Certificates of Banks	  	31
			
	 3.08
	  	Delay	  	31
			
	 3.09
	  	Replacement of Banks	  	31
			
	 3.10
	  	Survival	  	31

  

 i 

 TABLE OF CONTENTS 
 (continued) 
  

					
	 	  	 	  	Page

	 ARTICLE IV
	  	    CONDITIONS PRECEDENT	  	31
	 4.01
	  	Conditions of Initial Loans	  	31
			
	 4.02
	  	Conditions to All Borrowings	  	33
			
	 4.03
	  	Additional Condition Precedent of Initial Loans	  	33
			
	 ARTICLE V
	  	    REPRESENTATIONS AND WARRANTIES	  	34
			
	 5.01
	  	Corporate Existence and Power	  	34
			
	 5.02
	  	Corporate Authorization; No Contravention	  	34
			
	 5.03
	  	Governmental Authorization	  	34
			
	 5.04
	  	Binding Effect	  	35
			
	 5.05
	  	Litigation	  	35
			
	 5.06
	  	No Default	  	35
			
	 5.07
	  	ERISA Compliance	  	35
			
	 5.08
	  	Use of Proceeds; Margin Regulations	  	36
			
	 5.09
	  	Title to Properties	  	36
			
	 5.10
	  	Taxes	  	36
			
	 5.11
	  	Financial Condition	  	36
			
	 5.12
	  	Environmental Matters	  	37
			
	 5.13
	  	Regulated Entities	  	37
			
	 5.14
	  	No Burdensome Restrictions	  	37
			
	 5.15
	  	Copyrights, Patents, Trademarks and Licenses, Etc.	  	37
			
	 5.16
	  	Subsidiaries	  	37
			
	 5.17
	  	Insurance	  	38
			
	 5.18
	  	Swap Obligations	  	38
			
	 5.19
	  	Full Disclosure	  	38
			
	 5.20
	  	Tax Shelter Regulations	  	38
			
	 ARTICLE VI
	  	    AFFIRMATIVE COVENANTS	  	39
			
	 6.01
	  	Financial Statements	  	39
			
	 6.02
	  	Certificates; Other Information	  	39
			
	 6.03
	  	Notices	  	41
			
	 6.04
	  	Preservation of Corporate Existence, Etc.	  	42

  

 ii 

 TABLE OF CONTENTS 
 (continued) 
  

					
	 	  	 	  	Page

	 6.05
	  	Maintenance of Property	  	42
			
	 6.06
	  	Insurance	  	42
			
	 6.07
	  	Payment of Obligations	  	42
			
	 6.08
	  	Compliance with Laws	  	43
			
	 6.09
	  	Compliance with ERISA	  	43
			
	 6.10
	  	Inspection of Property and Books and Records	  	43
			
	 6.11
	  	Environmental Laws	  	44
			
	 6.12
	  	Use of Proceeds	  	44
			
	 6.13
	  	Additional Guarantors	  	44
			
	 ARTICLE VII
	  	    NEGATIVE COVENANTS	  	44
			
	 7.01
	  	Limitation on Liens	  	44
			
	 7.02
	  	Disposition of Assets	  	46
			
	 7.03
	  	Consolidations and Mergers	  	48
			
	 7.04
	  	Loans and Investments	  	48
			
	 7.05
	  	Limitation on Indebtedness	  	50
			
	 7.06
	  	Transactions with Affiliates	  	51
			
	 7.07
	  	Use of Proceeds	  	51
			
	 7.08
	  	Contingent Obligations	  	52
			
	 7.09
	  	Lease Obligations	  	52
			
	 7.10
	  	Restricted Payments	  	53
			
	 7.11
	  	ERISA	  	53
			
	 7.12
	  	Change in Business	  	54
			
	 7.13
	  	Accounting Changes	  	54
			
	 7.14
	  	Financial Covenants	  	54
			
	 7.15
	  	Assets of Special Purpose Subsidiary	  	56
			
	 7.16
	  	Unrestricted Subsidiaries	  	56
			
	 ARTICLE VIII
	  	    EVENTS OF DEFAULT	  	57
			
	 8.01
	  	Event of Default	  	57
			
	 8.02
	  	Remedies	  	59

  

 iii 

 TABLE OF CONTENTS 
 (continued) 
  

					
	 	  	 	  	Page

	 8.03
	  	Rights Not Exclusive	  	59
			
	 8.04
	  	Application of Funds	  	60
			
	 ARTICLE IX
	  	    THE AGENT	  	60
			
	 9.01
	  	Appointment and Authority	  	60
			
	 9.02
	  	Rights as a Bank	  	60
			
	 9.03
	  	Exculpatory Provisions	  	61
			
	 9.04
	  	Reliance by Agent	  	61
			
	 9.05
	  	Delegation of Duties	  	62
			
	 9.06
	  	Resignation of Agent	  	62
			
	 9.07
	  	Non-Reliance on Agent and Other Banks	  	62
			
	 9.08
	  	No Other Duties, Etc.	  	63
			
	 9.09
	  	Agent May File Proofs of Claim	  	63
			
	 9.10
	  	Guaranty Matters	  	63
			
	 ARTICLE X
	  	    MISCELLANEOUS	  	64
			
	 10.01
	  	Amendments and Waivers	  	64
			
	 10.02
	  	Notices	  	65
			
	 10.03
	  	No Waiver; Cumulative Remedies	  	67
			
	 10.04
	  	Expenses; Indemnity; Damage Waiver	  	67
			
	 10.05
	  	Payments Set Aside	  	68
			
	 10.06
	  	Successors and Assigns	  	69
			
	 10.07
	  	Withholding Tax	  	71
			
	 10.08
	  	Treatment of Certain Information; Confidentiality	  	72
			
	 10.09
	  	Set-off	  	73
			
	 10.10
	  	Automatic Debits of Fees	  	74
			
	 10.11
	  	Notification of Addresses, Lending Offices, Etc.	  	74
			
	 10.12
	  	Release of Guaranty	  	74
			
	 10.13
	  	Counterparts	  	74
			
	 10.14
	  	Severability	  	74
			
	 10.15
	  	No Third Parties Benefited	  	74

  

 iv 

 TABLE OF CONTENTS 
 (continued) 
  

					
	 	  	 	  	Page

	 10.16
	  	Replacement of Banks	  	74
			
	 10.17
	  	Governing Law and Jurisdiction	  	75
			
	 10.18
	  	Waiver of Jury Trial	  	76
			
	 10.19
	  	Survival of Representations and Warranties	  	76
			
	 10.20
	  	USA PATRIOT Act Notice	  	76
			
	 10.21
	  	Entire Agreement	  	76

  

 v 

 TABLE OF CONTENTS 
 (continued) 
  

					
	 	  	 	  	 Page

	ANNEX	  	 	  	 
	 Annex I
	  	Pricing Grid	  	 
			
	SCHEDULES	  	 	  	 
	Schedule 2.01	  	Commitments and Pro Rata Shares	  	 
	 Schedule 5.05
	  	Litigation	  	 
	 Schedule 5.07
	  	ERISA	  	 
	 Schedule 5.12
	  	Environmental Matters	  	 
	 Schedule 5.15
	  	Intellectual Property Matters	  	 
	 Schedule 5.16
	  	Subsidiaries and Equity Investments	  	 
	 Schedule 5.17
	  	Insurance Matters	  	 
	 Schedule 7.01
	  	Permitted Liens	  	 
	 Schedule 7.02
	  	Permitted Asset Dispositions	  	 
	 Schedule 7.04
	  	Permitted Investments	  	 
	 Schedule 7.05
	  	Permitted Indebtedness	  	 
	 Schedule 7.08
	  	Contingent Obligations	  	 
	 Schedule 10.02
	  	Offshore and Domestic Lending Offices, Addresses for Notices	  	 
	 Schedule 10.06
	  	Processing and Recordation Fees	  	 
			
	EXHIBITS	  	 	  	 
	 Exhibit A
	  	Form of Notice of Borrowing	  	 
	 Exhibit B
	  	Form of Notice of Conversion/Continuation	  	 
	 Exhibit C
	  	Form of Compliance Certificate	  	 
	 Exhibit D
	  	Form of Assignment and Assumption Agreement	  	 
	 Exhibit E
	  	Form of Promissory Note	  	 
	 Exhibit F
	  	Form of Notice of Designation of Unrestricted Subsidiary	  	 
	 Exhibit G
	  	Form of Guaranty	  	 

  

 vi 

 CREDIT AGREEMENT 
  
 This CREDIT AGREEMENT is entered into as of June 1, 2005, among Mentor Graphics Corporation, an Oregon corporation (the
“Company”), the several financial institutions from time to time party to this Agreement (collectively, the “Banks”; individually, a “Bank”), KeyBank National Association, as documentation agent
(the “Documentation Agent”) and Bank of America, N.A., as administrative agent for the Banks. 
  
 WHEREAS, the Banks have agreed to make available to the Company a revolving credit facility upon the terms and conditions set forth in this Agreement;

  
 WHEREAS, certain Material Domestic Subsidiaries have
agreed to guarantee the Obligations hereunder and under the other Loan Documents; 
  
 NOW, THEREFORE, in consideration of the mutual agreements, provisions and covenants contained herein, the parties agree as follows: 
  
 ARTICLE I  
  
 DEFINITIONS 
  
 1.01 Certain Defined Terms. The following terms have the following meanings: 
  
 “Acquisition” means any transaction or series of related transactions for the purpose of or
resulting, directly or indirectly, in (a) the acquisition of all or substantially all of the assets of a Person, or of any line of business or division of a Person, (b) the acquisition of in excess of 50% of the capital stock, partnership interests,
membership interests or equity of any Person, or otherwise causing any Person to become a Subsidiary, or (c) a merger or consolidation or any other combination with another Person (other than a Person that is a Subsidiary) provided that the Company
or the Subsidiary is the surviving entity. 
  
 “Act” has the meaning specified in Section 10.20. 
  
 “Adjusted Quick Ratio” has the meaning specified in Section 7.14(a). 
  
 “Administrative Questionnaire” means an administrative questionnaire in a form supplied by the Agent. 
  
 “Affiliate” means, as to any Person, any
other Person which, directly or indirectly, is in control of, is controlled by, or is under common control with, such Person. A Person shall be deemed to control another Person if the controlling Person possesses, directly or indirectly, the power
to direct or cause the direction of the management and policies of the other Person, whether through the ownership of voting securities, membership interests, by contract, or otherwise. 
  
 “Agent” means Bank of America in its capacity as administrative agent for the Banks
hereunder, and any successor administrative agent arising under Section 9.06. 

 “Agent Parties” has the meaning specified in Section 10.02(c).

  
 “Agent’s Payment
Office” means the address for payments set forth on Schedule 10.02 or such other address as the Agent may from time to time specify. 
  
 “Agreement” means this Credit Agreement. 
  
 “Applicable Margin” means, for any day, with respect to any Base Rate Loan or Offshore Rate
Loan, the applicable margin (on a per annum basis) set forth on the pricing grid attached as Annex I in accordance with the parameters for calculation and adjustment of such applicable margin also set forth on Annex I. 
  
 “Approved Fund” means any Fund that is
administered or managed by (a) a Bank, (b) an Affiliate of a Bank or (c) an entity or an Affiliate of an entity that administers or manages a Bank. 
  
 “Arranger” means Banc of America Securities LLC. 
  
 “Assignee Group” means two or more Eligible Assignees that are Affiliates of one another or
two or more Approved Funds managed by the same investment advisor. 
  
 “Assignment and Assumption” means an Assignment and Assumption substantially in the form of Exhibit D. 
  
 “Attorney Costs” means and includes all fees and disbursements of any law firm or other external counsel, the reasonable
allocated cost of internal legal services and all disbursements of internal counsel. 
  
 “Bank” has the meaning specified in the introductory clause hereto. 
  
 “Bank of America” means Bank of America,
N.A., a national banking association. 
  
 “Bankruptcy Code” means the Federal Bankruptcy Reform Act of 1978 (11 U.S.C. § 101, et seq.). 
  
 “Base Rate” means for any day a fluctuating rate per annum equal to the higher of (a) the Federal Funds Rate plus 1/2 of
1% and (b) the rate of interest in effect for such day as publicly announced from time to time by Bank of America as its “prime rate.” The “prime rate” is a rate set by Bank of America based upon various factors including Bank of
America’s costs and desired return, general economic conditions and other factors, and is used as a reference point for pricing some loans, which may be priced at, above, or below such announced rate. Any change in such rate announced by Bank
of America shall take effect at the opening of business on the day specified in the public announcement of such change. 
  
 “Base Rate Loan” means a Loan that bears interest based on the Base Rate. 
  

 2 

 “Borrowing” means a borrowing hereunder consisting of Loans of the same
Type made to the Company on the same day by the Banks under Article II, and, other than in the case of Base Rate Loans, having the same Interest Period. 
  
 “Borrowing Date” means any date on which a Borrowing occurs under Section 2.03. 
  
 “Business Day” means any day other than a
Saturday, Sunday or other day on which commercial banks in New York City, San Francisco, California, or Portland, Oregon, are authorized or required by law to close and, if the applicable Business Day relates to any Offshore Rate Loan, means such a
day on which dealings are carried on in the applicable offshore dollar interbank market. 
  
 “Capital Adequacy Regulation” means any guideline, request or directive of any central bank or other Governmental
Authority, or any other law, rule or regulation, whether or not having the force of law, in each case, regarding capital adequacy of any bank or of any corporation controlling a bank. 
  
 “Cash Acquisition Basket” has the meaning specified in Section 7.04(d). 
  
 “Cash Equivalents” means: 
  
 (a) securities issued or fully guaranteed or insured by the
United States Government or any agency thereof having maturities of not more than 12 months from the date of acquisition by the Company or any of its Subsidiaries; 
  
 (b) certificates of deposit, time deposits, Eurodollar time deposits, repurchase agreements, reverse
repurchase agreements, or bankers’ acceptances, having in each case maturities of not more than 12 months from the date of acquisition by the Company or any of its Subsidiaries, issued by (i) any U.S. commercial bank or any commercial bank
organized under the laws of any other country which is a member of the Organization for Economic Cooperation and Development (but including, in any event, China, Egypt, India, Israel, Pakistan, Singapore and Taiwan), or a political subdivision of
any such country, in each case having combined capital and surplus of not less than $100,000,000 and whose short-term securities are rated at least A-1 by S&P or at least P-1 by Moody’s, or (ii) any Bank; 
  
 (c) taxable and tax-exempt commercial paper of an issuer
rated at least A-l by S&P or at least P-l by Moody’s and in either case having maturities of not more than 270 days from the date of acquisition by the Company or any of its Subsidiaries; 
  
 (d) medium term notes of an issuer rated at least AA by
S&P or at least Aa2 by Moody’s and having maturities of not more than 12 months from the date of acquisition by the Company or any of its Subsidiaries; 
  
 (e) municipal notes and bonds which are rated at least SP-2 or AA by S&P or at least MIG-2 or Aa by
Moody’s and having maturities of not more than 12 months from the date of acquisition by the Company or any of its Subsidiaries; 
  

 3 

 (f) investments in taxable or tax-exempt money market funds with assets greater than
$500,000,000 and whose assets have average maturities less than or equal to 180 days and are rated at least A-l by S&P or at least P-l by Moody’s; 
  
 (g) money market preferred instruments of an issuer rated at least A-1 by S&P or at least P-1 by Moody’s and having maturities of
not more than 12 months from the date of acquisition by the Company or any of its Subsidiaries; 
  
 (g) solely with respect to Cash Equivalents held by Foreign Subsidiaries, similar investments to those set forth in clauses (a) through
(g) in the applicable foreign market; or 
  
 (i)
other similar investments, subject to the Majority Banks’ prior written approval. 
  
 “Change of Control” means (a) any “person” (as such term is used in subsections 13(d) and 14(d) of the Exchange
Act) or group of persons on or after the Closing Date is or becomes the “beneficial owner” (as defined in Rule 13d-3 under said Act), directly or indirectly, of securities of the Company representing 35% or more of the combined voting
power of the Company’s then-outstanding voting securities, or (b) the existing directors for any reason cease to constitute a majority of the Company’s board of directors. “Existing directors” means (x) individuals
constituting the Company’s board of directors on the Closing Date, and (y) any subsequent director whose election by the board of directors or nomination for election by the Company’s shareholders was approved by a vote of at least a
majority of the directors then in office, which directors either were directors on the Closing Date or whose election or nomination for election was previously so approved. 
  
 “Closing Date” means the date on which all conditions precedent set forth in Section 4.01
are satisfied or waived by all Banks (or, in the case of Section 4.01(e), waived by the Person entitled to receive such payment). 
  
 “Code” means the Internal Revenue Code of 1986, and regulations promulgated thereunder. 
  
 “Commitment”, as to each Bank, has the
meaning specified in Section 2.01. 
  
 “Commitment Fee” has the meaning specified in Section 2.09(b). 
  
 “Company Materials” has the meaning specified in Section 6.02. 
  
 “Compliance Certificate” means a
certificate substantially in the form of Exhibit C. 
  
 “Consolidated Current Liabilities” means, at any time of determination, all amounts which would, in accordance with GAAP, be included under current liabilities on a consolidated balance sheet of the Company and its
Subsidiaries, but in any event including all outstanding Loans, at such time. 
  

 4 

 “Consolidated EBITDA” means, with respect to the Company and its
Subsidiaries on a consolidated basis for any rolling four-quarter period, Consolidated Net Income for such period plus, to the extent deducted in computing such net income, the sum of (a) income tax expense, (b) interest expense, and (c)
depreciation and amortization expense, all as determined in accordance with GAAP. 
  
 “Consolidated Funded Indebtedness” means, as of any time of determination, in respect of the Company and its
Subsidiaries, determined on a consolidated basis, the sum of (a) the outstanding principal amount of all obligations, whether current or long-term, for borrowed money (including Obligations hereunder) and all obligations evidenced by bonds,
debentures, notes, loan agreements or other similar instruments, (b) Indebtedness in respect of capital leases recorded on the consolidated balance sheet of the Company and its Subsidiaries in accordance with GAAP, and (c) without duplication, all
Guaranty Obligations with respect to Indebtedness of the types specified in subsections (a) and (b) above of Persons other than the Company or any Subsidiary, except with respect to automobile leasing programs for employees in Europe; provided that,
solely for purposes of this clause (c) with respect to any such Guaranty Obligations that are in the aggregate not material and are not reflected on the consolidated financial statements of the Company and its Subsidiaries in accordance with GAAP,
the Company may in lieu of reporting actual amounts of such Guaranty Obligations substitute therefor a conservative good faith estimate of such Guaranty Obligations. 
  
 “Consolidated Net Income” means, for any period, in respect of the Company and its
Subsidiaries, determined on a consolidated basis, the net income of the Company and its Subsidiaries for that period, all as determined in accordance with GAAP. 
  
 “Consolidated Tangible Net Worth” means, at any time of determination, in respect of the
Company and its Subsidiaries, determined on a consolidated basis, total assets (exclusive of goodwill, trademarks, trade names, organization expense, treasury stock, unamortized debt discount and premium and other like intangibles) minus
total liabilities (including accrued and deferred income taxes), at such time, all as determined in accordance with GAAP. 
  
 “Contingent Obligation” means, as to any Person, any direct or indirect liability of that Person, whether or not
contingent, with or without recourse, (a) with respect to any Indebtedness, lease, dividend, letter of credit or other obligation (the “primary obligations”) of another Person (the “primary obligor”), including any obligation of
that Person (i) to purchase, repurchase or otherwise acquire such primary obligations or any security therefor, (ii) to advance or provide funds for the payment or discharge of any such primary obligation, or to maintain working capital or equity
capital of the primary obligor or otherwise to maintain the net worth or solvency or any balance sheet item, level of income or financial condition of the primary obligor, (iii) to purchase property, securities or services primarily for the purpose
of assuring the owner of any such primary obligation of the ability of the primary obligor to make payment of such primary obligation, or (iv) otherwise to assure or hold harmless the holder of any such primary obligation against loss in respect
thereof (each, a “Guaranty Obligation”); (b) with respect to any Surety Instrument issued for the account of that Person or as to which that 

  

 5 

 
Person is otherwise liable for reimbursement of drawings or payments; (c) to purchase any materials, supplies or other property from, or to obtain the
services of, another Person if the relevant contract or other related document or obligation requires that payment for such materials, supplies or other property, or for such services, shall be made regardless of whether delivery of such materials,
supplies or other property is ever made or tendered, or such services are ever performed or tendered, or (d) in respect of any Swap Contract. The amount of any Contingent Obligation shall, in the case of Guaranty Obligations, be deemed equal to the
stated or determinable amount of the primary obligation at the time of such determination in respect of which such Guaranty Obligation is made or, if not stated or if indeterminable, the maximum reasonably anticipated liability in respect thereof at
the time of such determination, and in the case of other Contingent Obligations other than in respect of Swap Contracts, shall be equal to the maximum reasonably anticipated liability in respect thereof and, in the case of Contingent Obligations in
respect of Swap Contracts, shall be equal to the Swap Termination Value at the time of such determination. 
  
 “Contractual Obligation” means, as to any Person, any provision of any security issued by such Person or of any
agreement, undertaking, contract, indenture, mortgage, deed of trust or other instrument, document or agreement to which such Person is a party or by which it or any of its property is bound. 
  
 “Conversion/Continuation Date” means any
date on which, under Section 2.04, the Company (a) converts Loans of one Type to another Type, or (b) continues as Loans of the same Type, but with a new Interest Period, Loans having Interest Periods expiring on such date. 
  
 “Debtor Relief Laws” means the Bankruptcy
Code, and all other liquidation, conservatorship, bankruptcy, assignment for the benefit of creditors, moratorium, rearrangement, receivership, insolvency, reorganization, or similar debtor relief laws of the United States or other applicable
jurisdictions from time to time in effect and affecting the rights of creditors generally. 
  
 “Default” means any event or circumstance which, with the giving of notice, the lapse of time, or both, would (if not
cured or otherwise remedied during such time) constitute an Event of Default. 
  
 “Defaulting Bank” means any Bank that (a) has failed to fund any portion of the Loan required to be funded by it hereunder within one Business Day of the date required to be funded by it hereunder,
(b) has otherwise failed to pay over to the Agent or any other Bank any other amount required to be paid by it hereunder within one Business Day of the date when due, unless the subject of a good faith dispute, or (c) has been deemed insolvent or
become the subject of a bankruptcy or insolvency proceeding. 
  
 “Dollars”, “dollars” and “$” each mean lawful money of the United States. 
  

 6 

 “Domestic Subsidiary” means any Subsidiary of the Company that is
incorporated or organized under the laws of the United States of America, any state thereof or the District of Columbia. 
  
 “Eligible Assignee” means (a) a Bank; (b) an Affiliate of a Bank; (c) an Approved Fund; and (d) any other Person (other
than a natural person) approved by (i) the Agent, and (ii) unless an Event of Default has occurred and is continuing, the Company (each such approval not to be unreasonably withheld or delayed); provided that notwithstanding the foregoing,
“Eligible Assignee” shall not include the Company or any of the Company’s Affiliates or Subsidiaries. 
  
 “Environmental Claims” means all claims, however asserted, by any Governmental Authority or other Person alleging
potential liability or responsibility for violation of any Environmental Law, including for release or injury to the environment. 
  
 “Environmental Laws” means all federal, state or local laws, statutes, common law duties, rules, regulations, ordinances
and codes, together with all administrative orders, directed duties, requests, licenses, authorizations and permits of, and agreements with, any Governmental Authorities, in each case relating to environmental, health, safety and land use matters.

  
 “Environmental Liability”
means any liability, contingent or otherwise (including any liability for damages, costs of environmental remediation, fines, penalties or indemnities), of the Company or any of its Subsidiaries directly or indirectly resulting from or based upon
(a) violation of any Environmental Law, (b) the generation, use, handling, transportation, storage, treatment or disposal of any Hazardous Materials, (c) exposure to any Hazardous Materials, (d) the release or threatened release of any Hazardous
Materials into the environment or (e) any contract, agreement or other consensual arrangement pursuant to which liability is assumed or imposed with respect to any of the foregoing. 
  
 “ERISA” means the Employee Retirement Income Security Act of 1974, and regulations
promulgated thereunder. 
  
 “ERISA
Affiliate” means any trade or business (whether or not incorporated) under common control with any Loan Party within the meaning of Section 414(b) or (c) of the Code (and Sections 414(m) and (o) of the Code for purposes of provisions
relating to Section 412 of the Code). 
  
 “ERISA Event” means (a) a Reportable Event with respect to a Pension Plan; (b) a withdrawal by any Loan Party or any ERISA Affiliate from a Pension Plan subject to Section 4063 of ERISA during a plan year in which it was a
substantial employer (as defined in Section 4001(a)(2) of ERISA) or a cessation of operations which is treated as such a withdrawal under Section 4062(e) of ERISA; (c) a complete or partial withdrawal by any Loan Party or any ERISA Affiliate from a
Multiemployer Plan or notification that a Multiemployer Plan is in reorganization; (d) the filing of a notice of intent to terminate, the treatment of a Plan amendment as a termination under Section 4041 or 4041A of 

  

 7 

 
ERISA, or the commencement of proceedings by the PBGC to terminate a Pension Plan or Multiemployer Plan; (e) an event or condition which is reasonably
expected to constitute grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Pension Plan or Multiemployer Plan; or (f) the imposition of any liability under Title IV of ERISA in excess of
$1,000,000, other than PBGC premiums due but not delinquent under Section 4007 of ERISA, upon any Loan Party or any ERISA Affiliate. 
  
 “Event of Default” means any of the events or circumstances specified in Section 8.01. 
  
 “Exchange Act” means the Securities
Exchange Act of 1934, and regulations promulgated thereunder. 
  
 “Federal Funds Rate” means, for any day, the rate per annum equal to the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by
Federal funds brokers on such day, as published by the Federal Reserve Bank of New York on the Business Day next succeeding such day; provided that (a) if such day is not a Business Day, the Federal Funds Rate for such day shall be such rate on such
transactions on the next preceding Business Day as so published on the next succeeding Business Day, and (b) if no such rate is so published on such next succeeding Business Day, the Federal Funds Rate for such day shall be the weighted average rate
(rounded upward, if necessary, to a whole multiple of 1/100 of 1%) charged to Bank of America on such day on such transactions as determined by the Agent. 
  
 “Fee Letter” has the meaning specified in Section 2.09(a). 
  
 “Foreign Plan” means any employee benefit plan maintained or contributed to by a Loan Party
that is mandated or governed by any law, rule or regulation of any Governmental Authority other than the United States of America, any state thereof or any other political subdivision thereof. 
  
 “Foreign Subsidiary” means any Subsidiary
of the Company that is not a Domestic Subsidiary. 
  
 “FRB” means the Board of Governors of the Federal Reserve System, and any Governmental Authority succeeding to any of its principal functions. 
  
 “Fund” means any Person (other than a natural person) that is (or will be) engaged in
making, purchasing, holding or otherwise investing in commercial loans and similar extensions of credit in the ordinary course of its business. 
  
 “Further Taxes” means any and all present or future taxes, levies, assessments, imposts, duties, deductions, fees,
withholdings or similar charges (including, without limitation, net income taxes and franchise taxes), and all liabilities with respect thereto, imposed by any jurisdiction on account of amounts payable or paid pursuant to Section 3.01. 

 

 8 

 “GAAP” means generally accepted accounting principles set forth from
time to time 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 agencies with similar
functions of comparable stature and authority within the U.S. accounting profession), which are applicable to the circumstances as of the date of determination. 
  
 “Governmental Authority” means any nation or government, any state or other political
subdivision thereof, any central bank (or similar monetary or regulatory authority) thereof, any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government, and any corporation or other
entity owned or controlled, through stock or capital ownership or otherwise, by any of the foregoing. 
  
 “Guarantors” means, collectively, the Material Domestic Subsidiaries of the Company that execute and deliver a
counterpart of the Guaranty on the Closing Date or from time to time thereafter pursuant to Section 6.13. 
  
 “Guaranty” means the Guaranty made by the Guarantors in favor of the Agent and the Banks, substantially in the form of
Exhibit G. 
  
 “Guaranty
Obligation” has the meaning specified in the definition of “Contingent Obligation.” 
  
 “Hazardous Materials” means all explosive or radioactive substances or wastes and all hazardous or toxic substances,
wastes or other pollutants, including petroleum or petroleum distillates, asbestos or asbestos-containing materials, polychlorinated biphenyls, radon gas, infectious or medical wastes and all other substances or wastes of any nature regulated as
such pursuant to any Environmental Law. 
  
 “Indebtedness” of any Person means, without duplication, (a) all indebtedness for borrowed money; (b) all obligations issued, undertaken or assumed as the deferred purchase price of property or services (other than trade
payables entered into in the ordinary course of business on ordinary terms); (c) all non-contingent reimbursement or payment obligations with respect to Surety Instruments; (d) all obligations evidenced by notes, bonds, debentures or similar
instruments, including obligations so evidenced incurred in connection with the acquisition of property, assets or businesses; (e) all indebtedness created or arising under any conditional sale or other title retention agreement, or incurred as
financing, in either case with respect to property acquired by the Person (even though the rights and remedies of the seller or bank under such agreement in the event of default are limited to repossession or sale of such property); (f) all
obligations with respect to capital leases; (g) all indebtedness referred to in clauses (a) through (f) above secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) any Lien upon or
in property (including accounts and contracts rights) owned by such Person, even though such Person has not assumed or become liable for the payment of such Indebtedness; and (h) all Guaranty Obligations in respect of indebtedness or obligations of
others of the kinds 

  

 9 

 
referred to in clauses (a) through (g) above. Provided, Indebtedness shall not include sales of Permitted Receivables sold pursuant to Permitted Receivables
Purchase Facilities and indemnification, recourse or repurchase obligations thereunder. For all purposes of this Agreement, the Indebtedness of any Person shall include all recourse Indebtedness of any partnership or joint venture in which such
Person is a general partner or a joint venturer. 
  
 “Indemnified Liabilities” has the meaning specified in Section 10.04. 
  
 “Indemnitee” has the meaning specified in Section 10.04. 
  
 “Independent Auditor” has the meaning specified in Section 6.01(a). 
  
 “Ineligible Securities” has the meaning
specified in Section 7.07(b). 
  
 “Information” has the meaning specified in Section 10.08. 
  
 “Insolvency Proceeding” means, with respect to any Person, (a) any case, action or proceeding with respect to such Person
before any court or other Governmental Authority relating to bankruptcy, reorganization, insolvency, liquidation, receivership, dissolution, winding-up or relief of debtors, or (b) any general assignment for the benefit of creditors, composition,
marshalling of assets for creditors, or other, similar arrangement in respect of its creditors generally or any substantial portion of its creditors; undertaken under U.S. Federal, state or foreign law, including the Bankruptcy Code. 
  
 “Interest Payment Date” means, as to any
Loan other than a Base Rate Loan, the last day of each Interest Period applicable to such Loan and, as to any Base Rate Loan, the last Business Day of each calendar quarter, provided, however, that if any Interest Period for an Offshore Rate Loan
exceeds three months, the date that falls three months after the beginning of such Interest Period and after each Interest Payment Date thereafter is also an Interest Payment Date. 
  
 “Interest Period” means, as to any Offshore Rate Loan, the period commencing on the
Borrowing Date of such Loan or on the Conversion/Continuation Date on which the Loan is converted into or continued as an Offshore Rate Loan, and ending on the date one, two, three or six months thereafter as selected by the Company in its Notice of
Borrowing or Notice of Conversion/Continuation; 
  
 provided
that: 
  
 (i) if any Interest Period would
otherwise end on a day that is not a Business Day, that Interest Period shall be extended to the following Business Day unless, in the case of an Offshore Rate Loan, the result of such extension would be to carry such Interest Period into another
calendar month, in which event such Interest Period shall end on the preceding Business Day; 
  
 (ii) any Interest Period pertaining to an Offshore Rate Loan that begins on the last Business Day of a calendar month (or on a day for
which there is no numerically corresponding day in the calendar month at the end of such Interest Period) shall end on the last Business Day of the calendar month at the end of such Interest Period; and 
  

 10 

 (iii) no Interest Period for any Loan shall extend beyond June 1, 2009. 
  
 “Investments” has the meaning specified in
Section 7.04. 
  
 “IRS” means
the Internal Revenue Service, and any Governmental Authority succeeding to any of its principal functions under the Code. 
  
 “Lending Office” means, as to any Bank, the office or offices of such Bank described as such in such Bank’s
Administrative Questionnaire, or such other office or offices as a Bank may from time to time notify the Company and the Agent. 
  
 “Leverage Ratio” means, as of any time of determination, the ratio of (a) total consolidated liabilities in respect of
the Company and its Subsidiaries, determined on a consolidated basis in accordance with GAAP, minus Subordinated Indebtedness, to (b) the sum of Consolidated Tangible Net Worth, plus Subordinated Indebtedness, in each case at such time. 

 
 “Lien” means any security interest,
mortgage, deed of trust, pledge, hypothecation, assignment, charge or deposit arrangement, encumbrance, lien (statutory or other) or preferential arrangement of any kind or nature whatsoever in respect of any property (including those created by,
arising under or evidenced by any conditional sale or other title retention agreement, the interest of a lessor under a capital lease, any financing lease having substantially the same economic effect as any of the foregoing, or the filing of any
financing statement naming the owner of the asset to which such lien relates as debtor, under the Uniform Commercial Code or any comparable law) and any contingent or other agreement to provide any of the foregoing, but not including the interest of
a lessor under an operating lease or the interest of a purchaser of Permitted Receivables under any Permitted Receivables Purchase Facility. 
  
 “Loan” means an extension of credit by a Bank to the Company under Article II, and may be a Base Rate Loan or an Offshore
Rate Loan (each, a “Type” of Loan). 
  
 “Loan Documents” means this Agreement, any Notes, the Fee Letter, the Guaranty and all other documents delivered to the Agent or any Bank in connection herewith. 
  
 “Loan Parties” means, collectively, the Company and each Guarantor. 
  
 “Majority Banks” means at any time at least
two Banks then holding more than 50% of the then aggregate unpaid principal amount of the Loans, or, if no such principal amount is then outstanding, at least two Banks then holding more than 50% of the Commitments. 
  
 “Margin Stock” means “margin
stock” as such term is defined in Regulation T, U or X of the FRB. 
  

 11 

 “Material Adverse Effect” means (a) a material adverse change in, or a
material adverse effect upon, the operations, business, properties or condition (financial or otherwise) of the Company and its Subsidiaries taken as a whole; (b) a material impairment of the ability of the Loan Parties to perform under the Loan
Documents and to avoid any Event of Default; or (c) a material impairment of the rights of or benefits available to the Banks or the Agent under any Loan Document. 
  
 “Material Domestic Subsidiary” means any Domestic Subsidiary that is a Material Subsidiary.

  
 “Material Subsidiary” means
any Subsidiary which (a) for any period, has revenues equal to or greater than 5% of the consolidated revenues of the Company and its Subsidiaries, taken as a whole, or (b) as of the end of any period, has assets equal to or greater than 5% of the
consolidated assets of the Company and its Subsidiaries, take as a whole, but in any event shall not include any Unrestricted Subsidiary. 
  
 “Moody’s” means Moody’s Investor Service, Inc. 
  
 “Multiemployer Plan” means a “multiemployer plan”, within the meaning of Section
4001(a)(3) of ERISA, to which any Loan Party or any ERISA Affiliate makes, is making, or is obligated to make contributions or, during the preceding three calendar years, has made, or been obligated to make, contributions. 
  
 “Net Cash Consideration” means, in respect
of any Acquisition, the cash consideration paid, including holdbacks, escrows and accruals, by the Company or any of its Subsidiaries in respect of such Acquisition less the unencumbered cash and Cash Equivalents of the target Person
(including, without limitation, unencumbered cash and Cash Equivalents tendered by holders of options to purchase the target Person’s capital stock upon the exercise of such options), in each case, which are acquired by the Company or any of
its Subsidiaries as a result of such Acquisition; provided that if the forgoing calculation in respect of any Acquisition results in a negative amount, the Net Cash Consideration in respect of such Acquisition shall be deemed to be zero. 

 
 “Net Cash Issuance Proceeds” means, as
to any issuance of debt or equity by any Person, cash proceeds received or receivable by such Person in connection therewith, net of commissions, underwriting fees and discounts and other reasonable out-of-pocket costs and expenses paid or incurred
in connection therewith in favor of any Person not an Affiliate of such Person. 
  
 “Net Issuance Proceeds” means, as to any issuance of debt or equity by any Person, cash proceeds and non-cash proceeds
received or receivable by such Person in connection therewith, net of commissions, underwriting fees and discounts and other reasonable out-of-pocket costs and expenses paid or incurred in connection therewith in favor of any Person not an Affiliate
of such Person. 
  
 “Note” means
a promissory note executed by the Company in favor of a Bank pursuant to Section 2.02(b), in substantially the form of Exhibit E. 
  

 12 

 “Notice of Borrowing” means a notice in substantially the form of
Exhibit A. 
  
 “Notice of
Conversion/Continuation” means a notice in substantially the form of Exhibit B. 
  
 “Notice of Designation” has the meaning specified in Section 1.04(b). 
  
 “Obligations” means all advances, debts,
liabilities, obligations, covenants and duties arising under any Loan Document owing by any Loan Party to any Bank, the Agent, or any Indemnitee, whether direct or indirect (including those acquired by assignment), absolute or contingent, due or to
become due, now existing or hereafter arising. 
  
 “Offset Proceeds” has the meaning specified in Section 7.14(a). 
  
 “Offshore Rate” means, for any Interest Period with respect to an Offshore Rate Loan, the rate per annum equal to the
British Bankers Association LIBOR Rate (“BBA LIBOR”), as published by Reuters (or other commercially available source providing quotations of BBA LIBOR as designated by the Agent from time to time) at approximately 11:00 a.m.,
London time, two Business Days prior to the commencement of such Interest Period, for Dollar deposits (for delivery on the first day of such Interest Period) with a term equivalent to such Interest Period. If such rate is not available at such time
for any reason, then the “Offshore Rate” for such Interest Period shall be the rate per annum determined by the Agent to be the rate at which deposits in Dollars for delivery on the first day of such Interest Period in same day
funds in the approximate amount of the Offshore Rate Loan being made, continued or converted by Bank of America and with a term equivalent to such Interest Period would be offered by Bank of America’s London Branch to major banks in the London
interbank offshore market at their request at approximately 11:00 a.m. (London time) two Business Days prior to the commencement of such Interest Period. 
  
 “Offshore Rate Loan” means a Loan that bears interest at a rate based on the Offshore Rate. 
  
 “Organization Documents” means, (a) for any
corporation, the certificate or articles of incorporation, the bylaws, any certificate of determination or instrument relating to the rights of preferred shareholders of such corporation, any shareholder rights agreement, and all applicable
resolutions of the board of directors (or any committee thereof) of such corporation and (b) for any Person not a corporation, the partnership agreement, operating agreement and/or such other documents which govern such Person. 
  
 “Other Taxes” means any present or future
stamp, court or documentary taxes or any other excise or property taxes, charges or similar levies which arise from any payment made hereunder or from the execution, delivery, performance, enforcement or registration of, or otherwise with respect
to, this Agreement or any other Loan Documents. 
  
 “Participant” has the meaning specified in Section 10.06(d). 
  

 13 

 “PBGC” means the Pension Benefit Guaranty Corporation, or any
Governmental Authority succeeding to any of its principal functions under ERISA. 
  
 “Pension Plan” means a pension plan (as defined in Section 3(2) of ERISA) subject to Title IV of ERISA which any Loan
Party or ERISA Affiliate sponsors, maintains, or to which it makes, is making, or is obligated to make contributions, or in the case of a multiple employer plan (as described in Section 4064(a) of ERISA) has made contributions at any time during the
immediately preceding five plan years. 
  
 “Permitted Investments” means: 
  
 (a) securities issued or fully guaranteed or insured by the United States Government or any agency thereof having maturities of not more than three years from the date of acquisition by the Company or any of its
Subsidiaries; 
  
 (b) certificates of deposit,
time deposits, Eurodollar time deposits, repurchase agreements, reverse repurchase agreements, or bankers’ acceptances, having in each case maturities of not more than three years from the date of acquisition by the Company or any of its
Subsidiaries, issued by any U.S. commercial bank or any commercial bank organized under the laws of any other country which is a member of the Organization for Economic Cooperation and Development (but including, in any event, China, Egypt, India,
Israel, Pakistan, Singapore and Taiwan), or a political subdivision of any such country, in each case having combined capital and surplus of not less than $100,000,000 and whose short-term securities are rated at least A-2 by S&P or at least P-2
by Moody’s; 
  
 (c) taxable and tax-exempt
commercial paper of an issuer rated at least A-2 by S&P or at least P-2 by Moody’s and in either case having maturities of not more than 270 days from the date of acquisition by the Company or any of its Subsidiaries; 
  
 (d) medium term notes of an issuer rated at least AA by
S&P or at least Aa2 by Moody’s and having maturities of not more than three years after the date of acquisition by the Company or any of its Subsidiaries; 
  
 (e) municipal notes and bonds which are rated at least SP-2 or AA by S&P or at least MIG-2 or Aa by
Moody’s and having maturities of not more than three years after the date of acquisition by the Company or any of its Subsidiaries; 
  
 (f) investments in taxable or tax-exempt money market funds with assets greater than $500,000,000 and whose assets have average maturities
less than or equal to 180 days and are rated at least A-2 by S&P or at least P-2 by Moody’s; 
  
 (g) money market preferred instruments of an issuer rated at least A-2 by S&P or at least P-2 by Moody’s and having maturities of
not more than three years after the date of acquisition by the Company or any of its Subsidiaries; or 
  
 (h) other similar investments, subject to the Majority Banks’ prior written approval. 
  

 14 

 “Permitted Liens” has the meaning specified in Section 7.01. 

 
 “Permitted Receivables” shall mean all
obligations of any obligor (whether now existing or hereafter arising) under a contract for sale of goods or services by the Company or any of its Subsidiaries, including any obligation of such obligor (whether now existing or hereafter arising) to
pay interest, finance charges or amounts with respect thereto, and, with respect to any of the foregoing receivables or obligations, (a) all of the interest of the Company or any of its Subsidiaries in the goods (including returned goods) the sale
of which gave rise to such receivable or obligation after the passage of title thereto to any obligor, (b) all other Liens and property subject thereto from time to time purporting to secure payment of such receivables or obligations, and (c) all
guarantees, insurance, letters of credit and other agreements or arrangements of whatever character from time to time supporting or securing payment of any such receivables or obligations. 
  
 “Permitted Receivables Purchase Facility”
shall mean any agreement of the Company or any of its Subsidiaries providing for sales, transfers or conveyances of Permitted Receivables purporting to be sales (and considered sales under GAAP) that do not provide, directly or indirectly, for
recourse against the seller of such Permitted Receivables (or against any of such seller’s Affiliates) by way of a guaranty or any other support arrangement, with respect to the amount of such Permitted Receivables (based on the financial
condition or circumstances of the obligor thereunder), other than such limited recourse as is reasonable given market standards for transactions of a similar type, taking into account such factors as product performance and product acceptance.

  
 “Permitted Swap Obligations”
means all obligations (contingent or otherwise) of the Company or any Subsidiary existing or arising under Swap Contracts, provided that each of the following criteria is satisfied: (a) such obligations are (or were) entered into by such Person in
the ordinary course of business for the purpose of directly mitigating risks associated with liabilities, commitments or assets held by such Person, or changes in the value of securities issued by such Person in conjunction with a securities
repurchase program not otherwise prohibited hereunder, and not for purposes of speculation or taking a “market view;” and (b) such Swap Contracts do not contain (i) any provision (“walk-away” provision) exonerating the
non-defaulting party from its obligation to make payments on outstanding transactions to the defaulting party, or (ii) any provision creating or permitting the declaration of an event of default, termination event or similar event upon the
occurrence of an Event of Default hereunder (other than an Event of Default under Section 8.01(a)). 
  
 “Person” means an individual, partnership, corporation, limited liability company, business trust, joint stock company,
trust, unincorporated association, joint venture or Governmental Authority. 
  
 “Plan” means an employee benefit plan (as defined in Section 3(3) of ERISA) which any Loan Party sponsors or maintains or to which any Loan Party makes, is making, or is obligated to make
contributions and includes any Pension Plan. 
  
 “Platform” has the meaning specified in Section 6.02. 
  

 15 

 “Pro Rata Share” means, as to any Bank at any time, the percentage
equivalent (expressed as a decimal, rounded to the ninth decimal place) at such time of such Bank’s Commitment divided by the combined Commitments of all Banks (or, if all Commitments have been terminated, the aggregate principal amount of such
Bank’s Loans divided by the aggregate principal amount of the Loans then held by all Banks). 
  
 “Public Bank” has the meaning specified in Section 6.02. 
  
 “Related Parties” means, with respect to any Person, such Person’s Affiliates and the
partners, directors, officers, employees, agents and advisors of such Person and of such Person’s Affiliates. 
  
 “Refinancing Indebtedness” has the meaning specified in Section 7.05(f). 
  
 “Register” has the meaning specified in
Section 10.06(c). 
  
 “Reportable
Event” means, any of the events set forth in Section 4043(c) of ERISA or the regulations thereunder, other than any such event for which the 30-day notice requirement under ERISA has been waived in regulations issued by the PBGC.

  
 “Requirement of Law” means,
as to any Person, any law (statutory or common), treaty, rule or regulation or determination of an arbitrator or of a Governmental Authority, in each case applicable to or binding upon the Person or any of its property or to which the Person or any
of its property is subject. 
  
 “Responsible Officer” means the chief financial officer, the chief operating officer or the treasurer of a Loan Party, or any other officer having substantially the same authority and responsibility; or, with respect to
compliance with financial covenants, any of the above officers or the chief accounting officer of a Loan Party, or any other officer having substantially the same authority and responsibility. 
  
 “Restricted Amounts” means, at any time of
determination, cash, Cash Equivalents and current accounts receivable that are not available for general corporate purposes. 
  
 “Returned Account” means an account receivable purchased under a Permitted Receivables Purchase Facility which is for any
reason returned by the purchaser thereof for repurchase, refund or replacement by the seller thereof in accordance with the terms of the Permitted Receivables Purchase Facility. 
  
 “Revolving Termination Date” means the earlier to occur of: 
  
 (a) June 1, 2009; and 
  
 (b) the date on which the Commitments terminate in
accordance with the provisions of this Agreement. 
  
 “S&P” means Standard & Poor’s Corporation. 
  

 16 

 “SEC” means the Securities and Exchange Commission, or any Governmental
Authority succeeding to any of its principal functions. 
  
 “Senior Indebtedness” means, as of any date of determination, Consolidated Funded Indebtedness minus Subordinated Indebtedness on such date. 
  
 “Senior Leverage Ratio” means, as of any
time of determination, the ratio of (a) Senior Indebtedness to (b) the sum of Consolidated Tangible Net Worth, plus Subordinated Indebtedness, in each case at such time. 
  
 “Short Term Trade Accounts Receivable” means all billed and due accounts receivable of the
Company and its Subsidiaries. 
  
 “Special Purpose Subsidiary” means that certain wholly owned Subsidiary created by the Company for the purposes of acquiring the Wilsonville Facility and obtaining a loan to be secured by a Lien on the Wilsonville
Facility. 
  
 “Subordinated
Indebtedness” means Indebtedness of the Company incurred from time to time and subordinated in right of payment to the Obligations hereunder. 
  
 “Subsidiary” of a Person means any corporation, association, partnership, limited liability company, joint venture or
other business entity of which more than 50% of the voting stock, membership interests or other equity interests (in the case of Persons other than corporations), is owned or controlled directly or indirectly by the Person, or one or more of the
Subsidiaries of the Person, or a combination thereof, but in any event shall not include any Unrestricted Subsidiary other than for purposes of Sections 6.01, 7.03, 7.07 and 7.14(b). Unless the context otherwise clearly requires, references herein
to a “Subsidiary” refer to a Subsidiary of the Company. 
  
 “Surety Instruments” means all letters of credit (including standby and commercial), banker’s acceptances, bank guaranties, shipside bonds, surety bonds and similar instruments. 
  
 “Swap Contract” means any agreement,
whether or not in writing, relating to any transaction that is a rate swap, basis swap, forward rate transaction, commodity swap, commodity option, equity or equity index swap or option, bond, note or bill option, interest rate option, forward
foreign exchange transaction, cap, collar or floor transaction, currency swap, cross-currency rate swap, swaption, currency option or any other, similar transaction (including any option to enter into any of the foregoing) or any combination of the
foregoing, and, unless the context otherwise clearly requires, any master agreement relating to or governing any or all of the foregoing. 
  
 “Swap Termination Value” means, in respect of any one or more Swap Contracts, after taking into account the effect of any
legally enforceable netting agreement relating to such Swap Contracts, (a) for any date on or after the date such Swap Contracts have been closed out and termination value(s) determined in accordance therewith, such termination value(s), and (b) for
any date prior to the date referenced in clause (a) the amount(s) determined as the mark-to-market value(s) for such Swap Contracts, as 

  

 17 

 
determined by the Company based upon one or more mid-market or other readily available quotations provided by any recognized dealer in such Swap Contracts
(which may include any Bank). 
  
 “Taxes” means any and all present or future taxes, levies, assessments, imposts, duties, deductions, fees, withholdings or similar charges, and all liabilities with respect thereto, excluding, in the case of each Bank and
the Agent, (i) taxes imposed on or measured by its net income by the jurisdiction (or any political subdivision thereof) under the laws of which such Bank or the Agent, as the case may be, is organized or maintains a lending office, (ii) any
withholding tax that is in effect and would apply to a payment to such Bank or the Agent at the time such Person becomes a party to this Agreement, and (iii) any tax that would not have been imposed but for the failure of a Bank to comply with the
certification requirements described in Section 10.07 (unless such failure results from a change in applicable law after the date on which such Bank becomes a party to this Agreement, which precludes such Bank from satisfying any such requirements
or otherwise from qualifying for a reduction in or exemption from such withholding Tax). 
  
 “TNW Buffer” means, as of the last day of any calendar quarter, the difference between (a) the actual Consolidated
Tangible Net Worth of the Company and its Subsidiaries on such date, minus (b) the minimum Consolidated Tangible Net Worth of the Company and its Subsidiaries required on such date under Section 7.14(b). 
  
 “Trade Date” has the meaning specified in
Section 10.06(b). 
  
 “Type” has
the meaning specified in the definition of “Loan.” 
  
 “Unfunded Pension Liability” means the excess of a Plan’s benefit liabilities under Section 4001(a)(16) of ERISA, over the current value of that Plan’s assets, determined in accordance with
the assumptions used for funding the Pension Plan pursuant to Section 412 of the Code for the applicable plan year. 
  
 “United States” and “U.S.” each means the United States of America. 
  
 “Unrestricted Subsidiary” shall mean any
Subsidiary designated as such by the Company in accordance with Section 1.04. 
  
 “Wholly-Owned Subsidiary” means any corporation in which (other than directors’ qualifying shares required by law or other de minimis shares owned by third parties as required by law) 100% of the
capital stock of each class having ordinary voting power, and 100% of the capital stock of every other class, in each case, at the time as of which any determination is being made, is owned, beneficially and of record, by the Company, or by one or
more of the other Wholly-Owned Subsidiaries, or both. 
  
 “Wilsonville Facility” means the Company’s principal facility and headquarters, consisting of approximately 130.01 acres, located at 8005 S.W. Boeckman Road, Wilsonville, Oregon, including related vacant land owned by
the Company. 
  

 18 

 1.02 Other Interpretive Provisions. 
  
 (a) The meanings of defined terms are equally applicable to the singular and plural forms of the defined terms. 

 
 (b) The words “hereof,” “herein,”
“hereunder” and similar words refer to this Agreement as a whole and not to any particular provision of this Agreement; and subsection, Section, Schedule and Exhibit references are to this Agreement unless otherwise specified. 

 
 (i) The term “documents” includes any and all
instruments, documents, agreements, certificates, indentures, notices and other writings, however evidenced. 
  
 (ii) The term “including” is not limiting and means “including without limitation.” 
  
 (iii) In the computation of periods of time from a specified
date to a later specified date, the word “from” means “from and including”; the words “to” and “until” each mean “to but excluding,” and the word “through” means “to and
including.” 
  
 (c) Unless otherwise expressly provided
herein, (i) references to agreements (including this Agreement) and other contractual instruments shall be deemed to include all subsequent amendments and other modifications thereto, but only to the extent such amendments and other modifications
are not prohibited by the terms of any Loan Document, and (ii) references to any statute or regulation are to be construed as including all statutory and regulatory provisions consolidating, amending, replacing, supplementing or interpreting the
statute or regulation. 
  
 (d) The captions and headings of this
Agreement are for convenience of reference only and shall not affect the interpretation of this Agreement. 
  
 (e) This Agreement and other Loan Documents may use several different limitations, tests or measurements to regulate the same or similar matters. All such
limitations, tests and measurements are cumulative and shall each be performed in accordance with their terms. Unless otherwise expressly provided, any reference to any action of the Agent or the Banks by way of consent, approval or waiver shall be
deemed modified by the phrase “in its/their sole discretion.” 
  
 (f) This Agreement and the other Loan Documents are the result of negotiations among and have been reviewed by counsel to the Agent, the Company and the other parties, and are the products of all parties. Accordingly, they shall not be
construed against the Banks or the Agent merely because of the Agent’s or Banks’ involvement in their preparation. 
  
 1.03 Accounting Principles. 
  
 (a) Unless the context otherwise clearly requires, all accounting terms not expressly defined herein shall be construed, and all financial computations
required under this Agreement shall be made, in accordance with GAAP, consistently applied. 
  

 19 

 (b) If the Company or the Majority Banks notify the Agent that the Company or the Majority Banks, as the
case may be, desire to amend any covenant in Article VII or any definition relating thereto to eliminate the effect of any change in GAAP occurring after the Closing Date on the operation of any such covenant, then the Company’s compliance with
such covenant shall be determined in accordance with GAAP as in effect immediately prior to such change in GAAP until either such notice is withdrawn or such covenant or related definition is amended in a manner reasonably satisfactory to the
Company and the Majority Banks. 
  
 1.04 Designation of
Unrestricted Subsidiaries. 
  
 (a) The Company, at its
option, may from time to time designate any Subsidiary as an “Unrestricted Subsidiary” for purposes hereof in accordance with the following: (i) any Subsidiary that is not a Material Subsidiary may be designated by the Company as an
Unrestricted Subsidiary in its sole discretion and (ii) any Material Subsidiary may be designated by the Company as an Unrestricted Subsidiary only with the prior written consent of the Majority Banks; provided, however, no Subsidiary may be
designated as an Unrestricted Subsidiary if (A) immediately after giving effect to any such designation, the aggregate revenues for the most recently ended calendar quarter of all Unrestricted Subsidiaries (including any Subsidiary being newly
designated as an Unrestricted Subsidiary), taken as a whole, shall exceed 15% of the aggregate revenues for such calendar quarter of the Company, its Subsidiaries and its Unrestricted Subsidiaries, taken as a whole, (B) immediately after giving
effect to any such designation, the aggregate assets of all Unrestricted Subsidiaries (including any Subsidiary being newly designated as an Unrestricted Subsidiary), taken as a whole, shall exceed 15% of the aggregate assets of the Company, its
Subsidiaries and its Unrestricted Subsidiaries, taken as a whole, or (C) any Default or Event of Default then exists (unless such designation would cure such Default or Event of Default) or would result from any such designation. 
  
 (b) Whenever the Company desires to designate a Subsidiary as an Unrestricted
Subsidiary, the Company shall provide to the Agent a Notice of Designation of Unrestricted Subsidiary (a “Notice of Designation”) in substantially the form of Exhibit F signed by a Responsible Officer. Subject to the preceding
subsection (a), any designation by the Company of an Unrestricted Subsidiary shall become effective (i) in the case of any Subsidiary that is not a Material Subsidiary, three Business Days after the Agent’s receipt of a completed Notice of
Designation in respect of such Subsidiary, and (ii) in the case of any Material Subsidiary, upon the written consent of the Majority Banks. In the case of the preceding clause (ii), the Majority Banks shall use good-faith efforts to consent to or
deny the Company’s request to designate a Material Subsidiary as an Unrestricted Subsidiary within 30 days of the Agent’s receipt of a completed Notice of Designation in respect of such Material Subsidiary. 
  
 (c) The Company may from time to time redesignate any Unrestricted Subsidiary
as a “Subsidiary” for purposes hereof by delivering to the Agent prior written notice of such redesignation signed by a Responsible Officer. 
  

 20 

 ARTICLE II  
  
 THE CREDITS 
  
 2.01 Amounts and Terms of Commitments. Each Bank severally agrees, on the terms and conditions set forth herein, to make loans to the Company from
time to time on any Business Day during the period from the Closing Date to the Revolving Termination Date, in an aggregate amount not to exceed at any time outstanding the amount set forth opposite the name of such Bank on Schedule 2.01 (such
amount as the same may be reduced under Section 2.05 or as a result of one or more assignments under Section 10.06, the Bank’s “Commitment”); provided, however, that, after giving effect to any Borrowing, the aggregate
principal amount of all outstanding Loans shall not at any time exceed the combined Commitments. Within the limits of each Bank’s Commitment, and subject to the other terms and conditions hereof, the Company may borrow under this Section 2.01,
prepay under Section 2.06 and reborrow under this Section 2.01. 
  
 2.02 Loan Accounts. 
  
 (a) The Loans made by
each Bank shall be evidenced by one or more loan accounts or records maintained by such Bank in the ordinary course of business. The loan accounts or records maintained by the Agent and each Bank shall be conclusive absent manifest error of the
amount of the Loans made by the Banks to the Company and the interest and payments thereon. Any failure so to record or any error in doing so shall not, however, limit or otherwise affect the obligation of the Company hereunder to pay any amount
owing with respect to the Loans. 
  
 (b) Upon the request of any
Bank made through the Agent, the Loans made by such Bank may be evidenced by one or more Notes, instead of or in addition to loan accounts. Each such Bank shall endorse on the schedules annexed to its Note(s) the date, amount and maturity of each
Loan made by it and the amount of each payment of principal made by the Company with respect thereto. Each such Bank is irrevocably authorized by the Company to endorse its Note(s) and each Bank’s record shall be conclusive absent manifest
error; provided, however, that the failure of a Bank to make, or an error in making, a notation thereon with respect to any Loan shall not limit or otherwise affect the obligations of the Company hereunder or under any such Note to such Bank.

  
 2.03 Procedure for Borrowing. 
  
 (a) Each Borrowing shall be made upon the Company’s irrevocable written
notice delivered to the Agent in the form of a Notice of Borrowing to be received by the Agent not later than 9:00 a.m. (San Francisco time) (i) three Business Days prior to the requested Borrowing Date, in the case of Offshore Rate Loans, and (ii)
on the requested Borrowing Date, in the case of Base Rate Loans, specifying: 
  
 (A) the amount of the Borrowing, which shall be in an aggregate minimum amount of $5,000,000 and any multiple of $1,000,000 in excess thereof, in the case of Offshore Rate Loans, or $2,000,000 and any multiple of
$500,000 in excess thereof, in the case of Base Rate Loans; 
  

 21 

 (B) the requested Borrowing Date, which shall be a Business Day; 
  
 (C) the Type of Loans comprising the Borrowing; and

  
 (D) in the case of Offshore Rate Loans, the
duration of the Interest Period applicable to such Loans included in such notice. If the Notice of Borrowing fails to specify the duration of the Interest Period for any Borrowing comprised of Offshore Rate Loans, such Interest Period shall be three
months. 
  
 (b) The Agent will promptly notify each Bank of its
receipt of any Notice of Borrowing and of the amount of such Bank’s Pro Rata Share of that Borrowing. 
  
 (c) Each Bank will make the amount of its Pro Rata Share of each Borrowing available to the Agent for the account of the Company at the Agent’s
Payment Office by 12:00 noon (San Francisco time) on the Borrowing Date requested by the Company in funds immediately available to the Agent. The proceeds of all such Loans will then be made available to the Company by the Agent at such office by
crediting the account of the Company on the books of Bank of America with the aggregate of the amounts made available to the Agent by the Banks and in like funds as received by the Agent. 
  
 (d) After giving effect to any Borrowing, unless the Agent shall otherwise consent, there may not be more than six different
Interest Periods in effect. 
  
 2.04 Conversion and
Continuation Elections. 
  
 (a) The Company may, upon
irrevocable written notice to the Agent in accordance with Section 2.04(b): 
  
 (i) elect, as of any Business Day, in the case of Base Rate Loans, or as of the last day of the applicable Interest Period, in the case of any other Type of Loans, to convert any such Loans (or any part thereof in an
amount not less than $5,000,000, or that is in an integral multiple of $1,000,000 in excess thereof) into Loans of any other Type; or 
  
 (ii) elect, as of the last day of the applicable Interest Period, to continue any Loans having Interest Periods expiring on such day (or
any part thereof in an amount not less than $5,000,000, or that is in an integral multiple of $1,000,000 in excess thereof); 
  
 provided, that if at any time the aggregate amount of Offshore Rate Loans in respect of any Borrowing is reduced, by payment, prepayment, or conversion of part thereof to
be less than $5,000,000, such Offshore Rate Loans shall automatically convert into Base Rate Loans, and on and after such date the right of the Company to continue such Loans as, and convert such Loans into, Offshore Rate Loans shall terminate.

  

 22 

 (b) The Company shall deliver a Notice of Conversion/Continuation to be received by the Agent not later
than 9:00 a.m. (San Francisco time) (i) three Business Days in advance of the Conversion/Continuation Date, if the Loans are to be converted into or continued as Offshore Rate Loans, and (ii) on the Conversion/Continuation Date, if the Loans are to
be converted into Base Rate Loans, specifying: 
  
 (A) the proposed Conversion/Continuation Date; 
  
 (B) the aggregate amount of Loans to be converted or continued; 
  
 (C) the Type of Loans resulting from the proposed conversion or continuation; and 
  
 (D) other than in the case of conversions into Base Rate
Loans, the duration of the requested Interest Period. 
  
 (c) If
upon the expiration of any Interest Period applicable to Offshore Rate Loans, (i) the Company has failed to select timely a new Interest Period to be applicable to such Offshore Rate Loans, or (ii) any Default or Event of Default then exists, the
Company shall be deemed to have elected to convert such Offshore Rate Loans into Base Rate Loans effective as of the expiration date of such Interest Period. 
  
 (d) The Agent will promptly notify each Bank of its receipt of a Notice of Conversion/Continuation, or, if no timely notice is provided by the Company,
the Agent will promptly notify each Bank of the details of any automatic conversion. All conversions and continuations shall be made ratably according to the respective outstanding principal amounts of the Loans with respect to which the notice was
given held by each Bank. 
  
 (e) Unless the Majority Banks
otherwise consent, during the existence of a Default or Event of Default, the Company may not elect to have a Loan converted into or continued as an Offshore Rate Loan. 
  
 (f) After giving effect to any conversion or continuation of Loans, unless the Agent shall otherwise consent, there may not
be more than six different Interest Periods in effect. 
  
 2.05
Voluntary Termination or Reduction of Commitments. The Company may, upon not less than three Business Days’ prior notice to the Agent, terminate the Commitments, or permanently reduce the Commitments by an aggregate minimum amount of
$10,000,000 or any multiple of $5,000,000 in excess thereof; unless, after giving effect thereto and to any prepayments of Loans made on the effective date thereof, the then-outstanding principal amount of the Loans would exceed the amount of the
combined Commitments then in effect. Once reduced in accordance with this Section 2.05, the Commitments may not be increased. Any reduction of the Commitments shall be applied to each Bank according to its Pro Rata Share. All accrued commitment fees
to, but not including the effective date of any reduction or termination of Commitments, shall be paid on the effective date of such reduction or termination. 
  

 23 

 2.06 Optional Prepayments. Subject to Section 3.04, the Company may, at any time or from time to
time, (a) in the case of Offshore Rate Loans, upon not less than three Business Days’ irrevocable notice to the Agent, ratably prepay Loans in whole or in part, in minimum amounts of $5,000,000 or any multiple of $1,000,000 in excess thereof,
or (b) in the case of Base Rate Loans, upon irrevocable notice to the Agent given no later than 9:00 a.m. (San Francisco time) on the date of prepayment, ratably prepay Loans in whole or in part, in minimum amounts of $2,000,000 or any multiple of
$500,000 in excess thereof. Such notice of prepayment shall specify the date and amount of such prepayment and the Type(s) of Loans to be prepaid. The Agent will promptly notify each Bank of its receipt of any such notice, and of such Bank’s
Pro Rata Share of such prepayment. If such notice is given by the Company, the Company shall make such prepayment and the payment amount specified in such notice shall be due and payable on the date specified therein, together with accrued interest
to each such date on the amount prepaid and any amounts required pursuant to Section 3.04. 
  
 2.07 Repayment. The Company shall repay to the Banks on the Revolving Termination Date the aggregate principal amount of Loans outstanding on such date. 
  
 2.08 Interest. 
  
 (a) Each Loan shall bear interest on the outstanding principal amount
thereof from the applicable Borrowing Date at a rate per annum equal to the Offshore Rate or the Base Rate, as the case may be (and subject to the Company’s right to convert to other Types of Loans under Section 2.04), plus the
Applicable Margin. 
  
 (b) Interest on each Loan shall be paid in
arrears on each Interest Payment Date. Interest shall also be paid on the date of any prepayment of Offshore Rate Loans under Section 2.06 for the portion of the Offshore Rate Loans so prepaid and upon payment (including prepayment) in full thereof
and, during the existence of any Event of Default, interest shall be paid on demand of the Agent at the request or with the consent of the Majority Banks. 
  
 (c) Notwithstanding subsection (a) of this Section, if any amount of principal of or interest on any Loan, or any other amount payable hereunder or under
any other Loan Document is not paid in full when due (whether at stated maturity, by acceleration, demand or otherwise), the Company agrees to pay interest on such unpaid principal or other amount, from the date such amount becomes due until the
date such amount is paid in full, and after as well as before any entry of judgment thereon to the extent permitted by law, payable on demand, at a fluctuating rate per annum equal to the Base Rate plus the Applicable Margin, plus 2%. 
  
 (d) Anything herein to the contrary notwithstanding, the obligations of the
Company to any Bank hereunder shall be subject to the limitation that payments of interest shall not be required for any period for which interest is computed hereunder, to the extent (but only to the extent) that contracting for or receiving such
payment by such Bank would be contrary to the provisions of any law applicable to such Bank limiting the highest rate of interest that may be lawfully contracted for, charged or received by such Bank, and in such event the Company shall pay such
Bank interest at the highest rate permitted by applicable law. 
  

 24 

 2.09 Fees. 
  
 (a) Arrangement, Agency Fees. The Company shall (i) pay an arrangement, structuring and syndication fee to the
Arranger for the Arranger’s own account, (ii) pay an administrative fee to the Agent for the Agent’s own account, and (iii) pay a participation fee to the Agent for the account of each Bank, in each case, as required by the letter
agreement (“Fee Letter”) among the Company, the Arranger and Agent dated April 5, 2005. 
  
 (b) Commitment Fees. The Company shall pay to the Agent for the account of each Bank a commitment fee on the actual daily unused portion of such
Bank’s Commitment, computed on a quarterly basis in arrears on the last Business Day of each calendar quarter based upon the daily utilization for that quarter as calculated by the Agent, equal to the applicable “Commitment
Fee” set forth on the pricing grid attached as Annex I in accordance with the parameters for calculation and adjustment of such Commitment Fee also set forth on Annex I. Such commitment fee shall accrue from the Closing Date to the
Revolving Termination Date and shall be due and payable quarterly in arrears on the last Business Day of each calendar quarter commencing on June 30, 2005 through the Revolving Termination Date, with the final payment to be made on the Revolving
Termination Date; provided that, in connection with any reduction or termination of Commitments under Section 2.05, the accrued commitment fee calculated for the period ending on such date shall also be paid on the date of such reduction or
termination, with the following quarterly payment being calculated on the basis of the period from such reduction or termination date to such quarterly payment date. The commitment fees provided in this subsection shall accrue at all times after the
above-mentioned commencement date, including at any time during which one or more conditions in Article IV are not met. 
  
 2.10 Computation of Fees and Interest. 
  
 (a) All computations of interest for Base Rate Loans when the Base Rate is determined by Bank of America’s prime rate shall be made on the basis of a
year of 365 or 366 days, as the case may be, and actual days elapsed. All other computations of fees and interest shall be made on the basis of a 360-day year and actual days elapsed (which results in more interest being paid than if computed on the
basis of a 365-day year). Interest and fees shall accrue during each period during which interest or such fees are computed from the first day thereof to the last day thereof. 
  
 (b) Each determination of an interest rate by the Agent shall be conclusive and binding on the Company and the Banks in the
absence of manifest error. The Agent will, at the request of the Company or any Bank, deliver to the Company or the Bank, as the case may be, a statement showing the quotations used by the Agent in determining any interest rate and the resulting
interest rate. 
  
 2.11 Payments Generally. 
  
 (a) All payments to be made by the Company shall be made without condition
or deduction for any counterclaim, defense, recoupment or setoff. Except as otherwise expressly provided herein, all payments by the Company hereunder shall be made to the Agent, for the account of the respective Banks to which such payment is owed,
at the Agent’s Payment Office 

  

 25 

 
in dollars and in immediately available funds not later than 11:00 a.m. (San Francisco time) on the date specified herein. The Agent will promptly distribute
to each Bank its Pro Rata Share (or other applicable share as provided herein) of such payment in like funds as received. All payments received by the Agent after 11:00 a.m. (San Francisco time) shall be deemed received on the next succeeding
Business Day and any applicable interest or fee shall continue to accrue. 
  
 (b) Subject to the provisions set forth in the definition of “Interest Period” herein, if any payment to be made by the Company shall come due on a day other than a Business Day, payment shall be made
on the next following Business Day, and such extension of time shall be reflected in computing interest or fees, as the case may be. 
  
 (c) Unless the Agent shall have received notice from a Bank prior to the proposed date of any Borrowing of Offshore Rate Loans (or, in the case of any
Borrowing of Base Rate Loans, prior to 12:00 noon on the date of such Borrowing) that such Bank will not make available to the Agent such Bank’s share of such Borrowing, the Agent may assume that such Bank has made such share available on such
date in accordance with Section 2.03 (or, in the case of a Borrowing of Base Rate Loans, that such Bank has made such share available in accordance with and at the time required by Section 2.03) and may, in reliance upon such assumption, make
available to the Company a corresponding amount. In such event, if a Bank has not in fact made its share of the applicable Borrowing available to the Agent, then the applicable Bank and the Company severally agree to pay to the Agent forthwith on
demand such corresponding amount in immediately available funds with interest thereon, for each day from and including the date such amount is made available to the Company to but excluding the date of payment to the Agent, at (A) in the case of a
payment to be made by such Bank, the greater of the Federal Funds Rate and a rate determined by the Agent in accordance with banking industry rules on interbank compensation and (B) in the case of a payment to be made by the Company, the interest
rate applicable to the applicable Borrowing. If the Company and such Bank shall pay such interest to the Agent for the same or an overlapping period, the Agent shall promptly remit to the Company the amount of such interest paid by the Company for
such period. If such Bank pays its share of the applicable Borrowing to the Agent, then the amount so paid shall constitute such Bank’s Loan included in such Borrowing. Any payment by the Company shall be without prejudice to any claim the
Company may have against a Bank that shall have failed to make such payment to the Agent. 
  
 (d) Unless the Company has notified the Agent, prior to the date any payment is required to be made by it to the Agent hereunder, that the Company will not make such payment, the Agent may assume that the Company has
timely made such payment and may (but shall not be so required to), in reliance thereon, make available a corresponding amount to the Person entitled thereto. If and to the extent that such payment was not in fact made to the Agent in immediately
available funds, then each Bank shall forthwith on demand repay to the Agent the portion of such assumed payment that was made available to such Bank in immediately available funds, together with interest thereon in respect of each day from and
including the date such amount was made available by the Agent to such Bank to the date such amount is repaid to the Agent in immediately available funds at the Federal Funds Rate from time to time in effect. 
  
 A notice of the Agent to any Bank or the Company with respect to any amount
owing under this subsection (d) shall be conclusive, absent manifest error. 
  

 26 

 (e) If any Bank makes available to the Agent funds for any Loan to be made by such Bank as provided in
the foregoing provisions of this Article II, and such funds are not made available to the Company by the Agent because the conditions to the Loan set forth in Article IV are not satisfied or waived in accordance with the terms hereof, the Agent
shall return such funds (in like funds as received from such Bank) to such Bank, without interest. 
  
 (f) The obligations of the Banks hereunder to make Loans and to make payments pursuant to Section 10.04(c) are several and not joint. The failure of any
Bank to make any Loan, to fund any such participation or to make any payment under Section 10.04(c) on any date required hereunder shall not relieve any other Bank of its corresponding obligation to do so on such date, and no Bank shall be
responsible for the failure of any other Bank to so make its Loan, to purchase its participation or to make its payment under Section 10.04(c). 
  
 (g) Nothing herein shall be deemed to obligate any Bank to obtain the funds for any Loan in any particular place or manner or to constitute a
representation by any Bank that it has obtained or will obtain the funds for any Loan in any particular place or manner. 
  
 2.12 Sharing of Payments, Etc. If, other than as expressly provided elsewhere herein, any Bank shall obtain on account of the Loans made by it any
payment (whether voluntary, involuntary, through the exercise of any right of set-off, or otherwise) in excess of its ratable share (or other share contemplated hereunder), such Bank shall immediately (a) notify the Agent of such fact, and (b)
purchase from the other Banks such participations in the Loans made by them as shall be necessary to cause such purchasing Bank to share the excess payment pro rata with each of them; provided, however, that if all or any portion of such excess
payment is thereafter recovered from the purchasing Bank, such purchase shall to that extent be rescinded and each other Bank shall repay to the purchasing Bank the purchase price paid therefor, together with an amount equal to such paying
Bank’s ratable share (according to the proportion of (i) the amount of such paying Bank’s required repayment to (ii) the total amount so recovered from the purchasing Bank) of any interest or other amount paid or payable by the purchasing
Bank in respect of the total amount so recovered. The Company agrees that any Bank so purchasing a participation from another Bank may, to the fullest extent permitted by law, exercise all its rights of payment (including the right of set-off, but
subject to Section 10.09) with respect to such participation as fully as if such Bank were the direct creditor of the Company in the amount of such participation. The Agent will keep records (which shall be conclusive and binding in the absence of
manifest error) of participations purchased under this Section and will in each case notify the Banks following any such purchases or repayments. 
  
 ARTICLE III  
  
 TAXES, YIELD PROTECTION AND ILLEGALITY 
  
 3.01 Taxes. 
  
 (a) Any and all payments by the Company to each Bank or the Agent under this Agreement and any other Loan Document shall be made free and clear of, and
without deduction or withholding for, any Taxes. In addition, the Company shall pay all Other Taxes. 
  

 27 

 (b) If the Company shall be required by law to deduct or withhold any Taxes, Other Taxes or Further Taxes
from or in respect of any sum payable hereunder to any Bank or the Agent, then: 
  
 (i) the sum payable shall be increased as necessary so that, after making all such deductions and withholdings (including deductions and
withholdings applicable to additional sums payable under this Section), such Bank or the Agent, as the case may be, receives and retains an amount equal to the sum it would have received and retained had no such deductions or withholdings been made;

  
 (ii) the Company shall make all required
deductions and withholdings; 
  
 (iii) the
Company shall pay the full amount deducted or withheld to the relevant taxing authority or other authority in accordance with applicable law; and 
  
 (iv) the Company shall also pay to each Bank or the Agent for the account of such Bank, at the time interest is paid, Further Taxes in the
amount that the respective Bank specifies as necessary to preserve the after-tax yield the Bank would have received if such Taxes, Other Taxes or Further Taxes had not been imposed. 
  
 (c) The Company agrees to indemnify and hold harmless each Bank and the Agent for the full amount of i) Taxes, ii) Other
Taxes, and iii) Further Taxes in the amount that the respective Bank specifies as necessary to preserve the after-tax yield the Bank would have received if such Taxes, Other Taxes or Further Taxes had not been imposed, and any liability (including
penalties, interest, additions to tax and expenses) arising therefrom or with respect thereto, whether or not such Taxes, Other Taxes or Further Taxes were correctly or legally asserted. Payment under this indemnification shall be made within 30
days after the date the Bank or the Agent makes written demand therefor. 
  
 (d) Within 30 days after the date of any payment by the Company of Taxes, Other Taxes or Further Taxes, the Company shall furnish to each Bank or the Agent the original or a certified copy of a receipt evidencing
payment thereof, or other evidence of payment satisfactory to such Bank or the Agent. 
  
 (e) If the Company is required to pay any amount to any Bank or the Agent pursuant to subsection (b) or (c) of this Section, then such Bank shall use reasonable efforts (consistent with legal and regulatory
restrictions) to change the jurisdiction of its Lending Office so as to eliminate any such additional payment by the Company which may thereafter accrue, if such change in the sole judgment of such Bank is not otherwise disadvantageous to such Bank.

  
 3.02 Illegality. 
  
 (a) If any Bank determines that the introduction of any Requirement of Law,
or any change in any Requirement of Law, or in the interpretation or administration of any Requirement of Law, has made it unlawful, or that any central bank or other Governmental Authority has asserted that it is unlawful, for any Bank or its
applicable Lending Office to make Offshore Rate Loans, then, on notice thereof by the Bank to the Company through the Agent, any obligation of that Bank to make Offshore Rate Loans shall be suspended until the Bank notifies the Agent and the Company
that the circumstances giving rise to such determination no longer exist. 
  

 28 

 (b) If a Bank determines that it is unlawful to maintain any Offshore Rate Loan, the Company shall, upon
its receipt of notice of such fact and demand from such Bank (with a copy to the Agent), prepay in full such Offshore Rate Loans of that Bank then outstanding, together with interest accrued thereon and amounts required under Section 3.04, either on
the last day of the Interest Period thereof, if the Bank may lawfully continue to maintain such Offshore Rate Loans to such day, or immediately, if the Bank may not lawfully continue to maintain such Offshore Rate Loan. If the Company is required to
so prepay any Offshore Rate Loan, then concurrently with such prepayment, the Company shall borrow from the affected Bank, in the amount of such repayment, a Base Rate Loan. 
  
 (c) If the obligation of any Bank to make or maintain Offshore Rate Loans has been so terminated or suspended, the Company
may elect, by giving notice to the Bank through the Agent that all Loans which would otherwise be made by the Bank as Offshore Rate Loans shall be instead Base Rate Loans. 
  
 (d) Before giving any notice to the Agent under this Section, the affected Bank shall designate a different Lending Office
with respect to its Offshore Rate Loans if such designation will avoid the need for giving such notice or making such demand and will not, in the judgment of the Bank, be illegal or otherwise disadvantageous to the Bank. 
  
 3.03 Increased Costs and Reduction of Return. 
  
 (a) If any Bank determines that, due to either (i) the introduction of or
any change (other than any change by way of imposition of or increase in reserve requirements included in the calculation of the Offshore Rate) in or in the interpretation of any law or regulation or (ii) the compliance by that Bank with any
guideline or request from any central bank or other Governmental Authority (whether or not having the force of law), there shall be any increase in the cost to such Bank of agreeing to make or making, funding or maintaining any Offshore Rate Loans,
then the Company shall be liable for, and shall from time to time, upon demand (with a copy of such demand to be sent to the Agent), pay to the Agent for the account of such Bank, additional amounts as are sufficient to compensate such Bank for such
increased costs. 
  
 (b) If any Bank shall have determined that
(i) the introduction of any Capital Adequacy Regulation, (ii) any change in any Capital Adequacy Regulation, (iii) any change in the interpretation or administration of any Capital Adequacy Regulation by any central bank or other Governmental
Authority charged with the interpretation or administration thereof, or (iv) compliance by the Bank (or its Lending Office) or any corporation controlling the Bank with any Capital Adequacy Regulation, affects or would affect the amount of capital
required or expected to be maintained by the Bank or any corporation controlling the Bank and (taking into consideration such Bank’s or such corporation’s policies with respect to capital adequacy and such Bank’s desired return on
capital) determines that the amount of such capital is increased as a consequence of its Commitment, loans, credits or obligations under this Agreement, then, upon demand of such Bank to the Company through the Agent, the Company shall pay to the
Bank, from time to time as specified by the Bank, additional amounts sufficient to compensate the Bank for such increase. 
  

 29 

 3.04 Funding Losses. The Company shall reimburse each Bank and hold each Bank harmless from any
loss or expense which the Bank may sustain or incur as a consequence of: 
  
 (a) the failure of the Company to make on a timely basis any payment of principal of any Offshore Rate Loan; 
  
 (b) the failure of the Company to borrow, continue or convert a Loan after the Company has given (or is deemed to have given) a Notice of Borrowing or a
Notice of Conversion/Continuation; 
  
 (c) the failure of the
Company to make any prepayment in accordance with any notice delivered under Section 2.06; 
  
 (d) the prepayment (including pursuant to Section 2.06) or other payment (including after acceleration thereof) of an Offshore Rate Loan on a day that is not the last day of the relevant Interest Period; or

  
 (e) the automatic conversion under the proviso of Section
2.04(a) of any Offshore Rate Loan to a Base Rate Loan on a day that is not the last day of the relevant Interest Period; 
  
 including any such loss or expense arising from the liquidation or reemployment of funds obtained by it to maintain its Offshore Rate Loans or from fees payable to
terminate the deposits from which such funds were obtained. For purposes of calculating amounts payable by the Company to the Banks under this Section and under Section 3.03(a), each Offshore Rate Loan made by a Bank (and each related reserve,
special deposit or similar requirement) shall be conclusively deemed to have been funded at the Offshore Rate for such Offshore Rate Loan by a matching deposit or other borrowing in the interbank eurodollar market for a comparable amount and for a
comparable period, whether or not such Offshore Rate Loan is in fact so funded. 
  
 3.05 Inability to Determine Rates. If the Agent determines that for any reason adequate and reasonable means do not exist for determining the Offshore Rate for any requested Interest Period with respect to a
proposed Offshore Rate Loan, or that the Offshore Rate applicable pursuant to Section 2.08(a) for any requested Interest Period with respect to a proposed Offshore Rate Loan does not adequately and fairly reflect the cost to the Banks of funding
such Loan, the Agent will promptly so notify the Company and each Bank. Thereafter, the obligation of the Banks to make or maintain Offshore Rate Loans, as the case may be, hereunder shall be suspended until the Agent revokes such notice in writing.
Upon receipt of such notice, the Company may revoke any Notice of Borrowing or Notice of Conversion/Continuation then submitted by it. If the Company does not revoke such Notice, the Banks shall make, convert or continue the Loans, as proposed by
the Company, in the amount specified in the applicable notice submitted by the Company, but such Loans shall be made, converted or continued as Base Rate Loans instead of Offshore Rate Loans. 
  

 30 

 3.06 Reserves on Offshore Rate Loans. The Company shall pay to each Bank, as long as such Bank
shall be required under regulations of the FRB to maintain reserves with respect to liabilities or assets consisting of or including Eurocurrency funds or deposits (currently known as “Eurocurrency liabilities”), additional costs on the
unpaid principal amount of each Offshore Rate Loan equal to the actual costs of such reserves allocated to such Loan by the Bank (as determined by the Bank in good faith, which determination shall be conclusive absent manifest error), payable on
each date on which interest is payable on such Loan, provided the Company shall have received at least 15 days’ prior written notice (with a copy to the Agent) of such additional interest from the Bank. If a Bank fails to give notice 15 days
prior to the relevant Interest Payment Date, such additional interest shall be payable 15 days from receipt of such notice. 
  
 3.07 Certificates of Banks. Any Bank claiming reimbursement or compensation under this Article III shall deliver to the Company (with a copy to the
Agent) a certificate setting forth in reasonable detail the amount payable to the Bank hereunder and such certificate shall be conclusive and binding on the Company in the absence of manifest error. 
  
 3.08 Delay. Failure or delay on the part of any Bank to demand
compensation under this Article III shall not constitute a waiver of such Bank’s right to demand such compensation; provided, that no Bank shall be entitled to compensation under this Article III for any increased costs or reductions incurred
or suffered with respect to any date unless such Bank shall have notified the Company not more than 90 days after the later of (a) such date and (b) the date on which such Bank shall have become aware of such costs or reductions. 
  
 3.09 Replacement of Banks. If any Bank requests compensation under
Section 3.03, or if the Company is required to pay any additional amount to any Bank or any Governmental Authority for the account of any Bank pursuant to Section 3.01, the Company may replace such Bank in accordance with Section 10.16. 

 
 3.10 Survival. The agreements and obligations of the Company in
this Article III shall survive the payment of all other Obligations. 
  
 ARTICLE IV 
  
 CONDITIONS PRECEDENT

  
 4.01 Conditions of Initial Loans. The
obligation of each Bank to make its initial Loan hereunder is subject to the condition that the Agent shall have received on or before the Closing Date all of the following, in form and substance reasonably satisfactory to the Agent and each Bank,
and in sufficient copies for each of the Banks: 
  
 (a) Loan
Documents. The Loan Documents executed by a Responsible Officer of each signing Loan Party thereto; 
  

 31 

 (b) Resolutions; Incumbency. 
  
 (i) Copies of the resolutions of the board of directors of each Loan Party authorizing the transactions
contemplated hereby, certified as of the Closing Date by the Secretary or an Assistant Secretary of such Loan Party; and 
  
 (ii) A certificate of the Secretary or Assistant Secretary of each Loan Party certifying the names and true signatures of the officers of
such Loan Party authorized to execute and deliver this Agreement, and all other Loan Documents to be delivered by it hereunder; 
  
 (c) Organization Documents; Good Standing. Each of the following documents: 
  
 (i) the articles of incorporation and the bylaws of each Loan Party as in effect on the Closing Date,
certified by the Secretary or Assistant Secretary of such Loan Party as of the Closing Date; and 
  
 (ii) a status certificate for each Loan Party from the Secretary of State of its jurisdiction of organization, in each case, as of a
recent date, together with a bring-down certificate by facsimile, dated on or about the Closing Date; 
  
 (d) Legal Opinions. Opinions of Dean Freed, Vice President and General Counsel of the Company and of Latham & Watkins LLP, each in form and
substance reasonably satisfactory to the Agent and its legal counsel and addressed to the Agent and the Banks; 
  
 (e) Payment of Fees. Evidence of payment by the Company of all accrued and unpaid fees, costs and expenses to the extent then due and payable on
the Closing Date, together with reasonable Attorney Costs of Bank of America to the extent invoiced prior to or on the Closing Date; including any such costs, fees and expenses arising under or referenced in Sections 2.09 and 10.04; 
  
 (f) Certificate. A certificate signed by a Responsible Officer, dated
as of the Closing Date, stating that: 
  
 (i) the
representations and warranties contained in Article V are true and correct on and as of such date, as though made on and as of such date; and 
  
 (ii) there has occurred since December 31, 2004, no event or circumstance that has resulted or is reasonably expected to result in a
Material Adverse Effect; 
  
 (g) A duly completed Compliance
Certificate as of the end of the calendar quarter ended March 31, 2005, signed by a Responsible Officer of the Company; 
  
 (h) Evidence reasonably satisfactory to the Agent that all amounts owing under the Credit Agreement dated as of July 14, 2003, among the Company, the
lenders party thereto and Bank of America, as administrative agent, have been paid in full and all commitments to lend thereunder terminated; 
  

 32 

 (i) Written notice to the Agent and the Banks setting forth the name(s) of all
Responsible Officers and other individuals authorized to give notices (including telephonic Notices of Borrowing) by or on behalf of the Company that Agent and the Banks shall be entitled to rely and act upon pursuant to Section 10.02(e); and

  
 (j) Other Documents. Such other
approvals, opinions, documents or materials as the Agent or any Bank may reasonably request. 
  
 Without limiting the generality of the provisions of Section 9.04, for purposes of determining compliance with the conditions specified in this Section 4.01, each Bank that has signed this Agreement shall be deemed to
have consented to, approved or accepted or to be satisfied with, each document or other matter required thereunder to be consented to or approved by or acceptable or satisfactory to a Bank unless the Agent shall have received notice from such Bank
prior to the proposed Closing Date specifying its objection thereto. 
  
 4.02 Conditions to All Borrowings. The obligation of each Bank to make any Loan to be made by it (including its initial Loan) or to continue or convert any Loan under Section 2.04 is subject to the satisfaction of the following
conditions precedent on the relevant Borrowing Date or Conversion/Continuation Date: 
  
 (a) Notice of Borrowing or Conversion/Continuation. The Agent shall have received (with, in the case of any Loan on the Closing Date, a copy for each Bank) a Notice of Borrowing or a Notice of
Conversion/Continuation, as applicable; 
  
 (b) Continuation of
Representations and Warranties. The representations and warranties of each Loan Party contained in Article V or any other Loan Document shall be true and correct in all material respects on and as of such Borrowing Date or
Conversion/Continuation Date with the same effect as if made on and as of such Borrowing Date or Conversion/Continuation Date (except to the extent such representations and warranties expressly refer to an earlier date, in which case they shall be
true and correct in all material respects as of such earlier date); provided that, if a representation and warranty is generally qualified as to materiality, with respect to such representation and warranty the applicable materiality qualifier set
forth above shall be disregarded for purposes of this condition; and 
  
 (c) No Existing Default. No Default or Event of Default shall exist or shall result from such Borrowing or continuation or conversion. 
  
 Each Notice of Borrowing and Notice of Conversion/Continuation submitted by the Company hereunder shall constitute a representation and warranty by the Company hereunder,
as of the date of each such notice and as of each Borrowing Date or Conversion/Continuation Date, as applicable, that the conditions in this Section 4.02 are satisfied. 
  
 4.03 Additional Condition Precedent of Initial Loans. Without limiting the operation of the preceding Sections 4.01
and 4.02, the obligation of each Bank to make its initial Loan hereunder is subject to the additional condition precedent that the Agent shall have received prior to the initial Borrowing Date a completed certificate of a Responsible Officer of the
Company which complies with the requirements of the second proviso of Section 6.02(c). 
  

 33 

 ARTICLE V  
  
 REPRESENTATIONS AND WARRANTIES 
  
 The Company represents and warrants to the Agent and each Bank that: 
  
 5.01 Corporate Existence and Power. The Company and each of its
Material Subsidiaries: 
  
 (a) is an entity duly organized,
validly existing and, if applicable in such jurisdiction, in good standing under the laws of the jurisdiction of its incorporation or other establishment; 
  
 (b) has (i) the power and authority and (ii) all governmental licenses, authorizations, consents and approvals, in each case, to own its assets, carry on
its business and to execute, deliver, and perform its obligations under the Loan Documents to which it is a party; 
  
 (c) is duly qualified as a foreign corporation or other entity and is licensed and in good standing under the laws of each jurisdiction where its
ownership, lease or operation of property or the conduct of its business requires such qualification or license; and 
  
 (d) is in compliance with all Requirements of Law; 
  
 except, in each case referred to in clause (b)(ii), clause (c) or clause (d), to the extent that the failure to do so is not reasonably expected to have a
Material Adverse Effect. 
  
 5.02 Corporate Authorization; No
Contravention. The execution, delivery and performance by each Loan Party of this Agreement and each other Loan Document to which any Loan Party is party, have been duly authorized by all necessary corporate action, and do not and will not:

  
 (a) contravene the terms of any Loan Party’s
Organization Documents; 
  
 (b) conflict with or result in any
breach or contravention of, or the creation of any Lien under, any document evidencing any Contractual Obligation to which any Loan Party is a party or any order, injunction, writ or decree of any Governmental Authority to which the Company or its
property is subject; or 
  
 (c) violate any Requirement of Law;

  
 except, in each case referred to in the foregoing clauses (b)
and (c), where the conflict, breach, contravention, creation or violation is not reasonably expected to have a Material Adverse Effect. 
  
 5.03 Governmental Authorization. No approval, consent, exemption, authorization, or other action by, or notice to, or filing with, any Governmental
Authority is necessary or required in connection with the execution, delivery or performance by, or enforcement against, any Loan Party of this Agreement or any other Loan Document. 
  

 34 

 5.04 Binding Effect. This Agreement and each other Loan Document to which any Loan Party is a
party constitute the legal, valid and binding obligations of each Loan Party party thereto, enforceable against each such Loan Party in accordance with their respective terms, except as enforceability may be limited by applicable bankruptcy,
insolvency, or similar laws affecting the enforcement of creditors’ rights generally or by equitable principles relating to enforceability. 
  
 5.05 Litigation. Except as specifically disclosed in Schedule 5.05, there are no actions, suits, proceedings, claims or disputes pending, or to the
best knowledge of the Company, threatened or contemplated, at law, in equity, in arbitration or before any Governmental Authority, against the Company, or its Subsidiaries or any of their respective properties which: 
  
 (a) purport to affect or pertain to this Agreement or any other Loan
Document, or any of the transactions contemplated hereby or thereby; or 
  
 (b) is reasonably expected to have a Material Adverse Effect. 
  
 No injunction, writ, temporary restraining order or any order of any nature has been issued by any court or other Governmental Authority purporting to enjoin or restrain the execution, delivery or performance of this Agreement or any other
Loan Document, or directing that the transactions provided for herein or therein not be consummated as herein or therein provided. 
  
 5.06 No Default. No Default or Event of Default exists or would result from the incurring of any Obligations by any Loan Party. As of the Closing
Date, neither the Company nor any Subsidiary is in default under or with respect to any Contractual Obligation in any respect which, individually or together with all such defaults, is reasonably expected to have a Material Adverse Effect, or that
would, if such default had occurred after the Closing Date, create an Event of Default under Section 8.01(e). 
  
 5.07 ERISA Compliance. Except as specifically disclosed in Schedule 5.07: 
  
 (a) Each Plan is in compliance in all respects with the applicable provisions of ERISA, the Code and other applicable
federal or state law, except to the extent that the failure to comply is not reasonably expected to have a Material Adverse Effect. Each Plan which is intended to qualify under Section 401(a) of the Code has received or has applied for when due and
not been denied a favorable determination letter from the IRS and to the best knowledge of each Loan Party, nothing has occurred which would cause the loss of such qualification. Each Loan Party and each ERISA Affiliate has made or duly provided for
all required contributions to any Plan subject to Section 412 of the Code, and no application for a funding waiver or an extension of any amortization period pursuant to Section 412 of the Code has been made with respect to any Plan. 
  
 (b) There are no pending or, to the best knowledge each Loan Party,
threatened claims, actions or lawsuits, or action by any Governmental Authority, with respect to any Plan which has resulted or is reasonably expected to result in a Material Adverse Effect. There has been no prohibited transaction or violation of
the fiduciary responsibility rules with respect to any Plan which has resulted or is reasonably expected to result in a Material Adverse Effect. 
  

 35 

 (c) (i) No ERISA Event has occurred or is reasonably expected to occur; (ii) no Pension Plan has any
Unfunded Pension Liability; (iii) neither any Loan Party nor any ERISA Affiliate has incurred, or reasonably expects to incur, any liability under Title IV of ERISA with respect to any Pension Plan (other than premiums due and not delinquent under
Section 4007 of ERISA); (iv) neither any Loan Party nor any ERISA Affiliate has incurred, or reasonably expects to incur, any liability (and no event has occurred which, with the giving of notice under Section 4219 of ERISA, would result in such
liability) under Section 4201 or 4243 of ERISA with respect to a Multiemployer Plan; and (v) neither any Loan Party nor any ERISA Affiliate has engaged in a transaction that could be subject to Section 4069 or 4212(c) of ERISA. 
  
 (d) Each Loan Party has made full payment when due of all material required
contributions to any Foreign Plans. 
  
 5.08 Use of Proceeds;
Margin Regulations. The proceeds of the Loans are to be used solely for the purposes set forth in and permitted by Section 6.12 and Section 7.07. Neither the Company nor any Subsidiary is generally engaged in the business of purchasing or
selling Margin Stock or extending credit for the purpose of purchasing or carrying Margin Stock. To the extent that the Company uses Loan proceeds to acquire shares of its own stock which is Margin Stock, the Company will cause such acquired shares
to be immediately retired. 
  
 5.09 Title to Properties.
The Company and each Subsidiary have good record and marketable title in fee simple to, or valid leasehold interests in, all real property necessary or used in the ordinary conduct of their respective businesses, except for such defects in title as
is not, individually or in the aggregate, reasonably expected to have a Material Adverse Effect. As of the Closing Date, the real and personal property of the Company and its Material Subsidiaries is subject to no Liens, other than Permitted Liens.

  
 5.10 Taxes. The Company and its Subsidiaries have filed
all Federal and other material tax returns and reports required to be filed, and have paid all Federal and other material taxes, assessments, fees and other governmental charges levied or imposed upon them or their properties, income or assets
otherwise due and payable, except those which are being contested in good faith by appropriate proceedings and for which adequate reserves have been provided in accordance with GAAP. To the best knowledge of the Company, there is no proposed tax
assessment against the Company or any Subsidiary that would, if made, have a Material Adverse Effect. 
  
 5.11 Financial Condition. 
  
 (a) The unaudited consolidated balance sheets of the Company and its Subsidiaries as of March 31, 2005, and the related consolidated statements of
operations and cash flows for the calendar quarter ended on that date: 
  
 (i) were prepared in accordance with GAAP consistently applied throughout the period covered thereby, except for the absence of footnotes and as otherwise expressly noted therein and subject to ordinary, good faith
year end audit adjustments; and 
  

 36 

 (ii) fairly present the financial condition of the Company and its Subsidiaries as of the
date thereof and results of operations for the period covered thereby. 
  
 (b) The audited financial statements of the Company at December 31, 2004, reflect or disclose all material Indebtedness and other liabilities of the Company and its consolidated Subsidiaries as of the date thereof, including liabilities for
taxes, material commitments and Contingent Obligations. 
  
 (c)
Since December 31, 2004, there has been no Material Adverse Effect. 
  
 5.12 Environmental Matters. The Company conducts in the ordinary course of business a review of the effect of existing Environmental Laws and existing Environmental Claims on its business, operations and properties, and as a result
thereof the Company has reasonably concluded that, except as specifically disclosed in Schedule 5.12, such Environmental Laws and Environmental Claims are not, individually or in the aggregate, reasonably expected to have a Material Adverse Effect.

  
 5.13 Regulated Entities. None of the Company, any
Person controlling the Company, or any Subsidiary, is an “Investment Company” within the meaning of the Investment Company Act of 1940. The Company is not subject to regulation under the Public Utility Holding Company Act of 1935,
the Federal Power Act, the Interstate Commerce Act, any state public utilities code, or any other Federal or state statute or regulation limiting its ability to incur Indebtedness. 
  
 5.14 No Burdensome Restrictions. Neither the Company nor any Subsidiary is a party to or bound by any Contractual
Obligation, or subject to any restriction in any Organization Document, or any Requirement of Law, which is reasonably expected to have a Material Adverse Effect. 
  
 5.15 Copyrights, Patents, Trademarks and Licenses, Etc. Except as disclosed on Schedule 5.15, the Company or its
Subsidiaries own or are licensed or otherwise have the right to use all of the patents, trademarks, service marks, trade names, copyrights, contractual franchises, authorizations and other rights that are reasonably necessary for the operation of
their respective businesses, without conflict with the rights of any other Person. To the best knowledge of each Loan Party, no slogan or other advertising device, product, process, method, substance, part or other material now employed, or now
contemplated to be employed, by the Company or any Subsidiary infringes upon any rights held by any other Person. Except as specifically disclosed in Schedule 5.05, no claim or litigation regarding any of the foregoing is pending or threatened, and
no patent, invention, device, application, principle or any statute, law, rule, regulation, standard or code is pending or, to the knowledge of any Loan Party, proposed, which, in either case, is reasonably expected to have a Material Adverse
Effect. 
  
 5.16 Subsidiaries. As of the Closing Date, the
Company has no Subsidiaries other than those specifically disclosed in part (a) of Schedule 5.16 which, identifies with respect to 

  

 37 

 
each such Subsidiary whether it is a Material Subsidiary or an Unrestricted Subsidiary. The Company has no material equity investments in any other
corporation or entity other than those specifically disclosed in part (b) of Schedule 5.16.  
  
 5.17 Insurance. Except as specifically disclosed in Schedule 5.17, the properties of the Company and its Subsidiaries are insured with financially
sound and reputable insurance companies not Affiliates of the Company, in such amounts, with such deductibles and covering such risks as are customarily carried by companies engaged in similar businesses and owning similar properties in localities
where the Company or such Subsidiary operates. 
  
 5.18 Swap
Obligations. Neither the Company nor any of its Subsidiaries has incurred any outstanding obligations under any Swap Contracts, other than Permitted Swap Obligations. The Company has undertaken its own independent assessment of its consolidated
assets, liabilities and commitments and has considered appropriate means of mitigating and managing risks associated with such matters and has not relied on any swap counterparty or any Affiliate of any swap counterparty in determining whether to
enter into any Swap Contract. 
  
 5.19 Full Disclosure.
None of the representations or warranties made by the Company or any Subsidiary in the Loan Documents as of the date such representations and warranties are made or deemed made, and none of the statements contained in any exhibit, report, statement
or certificate furnished by or on behalf of the Company or any Subsidiary in connection with the Loan Documents (including the offering and disclosure materials delivered by or on behalf of the Company to the Banks prior to the Closing Date),
contains any untrue statement of a material fact or omits any material fact required to be stated therein or necessary to make the statements made therein, in light of the circumstances under which they are made, not misleading as of the time when
made or delivered. 
  
 5.20 Tax Shelter Regulations. The
Company does not intend to treat the Loans and related transactions as being a “reportable transaction” (within the meaning of Treasury Regulation Section 1.6011-4). In the event the Company determines to take any action inconsistent with
such intention, it will promptly notify the Agent thereof. If the Company so notifies the Agent, the Company acknowledges that one or more of the Banks may treat its Loans as part of a transaction that is subject to Treasury Regulation Section
301.6112-1, and such Bank or Banks, as applicable, will maintain the lists and other records required by such Treasury Regulation. 
  

 38 

 ARTICLE VI  
  
 AFFIRMATIVE COVENANTS 
  

So long as any Bank shall have any Commitment hereunder, or any Loan or other Obligation shall remain unpaid or unsatisfied, unless the Majority Banks
waive compliance in writing: 
  
 6.01 Financial
Statements. The Company shall deliver to the Agent and each Bank, in form and detail reasonably satisfactory to the Agent and the Majority Banks: 
  
 (a) as soon as available, but not later than 100 days after the end of each calendar year, a copy of the audited consolidated balance sheet of the Company
and its Subsidiaries as of the end of such year and the related audited consolidated statements of operations and cash flows for such year, setting forth in each case in comparative form the figures for the previous calendar year, and accompanied by
the opinion of a nationally-recognized independent public accounting firm (“Independent Auditor”) which report shall state that such consolidated financial statements present fairly the financial position of the Company and its
Subsidiaries on a consolidated basis for the periods indicated in conformity with GAAP consistently applied. Such opinion shall not be qualified or limited because of a restricted or limited examination by the Independent Auditor of any material
portion of the Company’s or any Material Subsidiary’s records; and 
  
 (b) as soon as available, but not later than 50 days after the end of each of the first three calendar quarters of each calendar year, a copy of the unaudited consolidated balance sheet of the Company and its
Subsidiaries as of the end of such quarter and the related unaudited consolidated statements of operations and cash flows for the period commencing on the first day and ending on the last day of such quarter, certified by a Responsible Officer as
fairly presenting, in accordance with GAAP (subject to the absence of footnotes and ordinary, good faith year-end audit adjustments), the financial position and the results of operations of the Company and its Subsidiaries on a consolidated basis;

  
 provided, that if the Company has one or more designated Unrestricted
Subsidiaries during any period in respect of which the Company is required to deliver financial statements pursuant to Section 6.01(a) or (b), the Company shall concurrently deliver to the Agent and each Bank corresponding unaudited consolidating
financial statements of each such Unrestricted Subsidiary as of the end of and for such period. 
  
 6.02 Certificates; Other Information. The Company shall furnish to the Agent and each Bank: 
  
 (a) concurrently with the delivery of the financial statements referred to
in Sections 6.01(a) and (b), (i) a Compliance Certificate executed by a Responsible Officer and (ii) a schedule listing each Subsidiary that was a Material Subsidiary for, or as of the end of, the period covered by such financial statements;

  
 (b) promptly, but in no event later than 10 days after filing
the same, copies of all financial statements and reports that the Company sends to its shareholders, and copies of all financial statements and regular, periodical or special reports (including Forms 10K, 10Q and 8K) that the Company or any
Subsidiary may make to, or file with, the SEC; 
  
 (c) promptly
upon request of the Agent, a certificate of a Responsible Officer of the Company certifying (i) the aggregate dollar amount of Returned Accounts for the Company and its Subsidiaries for the most recently-ended calendar month, measured on a
consolidated basis, (ii) the aggregate dollar amount of all Short Term Trade Accounts Receivable of the Company and its Subsidiaries, measured on a consolidated basis, as of the last day of such calendar month, (iii) the aggregate dollar amount of
Short Term Trade Accounts Receivable of the Company and its Subsidiaries that are more than 90 days past due, measured on a 

  

 39 

 
consolidated basis, as of the last day of such calendar month, (iv) the aggregate dollar amount of Short Term Trade Accounts Receivable of the Company and
its Subsidiaries that are more than 90 days past due expressed as a percentage of the aggregate dollar amount of all Short Term Trade Accounts Receivable of the Company and its Subsidiaries, in each case, measured on a consolidated basis, as of the
last day of such calendar month, and (v) with respect to each amount of Short Term Trade Accounts Receivable reported under the preceding clauses (ii) and (iii), the amount of reserves associated with such Short Term Trade Accounts Receivable as
reported in the financial statements most recently delivered by the Company under Section 6.01; provided, however, that unless and until a Borrowing has occurred hereunder, the Company shall be under no obligation to deliver the monthly certificates
required under this Section 6.02(c); provided further, however, that, upon request of the Agent, it shall be an additional condition precedent to the initial Borrowing hereunder that the Company deliver to the Agent a certificate of a Responsible
Officer certifying retroactively the information required under the preceding clauses (i) through (v) for each calendar month ended from the Closing Date through the initial Borrowing Date; 
  
 (d) promptly after the Company has notified the Agent of any intention by the
Company to treat the Loans and related transactions as being a “reportable transaction” (within the meaning of Treasury Regulation Section 1.6011-4), a duly completed copy of IRS Form 8886 or any successor form; and 
  
 (e) promptly, such additional information regarding the business, financial
or corporate affairs of the Company or any Subsidiary as the Agent, at the request of any Bank, may from time to time reasonably request. 
  
 Reports required to be delivered pursuant to Sections 6.01(a) or (b) or 6.02(b) shall be deemed to have been delivered on the date on which the Company
posts such reports on the Company’s website on the Internet at the website address listed on Schedule 10.02 or when such report is posted on the Securities and Exchange Commission’s website at www.sec.gov.; provided that (x) the Company
shall deliver paper copies of such reports to the Agent or any Bank who requests the Company to deliver such paper copies until written request to cease delivering paper copies is given by the Agent or such Bank, (y) the Company shall notify by
facsimile or by electronic mail the Agent and each Bank of the posting of any such reports, and (z) in every instance the Company shall provide paper copies of the Compliance Certificates required by Section 6.02(a) to the Agent and each of the
Banks. Except for such Compliance Certificates, the Agent shall have no obligation to request the delivery or to maintain copies of the reports referred to above, and in any event shall have no responsibility to monitor compliance by the Company
with any such request for delivery, and each Bank shall be solely responsible for requesting delivery to it or maintaining its copies of such reports. 
  
 The Company hereby acknowledges that (a) the Agent and/or the Arranger will make available to the Banks materials and/or information provided by or on
behalf of the Company hereunder (collectively, “Company Materials”) by posting the Company Materials on IntraLinks or another similar electronic system (provided that any such similar electronic system is being adopted by the Agent
for distribution of such materials and/or information provided by or on behalf of similarly situated borrowers in connection with syndicated credit facilities), (the “Platform”) and (b) certain of the Banks may be
“public-side” Banks (i.e., Banks that do not 

  

 40 

 
wish to receive material non-public information with respect to the Company or its securities) (each, a “Public Bank”). The Company hereby
agrees that (w) all Company Materials that are to be made available to Public Banks shall be clearly and conspicuously marked “PUBLIC” which, at a minimum, shall mean that the word “PUBLIC” shall appear prominently on the first
page thereof; (x) by marking Company Materials “PUBLIC,” the Company shall be deemed to have authorized the Agent, the Arranger and the Banks to treat such Company Materials as not containing any material non-public information with
respect to the Company or its securities for purposes of United States Federal and state securities laws (provided, however, that to the extent such Company Materials constitute Information, they shall be treated as set forth in Section 10.08); (y)
all Company Materials marked “PUBLIC” are permitted to be made available through a portion of the Platform designated “Public Investor;” and (z) the Agent and the Arranger shall be entitled to treat any Company Materials that are
not marked “PUBLIC” as being suitable only for posting on a portion of the Platform not designated “Public Investor.” 
  
 6.03 Notices. The Company shall promptly notify the Agent and each Bank: 
  
 (a) of the occurrence of any Default or Event of Default; 
  
 (b) as soon as a Responsible Officer of the Company becomes aware thereof, of any matter that is reasonably expected to
result in a Material Adverse Effect, including (i) breach or non-performance of, or any default under, a Contractual Obligation of the Company or any Subsidiary; (ii) any dispute, litigation, investigation, proceeding or suspension between the
Company or any Subsidiary and any Governmental Authority; or (iii) the commencement of, or any material development in, any litigation or proceeding affecting the Company or any Material Subsidiary; including pursuant to any applicable Environmental
Laws; 
  
 (c) promptly, but in no event more than 10 days after
such event, of the occurrence of any of the following events affecting any Loan Party or any ERISA Affiliate, and deliver to the Agent and each Bank a copy of any notice with respect to such event that is filed with a Governmental Authority and any
notice delivered by a Governmental Authority to any Loan Party or any ERISA Affiliate with respect to such event: 
  
 (i) an ERISA Event; 
  
 (ii) a material increase in the Unfunded Pension Liability of any Pension Plan; 
  
 (iii) the adoption of, or the commencement of contributions
to, any Plan subject to Section 412 of the Code by any Loan Party or any ERISA Affiliate; or 
  
 (iv) the adoption of any amendment to a Plan subject to Section 412 of the Code, if such amendment results in a material increase in
contributions or Unfunded Pension Liability; and 
  
 (d) upon the
request from time to time (but not more frequently than once each calendar quarter unless a Default or an Event of Default exists) of the Agent, the Swap Termination Values, together with a description of the method by which such values were
determined, relating to any then-outstanding Swap Contracts to which the Company or any of its Subsidiaries is party. 
  

 41 

 Each notice under this Section shall be accompanied by a written statement by a Responsible Officer of
the Company setting forth details of the occurrence referred to therein, and stating what action the Company or any affected Subsidiary proposes to take with respect thereto and at what time. Each notice under Section 6.03(a) shall describe with
particularity any and all clauses or provisions of this Agreement or other Loan Document that have been breached or violated, but the reasonable failure to identify all such clauses or provisions shall not, of itself, constitute a failure to comply
with Section 6.03(a). 
  
 6.04 Preservation of Corporate
Existence, Etc. The Company shall, and shall cause each Material Subsidiary to: 
  
 (a) except as otherwise permitted by this Agreement, preserve and maintain in full force and effect its corporate existence and good standing under the laws of its state or jurisdiction of incorporation; 

 
 (b) preserve and maintain in full force and effect all governmental
rights, privileges, qualifications, permits, licenses and franchises necessary or desirable in the normal conduct of its business except (i) in connection with transactions permitted by Section 7.03 and sales of assets permitted by Section 7.02 or
(ii) where such failure to preserve or maintain is not reasonably expected to result in a Material Adverse Effect; 
  
 (c) use reasonable efforts, in the ordinary course of business, to preserve its business organization and goodwill; and 
  
 (d) preserve or renew all of its registered patents, trademarks, trade names
and service marks, the non-preservation of which is reasonably expected to have a Material Adverse Effect. 
  
 6.05 Maintenance of Property. The Company shall, and shall cause each Subsidiary to, maintain and preserve all of its material property which is
used or useful in its business in good working order and condition, ordinary wear and tear excepted, except as permitted by Section 7.02. The Company and each Subsidiary shall use the standard of care typical in the industry in the operation and
maintenance of its facilities. 
  
 6.06 Insurance. The
Company shall maintain, and shall cause each Material Subsidiary to maintain, with financially sound and reputable independent insurers, insurance with respect to its properties and business against loss or damage of the kinds customarily insured
against by Persons engaged in the same or similar business, of such types and in such amounts as are customarily carried under similar circumstances by such other Persons. 
  
 6.07 Payment of Obligations. The Company shall, and shall cause each Material Subsidiary to, pay and discharge as the
same shall become due and payable, all their respective obligations and liabilities, including: 
  
 (a) unless the same are being contested in good faith by appropriate proceedings and adequate reserves in accordance with GAAP are being maintained by the
Company or such Subsidiary, all tax liabilities, assessments and governmental charges or levies upon it or its properties or assets; 
  

 42 

 (b) unless the same are being contested in good faith by appropriate proceedings and adequate reserves in
accordance with GAAP are being maintained by the Company or such Subsidiary, all lawful claims which, if unpaid, would by law become a Lien upon its property not otherwise permitted hereunder; 
  
 (c) all Indebtedness where failure to pay or discharge such Indebtedness is
reasonably expected to result in a Material Adverse Effect; and 
  
 (d) all Subordinated Indebtedness in an aggregate principal amount (including undrawn committed or available amounts and including amounts owing to all creditors under any combined or syndicated credit arrangement), whether individually or
collectively, of more than $10,000,000 when due (whether by scheduled maturity, required prepayment, acceleration, demand, or otherwise). 
  
 6.08 Compliance with Laws. The Company shall comply, and shall cause each Material Subsidiary to comply, in all material respects with all
Requirements of Law of any Governmental Authority having jurisdiction over it or its business (including the Federal Fair Labor Standards Act), except such as may be contested in good faith or as to which a bona fide dispute may exist. 

 
 6.09 Compliance with ERISA. Each Loan Party shall, and shall cause
each of its ERISA Affiliates to: (a) maintain each Plan in compliance in all material respects with the applicable provisions of ERISA, the Code and other federal or state law; (b) cause each Plan which is qualified under Section 401(a) of the Code
to maintain such qualification; and (c) make all required contributions to any Plan subject to Section 412 of the Code, except in each case to the extent that any failure to maintain such compliance or qualification or to make such contributions is
not reasonably expected to have a Material Adverse Effect. 
  
 6.10 Inspection of Property and Books and Records. The Company shall maintain and shall cause each Material Subsidiary to maintain adequate books of record and account, in which full, true and correct entries in conformity with GAAP
consistently applied shall be made of all financial transactions and matters involving the assets and business of the Company or such Material Subsidiary. The Company shall permit, and shall cause each Material Subsidiary to permit, representatives
and independent contractors of the Agent or any Bank to visit and inspect any of their respective properties, to examine their respective corporate, financial and operating records, and make copies thereof or abstracts therefrom, and to discuss
their respective affairs, finances and accounts with their respective directors, officers, and independent public accountants at such reasonable times during normal business hours and as often as may be reasonably necessary upon reasonable advance
notice to the Company and, in the case of any discussion with independent public accountants of the Company or any Material Subsidiary, upon providing the Company’s representatives with a reasonable opportunity to participate in and/or be
present at any such discussion; provided, however, when an Event of Default exists the 

  

 43 

 
Agent or any Bank may do any of the foregoing at the expense of the Company and at any time during normal business hours without advance notice (except that
the Company’s representatives shall be given a reasonable opportunity to participate in and/or be present at any discussions with independent public accountants of the Company or any Material Subsidiary). 
  
 6.11 Environmental Laws. The Company shall, and shall cause each
Subsidiary to, conduct its operations and keep and maintain its property in compliance, in all material respects, with all Environmental Laws. 
  
 6.12 Use of Proceeds. The proceeds of the Loans shall be available to be used by the Company for working capital, acquisitions, share repurchases
and other general corporate purposes not in contravention of any Requirement of Law or of any Loan Document. 
  
 6.13 Additional Guarantors. The Company shall notify the Agent at the time that any Person becomes a Material Domestic Subsidiary of the
Company after the date hereof, and promptly thereafter (and in any event within 30 days), cause such Person to (i) become a Guarantor by executing and delivering to the Agent a counterpart of the Guaranty or such other document as the Agent shall
reasonably deem appropriate for such purpose, and (ii) deliver to the Agent documents of the types referred to in clauses (b) and (c) of Section 4.01 and favorable legal opinions of counsel to such Person, which shall cover (A) the due organization
and good standing of such Subsidiary, (B) the due authorization, execution and delivery by such Subsidiary of such Loan Documents, (C) the enforceability of such Loan Documents against such Subsidiary and (D) such other matters as were contained in
the legal opinions delivered pursuant to Section 4.01(d) or that the Agent may otherwise reasonably request, all of the foregoing to be reasonably satisfactory in form and substance to the Agent and its counsel. 
  
 ARTICLE VII  
  
 NEGATIVE COVENANTS 
  
 So long as any Bank shall have any Commitment hereunder, or any Loan or other
Obligation shall remain unpaid or unsatisfied, unless the Majority Banks waive compliance in writing: 
  
 7.01 Limitation on Liens. The Company shall not, and shall not suffer or permit any Material Subsidiary to, directly or indirectly, make, create,
incur, assume or suffer to exist any Lien upon or with respect to any part of its property, whether now owned or hereafter acquired, other than the following (“Permitted Liens”): 
  
 (a) any Lien existing on property of the Company or any Subsidiary on the
Closing Date and set forth in Schedule 7.01; 
  
 (b) any Lien
created under any Loan Document; 
  
 (c) Liens for taxes, fees,
levies, imposts, assessments or other governmental charges which are not delinquent or remain payable without penalty, or to the extent that non-payment thereof is permitted by Section 6.07, provided that no notice of lien has been filed or recorded
under the Code; 
  

 44 

 (d) carriers’, warehousemen’s, mechanics’, landlords’, materialmen’s,
repairmen’s or other similar Liens arising in the ordinary course of business which are not delinquent or remain payable without penalty or which are being contested in good faith and by appropriate proceedings, which proceedings have the
effect of preventing the forfeiture or sale of the property subject thereto; 
  
 (e) Liens (other than any Lien imposed by ERISA) consisting of pledges or deposits required in the ordinary course of business in connection with workers’ compensation, unemployment insurance and other social
security legislation; 
  
 (f) Liens on the property of the Company
or any Subsidiary securing (i) the non-delinquent performance of bids, trade contracts (other than for borrowed money), leases, statutory obligations, (ii) contingent obligations on surety and appeal bonds, and (iii) other non-delinquent obligations
of a like nature; in each case, incurred in the ordinary course of business, provided all such Liens in the aggregate would not (even if enforced) cause a Material Adverse Effect; 
  
 (g) Liens consisting of judgment or judicial attachment liens, provided that the enforcement of such Liens is effectively
stayed and all such liens in the aggregate at any time outstanding for the Company and its Subsidiaries do not exceed $20,000,000; 
  
 (h) easements, rights-of-way, zoning or use restrictions and other similar encumbrances incurred in the ordinary course of business which, in the
aggregate, are not substantial in amount, and which do not in any case materially detract from the value of the property subject thereto or interfere with the ordinary conduct of the businesses of the Company and its Subsidiaries; 
  
 (i) Liens on assets acquired by the Company or any Subsidiary or on any
assets of Persons which become Subsidiaries, in each case, which assets or Persons are acquired after the date of this Agreement, provided, however, that such Liens existed at the time such assets were acquired by the Company or any Subsidiary or
such Persons became Subsidiaries and were not created in anticipation thereof; 
  
 (j) purchase money security interests on any property acquired, constructed or held by the Company or its Subsidiaries in the ordinary course of business, securing Indebtedness incurred or assumed for the purpose of
financing all or any part of the cost of acquiring such property; provided that (i) any such Lien attaches to such property concurrently with or within 30 days after the acquisition or construction thereof, (ii) such Lien attaches solely to the
property so acquired or constructed in such transaction, (iii) the principal amount of the debt secured thereby does not exceed 100% of the cost of such property, and (iv) the principal amount of the Indebtedness secured by any and all such purchase
money security interests shall not at any time exceed $10,000,000; 
  
 (k) Liens securing obligations in respect of capital leases on assets subject to such leases, provided that such capital leases are otherwise permitted under Section 7.09; 
  
 (l) Liens arising solely by virtue of any statutory or common law provision relating to banker’s liens, rights of
set-off or similar rights and remedies as to deposit accounts or 

  

 45 

 
other funds maintained with a creditor depository institution; provided that (i) such deposit account is not a dedicated cash collateral account and is not
subject to restrictions against access by the Company in excess of those set forth by regulations promulgated by the FRB, and (ii) such deposit account is not intended by the Company or any Subsidiary to provide collateral to the depository
institution; 
  
 (m) Liens consisting of pledges of cash
collateral or government securities to secure on a mark-to-market basis Permitted Swap Obligations only, provided that (i) the counterparty to any Swap Contract relating to any such Permitted Swap Obligation is under a similar requirement to deliver
similar collateral from time to time to the Company or the Subsidiary party thereto on a mark-to-market basis; and (ii) the aggregate value of such collateral so pledged by the Company and its Subsidiaries together in favor of any counterparty does
not at any time exceed $10,000,000; 
  
 (n) Liens securing
Refinancing Indebtedness permitted under Section 7.05(f), provided that such Lien does not apply to any other property or assets of the Company or any Subsidiary other than the proceeds of the property or assets subject to the respective original
Lien; 
  
 (o) Liens pursuant to Permitted Receivables Purchase
Facilities permitted hereunder; 
  
 (p) other non-consensual Liens
arising in the ordinary course of business the existence or enforcement of which would not result in a Material Adverse Effect; 
  
 (q) other Liens securing Indebtedness and obligations in an aggregate principal amount at any time outstanding not exceeding $5,000,000, provided that any
such Lien shall not encumber cash (other than to the extent such cash constitutes proceeds of the property subject to any such Lien), inventory or accounts receivable; and 
  
 (r) a Lien on all or any part of the Wilsonville Facility securing Indebtedness of the Company and/or the Special Purpose
Subsidiary in an aggregate principal amount not exceeding $50,000,000 at any time. 
  
 7.02 Disposition of Assets. The Company shall not, and shall not suffer or permit any Subsidiary to, directly or indirectly, sell, assign, lease, convey, transfer or otherwise dispose of (whether in one or a
series of transactions) any property (including accounts and notes receivable, with or without recourse) or enter into any agreement to do any of the foregoing, except: 
  
 (a) dispositions of (i) inventory, or (ii) used, worn-out or surplus equipment or other operating assets, in each case in
the ordinary course of business; 
  
 (b) the sale of equipment to
the extent that such equipment is exchanged for credit against the purchase price of similar replacement equipment, or the proceeds of such sale are reasonably promptly applied to the purchase price of such replacement equipment; 
  

 46 

 (c) dispositions of inventory or equipment by the Company or any Subsidiary to the Company or any
Subsidiary pursuant to reasonable business requirements; 
  
 (d)
dispositions of Permitted Receivables pursuant to Permitted Receivables Purchase Facilities; provided that (i) for those Permitted Receivables having a final maturity date which is less than 12 months after the date such obligations arise, the value
of such accounts receivable so sold by the Company and its Subsidiaries shall not exceed $50,000,000 at any time outstanding, and (ii) the value of all Permitted Receivables (whether or not having a final maturity date which is less than 12 months
after the date such obligations arise) so sold by the Company and its Subsidiaries shall not exceed $100,000,000 at any time outstanding; and provided, further, however, that no dispositions of any Permitted Receivables shall be permitted at any
time that any of the following circumstances exist: (A) Returned Accounts for the Company and its Subsidiaries for any calendar month shall have exceeded $10,000,000 in the aggregate, measured on a consolidated basis, (B) Short Term Trade Accounts
Receivable (after deducting the amount of reserves associated with such Short Term Trade Accounts Receivable as reported in the financial statements most recently delivered by the Company under Section 6.01) of the Company and its Subsidiaries that
are more than 90 days past due shall be greater than 10% of all Short Term Trade Accounts Receivable (after deducting the amount of reserves associated with such Short Term Trade Accounts Receivable as reported in the financial statements most
recently delivered by the Company under Section 6.01) of the Company and its Subsidiaries, in each case, measured on a consolidated basis, (C) the TNW Buffer measured as of the last day of any calendar quarter (as adjusted to exclude the effect of
any Acquisitions by the Company or any of its Subsidiaries consummated during such calendar quarter) shall be less than 50% of the TNW Buffer measured as of the last day of the calendar quarter immediately preceding such calendar quarter, (D) if
after giving effect to such disposition, the Company would not be in pro forma compliance with the financial covenants set forth in Sections 7.14(a) through (d), measured as of the last day of the calendar quarter then most recently ended for which
a Compliance Certificate has been delivered to the Agent and the Banks pursuant to Section 6.02(a), or (E) any Event of Default then exists or would result from such disposition; 
  
 (e) (i) subject to Section 7.06 (without regard to the exception in the first clause of the first sentence of Section 7.06),
the sale or other transfer of all or any part of the Wilsonville Facility to the Special Purpose Subsidiary, or (ii) any other sale of all or any part of the Wilsonville Facility for fair market value (as determined in good faith at the time of such
sale by the board of directors of the Company); provided in each case that no Default or Event of Default then exists or would result from such sale; 
  
 (f) the sale or lease of any property set forth on Schedule 7.02, in each case for fair market value (as determined in good faith at the time of such sale
by the board of directors of the Company or the applicable Subsidiary, as the case may be); provided that no Default or Event of Default then exists or would result from such sale; 
  
 (g) dispositions not otherwise permitted hereunder which are made for fair market value; provided, that (i) at the time of
any disposition, no Event of Default shall exist or shall result from such disposition, (ii) the aggregate net book value of all assets so sold by the Company and its Subsidiaries, together, shall not exceed in any calendar year $10,000,000, and
(iii) any such disposition made pursuant to this subsection (g) shall not be of accounts receivable of the Company or any of its Subsidiaries; 

  

 47 

 (h) dispositions to the extent permitted under Section 7.03; 
  
 (i) any Subsidiary may sell all or substantially all of its assets (upon
voluntary liquidation or otherwise) to the Company or a Wholly-Owned Subsidiary; provided that if the transferor of such property is a Guarantor, the transferee thereof must either be the Company or a Guarantor; and 
  
 (j) sales by Mentor Graphics (Japan) Co. Ltd. of bills of exchange and
promissory notes to third party financial institutions in Japan in the ordinary course of business and in transactions consistent with such Subsidiary’s past practice. 
  
 7.03 Consolidations and Mergers. The Company shall not, and shall not suffer or permit any Subsidiary to, merge or
consolidate with or into any Person, except: 
  
 (a) any
Subsidiary may merge with the Company (provided that the Company shall be the continuing or surviving corporation) or with any one or more Subsidiaries (provided that, (i) when any Subsidiary is merging with a Wholly-Owned Subsidiary, the continuing
or surviving Person shall be a Wholly-Owned Subsidiary and (ii) when any Subsidiary is merging with a Guarantor, the continuing or surviving Person shall be a Guarantor); 
  
 (b) the Company or any Subsidiary may merge with any Person in an Acquisition so long as (i) either (A) the surviving entity
is the Company or such Subsidiary; provided that in any such merger involving the Company, the Company shall be the surviving entity; or (B) if the merger involves (1) a Guarantor being absorbed into the target Person, such target Person shall
become a Guarantor upon the consummation of the Acquisition and (2) any other Subsidiary being absorbed into the target Person, such target Person shall become a Wholly-Owned Subsidiary of the Company upon the consummation of the Acquisition, (ii)
such Acquisition is otherwise permitted under this Agreement and (iii) immediately before and after giving effect to such merger no Default or Event of Default shall exist; and 
  
 (c) any Subsidiary may merge with any Person pursuant to a disposition of such Subsidiary or the assets of such Subsidiary,
in each case, permitted under Section 7.02. 
  
 7.04 Loans and
Investments. The Company shall not purchase or acquire, or suffer or permit any Subsidiary to purchase or acquire, for cash or property, or make any commitment therefor for cash or property, any capital stock, equity interest, or any obligations
or other securities of, or any interest in, any Person, or make or commit to make any Acquisitions, or make or commit to make any advance, loan, extension of credit or capital contribution to or any other investment in, any Person including any
Affiliate of the Company (together, “Investments”), except for: 
  
 (a) Investments held by the Company or any Subsidiary in the form of Cash Equivalents or short term marketable securities or Permitted Investments; 
  

 48 

 (b) extensions of credit in the nature of accounts receivable or notes receivable arising from the sale
or lease of goods or services in the ordinary course of business; 
  
 (c) Investments (i) by the Company in any Guarantor or by any Guarantor in the Company or another Guarantor; and (ii) by any non-Guarantor Wholly-Owned Subsidiary in the Company or any other Wholly-Owned Subsidiary, provided, however, that
Investments by the Company or any of its Subsidiaries in any Unrestricted Subsidiary shall only be made if the Company reasonably believes that, calculated on a pro forma basis based on the most recent financial statements delivered by the Company
pursuant to Section 6.01, such Investment would not have resulted in a breach of the requirements of Section 7.16 in relation to the most recently completed calendar quarter included in such financial statements; 
  
 (d) Investments incurred in order to consummate Acquisitions otherwise
permitted hereunder, provided that (i) the Net Cash Consideration (if any) given for any such Acquisition, together with the Net Cash Consideration given for all prior Acquisitions consummated by the Company and its Subsidiaries after the Closing
Date shall not exceed $50,000,000 in any calendar year (the “Cash Acquisition Basket”), provided that unused portions of the Cash Acquisition Basket in respect of any calendar year may be carried over to future years, but (A) in no
case shall the aggregate amount of the Cash Acquisition Basket exceed $100,000,000 in any calendar year and (B) in no case shall the aggregate amount of all Net Cash Consideration given in respect of Acquisitions permitted under this Section 7.04(d)
exceed $165,000,000 prior to the Revolving Termination Date; (ii) such Acquisitions are undertaken in accordance with all applicable Requirements of Law; and (iii) the prior, effective written consent or approval to such Acquisition of the board of
directors or equivalent governing body of the acquiree is obtained, provided that notwithstanding this clause (iii), if all of the consideration given for any such Acquisition is common stock of the Company or any Subsidiary, then the prior,
effective written consent or approval to such Acquisition of the board of directors or equivalent governing body of the acquiree shall not be required hereby; 
  

(e) Investments incurred in order to consummate Acquisitions not otherwise permitted herein subject to the prior written consent of the Majority Banks;

  
 (f) Investments constituting Permitted Swap Obligations or
payments or advances under Swap Contracts relating to Permitted Swap Obligations; 
  
 (g) Investments permitted under Sections 7.10(b) and (c); 
  
 (h) loans made by the Company or any Subsidiary in the ordinary course of business to a Person not an Affiliate of the Company in an aggregate principal amount not exceeding $15,000,000 at any time outstanding for all
such loans; 
  
 (i) unsecured loans and advances made by the
Company or any Subsidiary to employees in the ordinary course of business consistent with past practice in principal amounts not exceeding $2,500,000 in the aggregate at any time outstanding and not more than $500,000 to any individual employee;
provided, however, that solely with respect to any such loans and advances initially made or extended by a Person other than the Company or any Subsidiary or Unrestricted Subsidiary and included on the consolidated balance sheet of the Company and
its 

  

 49 

 
Subsidiaries solely as a result of an Acquisition of such Person (or assets of such Person) consummated after the Closing Date, the amount of such loans and
advances shall be calculated for purposes of this Section 7.04(i) net of reserves accounted for on the consolidated financial statements of the Company and its Subsidiaries in respect of such loans and advances; 
  
 (j) other Investments not exceeding $30,000,000 in any calendar year as to
all such Investments in the aggregate; provided that if all such Investments permitted by this subsection (j) exceed $15,000,000 in the aggregate in any calendar year, then the $50,000,000 limitation set forth in the preceding Section 7.04(d) shall
be reduced for such calendar year by the amount of such excess; 
  
 (k) Investments of the Company or its Subsidiaries existing on the Closing Date and identified on Schedule 7.04; and 
  
 (l) Company may contribute to the Special Purpose Subsidiary all or any part of the Wilsonville Facility and other Investments incidental or necessary to
the capitalization and operation of the Special Purpose Subsidiary, the Special Purpose Subsidiary’s ownership of all or any part of the Wilsonville Facility and its lease of all or any part of the Wilsonville Facility to the Company.

  
 7.05 Limitation on Indebtedness. The Company shall not,
and shall not suffer or permit any Subsidiary to, create, incur, assume, suffer to exist, or otherwise become or remain directly or indirectly liable with respect to, any Indebtedness, except: 
  
 (a) Indebtedness incurred pursuant to this Agreement; 
  
 (b) Indebtedness consisting of Contingent Obligations permitted pursuant to
Section 7.08; 
  
 (c) Indebtedness existing on the Closing Date
and set forth in Schedule 7.05; 
  
 (d) Indebtedness secured by
Liens permitted by Sections 7.01(i) and (j); 
  
 (e)
Indebtedness in the form of leases permitted pursuant to Section 7.09; 
  
 (f) extensions, renewals or refinancings of Indebtedness permitted under Sections 7.05(a), (c), (d), (f) and (j), so long as (i) such Indebtedness (the “Refinancing Indebtedness”) is in an aggregate principal amount not
greater than the aggregate principal amount of the Indebtedness being extended, renewed or refinanced plus the amount of any premiums required to be paid therefor and fees and expenses associated therewith, (ii) such Refinancing Indebtedness has a
later or equal final maturity and a longer or equal weighted average life as the Indebtedness being extended, refinanced or renewed, (iii) the interest rate applicable to such Refinancing Indebtedness shall not exceed a market rate (as determined in
good faith by the Company or the relevant Subsidiary, as the case may be) as of the time of such extension, renewal or refinancing, (iv) if the Indebtedness being extended, renewed or refinanced is subordinated to the Obligations, such Refinancing
Indebtedness is subordinated to the Obligations to the same extent as the Indebtedness being extended, renewed or refinanced and (v) at the time of and after giving effect to such extension, renewal or refinancing, no Default or Event of Default
shall exist; 
  

 50 

 (g) Indebtedness incurred by the Company or any Subsidiary pursuant to Permitted Receivables Purchase
Facilities permitted hereunder; 
  
 (h) other unsecured
Indebtedness in an aggregate principal amount outstanding not exceeding $20,000,000 at any time; 
  
 (i) Indebtedness of the Company to the Special Purpose Subsidiary or of the Special Purpose Subsidiary to the Company, to the extent such Indebtedness
results from an Investment permitted under Section 7.04(c); and 
  
 (j) Subordinated Indebtedness of the Company to the extent subordinated in right of payment to the Obligations hereunder on terms reasonably consented to by the Majority Banks. 
  
 7.06 Transactions with Affiliates. Except as otherwise expressly permitted hereunder, the Company shall not, and
shall not suffer or permit any Subsidiary to, enter into any transaction with any Affiliate of the Company, except upon fair and reasonable terms no less favorable to the Company or such Subsidiary than would obtain in a comparable arm’s-length
transaction with a Person not an Affiliate of the Company or such Subsidiary; provided that the loans permitted by Section 7.04(i) and the Company’s or any Subsidiary’s employee relocation program as in effect on the Closing Date, as such
programs may be amended or otherwise modified after the Closing Date in the ordinary course of business, shall not be subject to the application of this Section 7.06. 
  
 7.07 Use of Proceeds. 
  
 (a) The Company shall not, and shall not suffer or permit any Subsidiary to, use any portion of the Loan proceeds, directly or indirectly, otherwise than
in connection with the purchase of shares of its own stock for immediate retirement, (i) to purchase or carry Margin Stock, (ii) to repay or otherwise refinance indebtedness of the Company or others incurred to purchase or carry Margin Stock, (iii)
to extend credit for the purpose of purchasing or carrying any Margin Stock, in the case of each of the preceding clauses (i), (ii) and (iii) in violation of Regulation T, U or X of the FRB, or (iv) to acquire any security in any transaction that is
subject to Section 13(d) or 14(d) of the Exchange Act unless such transaction has been duly approved in advance by the board of directors of the issuer of such security. 
  
 (b) The Company shall not, directly or indirectly, use any portion of the Loan proceeds (i) knowingly to purchase Ineligible
Securities from the Arranger during any period in which the Arranger makes a market in such Ineligible Securities, (ii) knowingly to purchase during the underwriting or placement period Ineligible Securities being underwritten or privately placed by
the Arranger, or (iii) to make payments of principal or interest on Ineligible Securities underwritten or privately placed by the Arranger and issued by or for the benefit of the Company or any Affiliate of the Company. The Arranger is a registered
broker-dealer and permitted to underwrite and deal in certain Ineligible Securities; and “Ineligible Securities” means securities which may not be underwritten or dealt in by member banks of the Federal Reserve System under Section
16 of the Banking Act of 1933 (12 U.S.C. § 24, Seventh), as amended. 
  

 51 

 (c) The Company shall not, and shall not suffer or permit any Subsidiary to, use any portion of the Loan
proceeds in excess of $10,000,000, directly or indirectly, to satisfy, in whole or in part, any limited recourse obligations arising under any Permitted Receivables Purchase Facility. 
  
 7.08 Contingent Obligations. The Company shall not, and shall not suffer or permit any Subsidiary to, create, incur,
assume or suffer to exist any Contingent Obligations except: 
  
 (a) endorsements for collection or deposit in the ordinary course of business; 
  
 (b) Permitted Swap Obligations; 
  
 (c) Contingent Obligations of the Company and its Subsidiaries existing as of the Closing Date and set forth on Schedule 7.08 and any replacements thereof; provided that the amount of any such replacement Contingent Obligation shall in no
case exceed the amount of the Contingent Obligation replaced thereby; 
  
 (d) Contingent Obligations with respect to Surety Instruments incurred in the ordinary course of business; 
  
 (e) Guaranty Obligations by the Company of Indebtedness and other obligations of a Subsidiary (other than the Special Purpose Subsidiary), or by any
Subsidiary of the Indebtedness and other obligations of the Company or any other Subsidiary (other than the Special Purpose Subsidiary), provided that, in each case, such Indebtedness and other obligations are otherwise permitted hereunder;

  
 (f) Contingent Obligations under the Company’s or any
Subsidiary’s employee relocation plan as in effect on the Closing Date, as such plans may be amended or otherwise modified after the Closing Date in the ordinary course of business; 
  
 (g) Contingent Obligations relating to sales of bills of exchange and promissory notes permitted under Section 7.02(j); and

  
 (h) Contingent Obligations of Guarantors under the Guaranty.

  
 7.09 Lease Obligations. The Company shall not, and
shall not suffer or permit any Subsidiary to, create or suffer to exist any obligations for the payment of rent for any property under lease or agreement to lease, except for: 
  
 (a) operating leases existing on or entered into by the Company or any Subsidiary after the Closing Date in the ordinary
course of business and reported in the Company’s consolidated financial statements in accordance with GAAP, provided that the aggregate annual rental payments in respect of all such operating leases, together with all payments in respect of
capital leases permitted under clause (c) of this Section, shall not exceed $60,000,000 in the aggregate in any calendar year; 
  

 52 

 (b) leases entered into by the Company or any Subsidiary after the Closing Date (i) pursuant to
sale-leaseback transactions relating to assets the disposition of which is permitted under Section 7.02(g) or (ii) with respect to all or any part of the Wilsonville Facility; 
  
 (c) capital leases, other than those permitted under clause (b) of this Section, entered into by the Company or any
Subsidiary after the Closing Date to finance the acquisition of equipment; provided that the aggregate annual rental payments in respect of all such capital leases, together with all payments in respect of operating leases permitted under clause (a)
of this Section, shall not exceed $60,000,000 in the aggregate in any calendar year; and 
  
 (d) leases entered into by Persons which become Subsidiaries after the date of this Agreement, provided that such leases existed at the time the respective Persons became Subsidiaries and were not created in
anticipation thereof. 
  
 7.10 Restricted Payments. The
Company shall not declare or make any dividend payment or other distribution of assets, properties, cash, rights, obligations or securities on account of any shares of any class of its capital stock, or purchase, redeem or otherwise acquire for
value any shares of its capital stock or any warrants, rights or options to acquire such shares, now or hereafter outstanding, except that: 
  
 (a) the Company may declare and make dividend payments or other distributions payable solely in its common stock; 
  
 (b) so long as no Default or Event of Default exists or would result
therefrom, the Company may purchase, redeem or otherwise acquire shares of its common stock or warrants or options to acquire any such shares pursuant to any employee stock option or purchase plan; provided that all such purchases, redemptions or
other acquisitions otherwise permitted under this clause (b) do not exceed $15,000,000 in the aggregate in any calendar year; 
  
 (c) so long as no Default or Event of Default exists or would result therefrom, the Company may purchase, redeem or otherwise acquire shares of its common
stock or warrants or options to acquire any such shares (including pursuant to any employee stock option or purchase plan); provided that all such purchases, redemptions or other acquisitions otherwise permitted under this clause (c) do not exceed
$15,000,000 in the aggregate; and 
  
 (d) the Company may, in
connection with any issuance of Subordinated Indebtedness convertible into common stock of the Company permitted under Section 7.05(j), purchase common stock of the Company with up to 50% of the Net Issuance Proceeds for anti-dilution purposes and
as part of the structure of the offering of such Subordinated Indebtedness; provided that any such purchases of common stock must occur within 60 days of such issuance. 
  
 7.11 ERISA. No Loan Party shall, nor shall any Loan Party suffer or permit any of its ERISA Affiliates to, engage in
a prohibited transaction or violation of the fiduciary responsibility rules with respect to any Plan or engage in a transaction that could be subject to Section 4069 or 4212(c) of ERISA which has resulted or is reasonably expected to result in
liability of the Loan Parties in an aggregate amount in excess of $5,000,000. 
  

 53 

 7.12 Change in Business. The Company shall not, and shall not suffer or permit any Material
Subsidiary to, engage in any material line of business substantially different from design automation and reasonably related lines of business. 
  
 7.13 Accounting Changes. The Company shall not make any significant change in accounting treatment or reporting practices, except as required by
GAAP, or change the fiscal year of the Company. 
  
 7.14
Financial Covenants. 
  
 (a) Adjusted Quick Ratio.
The Company shall not as of the end of any calendar quarter suffer or permit its ratio (determined in respect of the Company and its Subsidiaries on a consolidated basis) of (i) cash plus the value (valued in accordance with GAAP) of all Cash
Equivalents plus net current accounts receivable (valued in accordance with GAAP), less Restricted Amounts, to (ii) Consolidated Current Liabilities (excluding all liabilities that will be satisfied by Restricted Amounts) (the
“Adjusted Quick Ratio”), to be less than the correlative ratio indicated. If on or prior to the end of any calendar quarter, the Company has repaid, repurchased, redeemed or otherwise retired Subordinated Indebtedness in an
aggregate amount (for all such repayments, repurchases, redemptions and other retirements since the Closing Date) equal to or greater than (i) $37,500,000 but less than $75,000,000 with cash on hand (other than cash on hand that constitutes, or is
replaced by, Offset Proceeds) or the proceeds of Senior Indebtedness, then the minimum Adjusted Quick Ratio set forth below as of the end of such calendar quarter shall be increased by 0.05; or (ii) $75,000,000 with cash on hand (other than cash on
hand that constitutes, or is replaced by, Offset Proceeds) or the proceeds of Senior Indebtedness, then the minimum Adjusted Quick Ratio set forth below as of the end of such calendar quarter shall be increased by 0.10; provided that, in no case
shall the minimum Adjusted Quick Ratio as of the end of any calendar quarter exceed 1.00:1.00. For purposes of this paragraph, “Offset Proceeds” shall mean Net Cash Issuance Proceeds from an issuance of new equity or new
Subordinated Indebtedness consummated within 120 days before or after the date of such repayment, repurchase, redemption or other retirement of Subordinated Indebtedness; provided that (x) with respect to any calendar quarter which ends during such
120-day period, if the Company has delivered written notice that it intends to issue new equity or new Subordinated Indebtedness within such 120-day period, then the increase in the minimum Adjusted Quick Ratio shall not apply to such calendar
quarter, and (y) if sufficient new equity or new Subordinated Indebtedness is not issued during such 120-day period then the increase in the minimum Adjusted Quick Ratio shall be retroactively applicable as of the end of each calendar quarter during
such 120-day period. 
  

			
	 Period

	  	Ratio

	 calendar quarter ending March 31, 2005 through calendar quarter ending September 30, 2005
	  	0.85:1.00
	 calendar quarter ending December 31, 2005 through calendar quarter ending March 31, 2007
	  	0.90:1.00
	 calendar quarter ending June 30, 2007 and each calendar quarter ending thereafter
	  	0.95:1.00

  

 54 

 (b) Minimum Tangible Net Worth. The Company shall not as of the end of any calendar quarter permit
Consolidated Tangible Net Worth to be less than the sum of (i) $30,000,000, plus (ii) for each calendar quarter commencing with the calendar quarter ending March 31, 2005 (to the extent Consolidated Net Income for any such calendar quarter is
positive), 70% of Consolidated Net Income for such calendar quarter, plus (iii) 100% of the amortization of intangible assets for each calendar quarter commencing with the calendar quarter ending March 31, 2005, plus (iv) 100% of the
Net Issuance Proceeds of any new equity issued by the Company after December 31, 2004 (excluding (A) equity issued under employee stock option or purchase plans and (B) equity issued to finance an Acquisition, provided that such amount is in fact
applied to transaction costs relating to such Acquisition and such Acquisition is consummated no later than 120 days after the date of such issuance), minus (v) goodwill and other intangibles arising during such calendar quarter from
Acquisitions permitted pursuant to Section 7.04, provided that (A) the aggregate amount of such goodwill and other intangibles excluded under this clause (v) in connection with any Acquisition shall be the product of (1) the Net Cash Consideration
given in respect of such Acquisition divided by the total fair market value of all cash and non-cash consideration given in respect of such Acquisition multiplied by (2) the aggregate amount of all goodwill and other intangibles
acquired in such Acquisition, and (B) the aggregate amount of all such goodwill and other intangibles excluded under this clause (v) in any calendar year shall in no case exceed the amount of Net Cash Consideration permitted to be given in respect
of Acquisitions in such calendar year under Section 7.04(d)(i), minus (vi) without duplication, the lesser of (A) the actual goodwill and other intangibles arising from cash Acquisitions consummated during the period from January 1, 2005
through the Closing Date and (B) $30,000,000. 
  
 (c) Leverage
Ratio. The Company shall not as of the end of any calendar quarter suffer or permit the Leverage Ratio to be greater than the correlative ratio indicated. 
  

			
	 Period

	  	Ratio

	 calendar quarter ending March 31, 2005 through calendar quarter ending September 30, 2005
	  	1.75:1.00
	 calendar quarter ending December 31, 2005 and each calendar quarter ending thereafter
	  	1.50:1.00

  
 (d) Senior Leverage
Ratio. The Company shall not as of the end of any calendar quarter suffer or permit the Senior Leverage Ratio to be greater than the correlative ratio indicated. 
  

 55 

			
	 Period

	  	Ratio

	 calendar quarter ending March 31, 2005 through calendar quarter ending September 30, 2005
	  	0.60:1.00
	 calendar quarter ending December 31, 2005 through calendar quarter ending September 30, 2006
	  	0.55:1.00
	 calendar quarter ending December 31, 2006 and each calendar quarter ending thereafter
	  	0.50:1.00

  
 (e) Minimum Cash
and Accounts Receivable. The Company shall not as of the end of any calendar quarter suffer or permit its ratio (determined on a consolidated basis) of (i) cash plus the value (valued in accordance with GAAP) of all Cash Equivalents
plus 47.5% of current accounts receivable (valued in accordance with GAAP), less Restricted Amounts, to (ii) the then outstanding principal amount of the Loans, to be less than the correlative ratio indicated. 
  

			
	 Period

	  	Ratio

	 calendar quarter ending March 31, 2005 through calendar quarter ending March 31, 2008
	  	1.75:1.00
	 calendar quarter ending June 30, 2008 and each calendar quarter ending thereafter
	  	2.00:1.00

  
 For the avoidance of
doubt, (i) Unrestricted Subsidiaries shall not be included in the calculation of any of the financial measures set forth in the preceding clauses (a), (c), (d) or (e), (ii) Permitted Receivables sold pursuant to any Permitted Receivables Purchase
Facility permitted hereunder shall not be included in the calculation of any of the financial measures set forth in the preceding clauses (a) through (e), and (iii) in the calculation of any of the financial measures set forth in the preceding
clauses (a) and (e), the Company may in lieu of reporting actual Restricted Amounts substitute therefor a conservative good faith estimate of such Restricted Amounts. 
  
 7.15 Assets of Special Purpose Subsidiary. The Special Purpose Subsidiary shall not hold, and the Company shall not
permit the Special Purpose Subsidiary to hold, as of the end of any calendar quarter, assets other than the Special Purpose Subsidiary’s interest in all or any part of the Wilsonville Facility and other assets incidental or necessary to the
capitalization and operation of the Special Purpose Subsidiary, the Special Purpose Subsidiary’s ownership of all or any part of the Wilsonville Facility and its lease of all or any part of the Wilsonville Facility to the Company. 

 
 7.16 Unrestricted Subsidiaries. The Company shall not permit (a)
the aggregate revenues for any calendar quarter of all Unrestricted Subsidiaries, taken as a whole, to exceed 15% of the aggregate revenues for such calendar quarter of the Company, its Subsidiaries and its Unrestricted Subsidiaries, taken as a
whole, or (b) the aggregate assets of all Unrestricted Subsidiaries, taken as a whole, as of the end of any calendar quarter to exceed 15% of the aggregate assets of the Company, its Subsidiaries and its Unrestricted Subsidiaries, taken as a 

  

 56 

 
whole; provided, however, that if for or as of the end of any calendar quarter any requirement of the foregoing clauses (a) and (b) is not satisfied, the
Company may comply with this Section 7.16 by redesignating one or more Unrestricted Subsidiaries as Subsidiaries in accordance with Section 1.04(c) within 50 days after the end of such calendar quarter, or within 100 days of the end of such calendar
quarter if such date corresponds to the end of a calendar year, such that after giving effect to such redesignations the foregoing clauses (a) and (b) would have been so satisfied. 
  
 ARTICLE VIII  
  
 EVENTS OF DEFAULT 
  
 8.01 Event of Default. Any of the following shall constitute an “Event of Default”: 
  
 (a) Non-Payment. Any Loan Party fails to pay, (i) when and as
required to be paid herein, any amount of principal of any Loan, or (ii) within five days after the same becomes due, any interest, fee or any other amount payable hereunder or under any other Loan Document; or 
  
 (b) Representation or Warranty. Any representation or warranty by the
Company or any Subsidiary made or deemed made herein, in any other Loan Document, or which is contained in any certificate, document or financial or other statement by the Company, any Subsidiary, or any Responsible Officer of any Loan Party,
furnished at any time under this Agreement, or in or under any other Loan Document, is incorrect in any material respect on or as of the date made or deemed made; or 
  
 (c) Specific Defaults. The Company fails to perform or observe any term, covenant or agreement contained in any of
Section 6.01, 6.03(a), 6.07(d) or 6.12 or in Article VII; or 
  
 (d) Other Defaults. Any Loan Party fails to perform or observe any other term or covenant contained in this Agreement or any other Loan Document, and such default shall continue unremedied for a period of 30 days after the earlier of
(i) the date upon which a Responsible Officer of such Loan Party knew of such failure or (ii) the date upon which written notice thereof is given to the Company by the Agent or any Bank; or 
  
 (e) Cross-Acceleration. (i) The Company or any Material Subsidiary (A)
fails to make any payment in respect of any Indebtedness or Contingent Obligation (other than in respect of Swap Contracts), having an aggregate principal amount (including undrawn committed or available amounts and including amounts owing to all
creditors under any combined or syndicated credit arrangement) of more than $10,000,000 when due (whether by scheduled maturity, required prepayment, acceleration, demand, or otherwise) and such failure continues after the applicable grace or notice
period, if any, specified in the relevant document on the date of such failure, or (B) fails to perform or observe any other condition or covenant, or any other event shall occur or condition exist, under any agreement or instrument relating to any
such Indebtedness or Contingent Obligation, and such failure continues after the applicable grace or notice period, if any, specified in the relevant document on the date of such failure, if the 

  

 57 

 
effect of such failure, event or condition under the preceding clauses (A) or (B) is to cause such Indebtedness to be declared or to become due or to be
repurchased, prepaid, defeased or redeemed (automatically or otherwise), or an offer to repurchase, prepay, defease or redeem such Indebtedness to be required to be made, prior to its stated maturity, or such Contingent Obligation to become payable
or cash collateral in respect thereof to be demanded; or (ii) there occurs under any Swap Contract an Early Termination Date (as defined in such Swap Contract) resulting from (1) any event of default under such Swap Contract as to which the Company
or any Subsidiary is the Defaulting Party (as defined in such Swap Contract) or (2) any Termination Event (as defined in such Swap Contract) as to which the Company or any Subsidiary is an Affected Party (as defined in such Swap Contract), and, in
either event, the Swap Termination Value owed by the Company or such Subsidiary as a result thereof is greater than $10,000,000; or 
  
 (f) Insolvency; Voluntary Proceedings. Any Loan Party or any of their respective Material Subsidiaries (i) ceases or fails to be solvent, or
generally fails to pay, or admits in writing its inability to pay, its debts as they become due, subject to applicable grace periods, if any, whether at stated maturity or otherwise; (ii) voluntarily ceases to conduct its business in the ordinary
course; (iii) commences any Insolvency Proceeding with respect to itself; or (iv) takes any action to effectuate or authorize any of the foregoing; or 
  
 (g) Involuntary Proceedings. (i) Any involuntary Insolvency Proceeding is commenced or filed against the Company or any Material Subsidiary, or any
writ, judgment, warrant of attachment, execution or similar process, is issued or levied against a substantial part of the Company’s or any Material Subsidiary’s properties, and any such proceeding or petition shall not be dismissed, or
such writ, judgment, warrant of attachment, execution or similar process shall not be released, vacated or fully bonded within 60 days after commencement, filing or levy; (ii) the Company or any Material Subsidiary admits the material allegations of
a petition against it in any Insolvency Proceeding, or an order for relief (or similar order under non-U.S. law) is ordered in any Insolvency Proceeding; or (iii) the Company or any Material Subsidiary acquiesces in the appointment of a receiver,
trustee, custodian, conservator, liquidator, mortgagee in possession (or agent therefor), or other similar Person for itself or a substantial portion of its property or business; or 
  
 (h) ERISA. (i) An ERISA Event shall occur with respect to a Pension Plan or Multiemployer Plan which has resulted or
is reasonably expected to result in liability of any Loan Party under Title IV of ERISA to the Pension Plan, Multiemployer Plan or the PBGC in an aggregate amount in excess of $10,000,000; (ii) the aggregate amount of Unfunded Pension Liability
among all Pension Plans at any time exceeds $10,000,000; or (iii) any Loan Party or any ERISA Affiliate shall fail to pay when due, after the expiration of any applicable grace period, any installment payment with respect to its withdrawal liability
under Section 4201 of ERISA under a Multiemployer Plan in an aggregate amount in excess of $10,000,000; or 
  
 (i) Monetary Judgments. One or more non-interlocutory judgments, non-interlocutory orders, decrees or arbitration awards is entered against the
Company or any Subsidiary involving in the aggregate a liability (to the extent not covered by independent third-party insurance as to which the insurer does not dispute coverage) as to any single or related series of transactions, incidents or
conditions, of $20,000,000 or more, and the same shall remain unsatisfied, unvacated and unstayed pending appeal for a period of 10 days after the entry thereof; or 
  

 58 

 (j) Non-Monetary Judgments. Any non-monetary judgment, order or decree is entered against the
Company or any Subsidiary which has a Material Adverse Effect, and there shall be any period of 30 consecutive days during which a stay of enforcement of such judgment or order, by reason of a pending appeal or otherwise, shall not be in effect; or

  
 (k) Change of Control. There occurs any Change of
Control; or 
  
 (l) Invalidity of Subordination Provisions.
The subordination provisions of any agreement or instrument governing any Subordinated Indebtedness and subordinating such Subordinated Indebtedness to the Obligations hereunder is for any reason revoked, invalidated or otherwise breached by the
Company or any Subsidiary, or otherwise ceases to be in full force and effect as a result of any act or omission of the Company or any Subsidiary, or the Company or any Subsidiary otherwise contests in any manner the validity or enforceability
thereof or denies that it has any further liability or obligation thereunder, in each case unless the Company can satisfy the Agent, in its reasonable discretion, that such Indebtedness would be permitted under Section 7.05(h) absent such
subordination provisions; or 
  
 (m) Invalidity of Loan
Documents. Any Loan Party declares that it intends not to comply with any material provision of the Loan Documents; or any Loan Party denies that it has any further liability or obligation under any Loan Document, or purports to revoke,
terminate or rescind any Loan Document. 
  
 8.02 Remedies.
If any Event of Default occurs, the Agent shall, at the request of, or may, with the consent of, the Majority Banks, 
  
 (a) declare the commitment of each Bank to make Loans to be terminated, whereupon such commitments shall be terminated; 
  
 (b) declare the unpaid principal amount of all outstanding Loans, all
interest accrued and unpaid thereon, and all other amounts owing or payable hereunder or under any other Loan Document to be immediately due and payable, without presentment, demand, protest or other notice of any kind, all of which are hereby
expressly waived by the Company; and 
  
 (c) exercise on behalf of
itself and the Banks all rights and remedies available to it and the Banks under the Loan Documents or applicable law; 
  
 provided, however, that upon the occurrence of any event specified in Section 8.01(f) or (g) (in the case of clause (i) of Section 8.01(g) upon the expiration of the
60-day period mentioned therein), the obligation of each Bank to make Loans shall automatically terminate and the unpaid principal amount of all outstanding Loans and all interest and other amounts as aforesaid shall automatically become due and
payable without further act of the Agent or any Bank. 
  
 8.03
Rights Not Exclusive. The rights provided for in this Agreement and the other Loan Documents are cumulative and are not exclusive of any other rights, powers, privileges or remedies provided by law or in equity, or under any other instrument,
document or agreement now existing or hereafter arising. 
  

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 8.04 Application of Funds. After the exercise of remedies provided for in Section 8.02 (or after
the Loans have automatically become due and payable as set forth in the proviso to Section 8.02), any amounts received, whether from the Company, any Guarantor or otherwise, on account of the Obligations shall be applied by the Agent in the
following order: 
  
 (a) First, to payment of that portion
of the Obligations constituting fees, indemnities, expenses and other amounts (including Attorney Costs and amounts payable under Article III) payable to the Agent in its capacity as such; 
  
 (b) Second, to payment of that portion of the Obligations constituting
fees, indemnities and other amounts (other than principal and interest) payable to the Banks (including Attorney Costs and amounts payable under Article III), ratably among them in proportion to the amounts described in this clause (b) payable to
them; 
  
 (c) Third, to payment of that portion of the
Obligations constituting unpaid principal of the Loans, ratably among the Banks in proportion to the respective amounts described in this clause (c) held by them; and 
  
 (d) Last, the balance, if any, after all of the Obligations have been paid in full, to the Company or as otherwise
required by law. 
  
 ARTICLE IX  
  
 THE AGENT 
  
 9.01 Appointment and Authority. Each of the Banks hereby irrevocably
appoints Bank of America to act on its behalf as the Agent hereunder and under the other Loan Documents and authorizes the Agent to take such actions on its behalf and to exercise such powers as are delegated to the Agent by the terms hereof or
thereof, together with such actions and powers as are reasonably incidental thereto. The provisions of this Article (except for Section 9.06) are solely for the benefit of the Agent, the Banks, and none of the Loan Parties shall have rights as a
third party beneficiary of any of such provisions. 
  
 9.02
Rights as a Bank. The Person serving as the Agent hereunder shall have the same rights and powers in its capacity as a Bank as any other Bank and may exercise the same as though it were not the Agent and the term “Bank” or
“Banks” shall, unless otherwise expressly indicated or unless the context otherwise requires, include the Person serving as the Agent hereunder in its individual capacity. Such Person and its Affiliates may accept deposits from,
lend money to, act as the financial advisor or in any other advisory capacity for and generally engage in any kind of business with the Company or any Subsidiary or other Affiliate thereof as if such Person were not the Agent hereunder and without
any duty to account therefor to the Banks. 
  

 60 

 9.03 Exculpatory Provisions. The Agent shall not have any duties or obligations except those
expressly set forth herein and in the other Loan Documents. Without limiting the generality of the foregoing, the Agent: 
  
 (a) shall not be subject to any fiduciary or other implied duties, regardless of whether a Default has occurred and is continuing; 
  
 (b) shall not have any duty to take any discretionary action or exercise any
discretionary powers, except discretionary rights and powers expressly contemplated hereby or by the other Loan Documents that the Agent is required to exercise as directed in writing by the Majority Banks (or such other number or percentage of the
Banks as shall be expressly provided for herein or in the other Loan Documents), provided that the Agent shall not be required to take any action that, in its opinion or the opinion of its counsel, may expose the Agent to liability or that is
contrary to any Loan Document or applicable law; and 
  
 (c) shall
not, except as expressly set forth herein and in the other Loan Documents, have any duty to disclose, and shall not be liable for the failure to disclose, any information relating to the Company or any of its Affiliates that is communicated to or
obtained by the Person serving as the Agent or any of its Affiliates in any capacity. 
  
 The Agent shall not be liable for any action taken or not taken by it (i) with the consent or at the request of the Majority Banks (or such other number or percentage of the Banks as shall be necessary, or as the
Agent shall believe in good faith shall be necessary, under the circumstances as provided in Sections 10.01 and 8.02) or (ii) in the absence of its own gross negligence or willful misconduct. The Agent shall be deemed not to have knowledge of any
Default unless and until notice describing such Default is given to the Agent by the Company, or a Bank. 
  
 The Agent shall not be responsible for or have any duty to ascertain or inquire into (i) any statement, warranty or representation made in or in
connection with this Agreement or any other Loan Document, (ii) the contents of any certificate, report or other document delivered hereunder or thereunder or in connection herewith or therewith, (iii) the performance or observance of any of the
covenants, agreements or other terms or conditions set forth herein or therein or the occurrence of any Default, (iv) the validity, enforceability, effectiveness or genuineness of this Agreement, any other Loan Document or any other agreement,
instrument or document or (v) the satisfaction of any condition set forth in Article IV or elsewhere herein, other than to confirm receipt of items expressly required to be delivered to the Agent. 
  
 9.04 Reliance by Agent. The Agent shall be entitled to rely upon, and
shall not incur any liability for relying upon, any notice, request, certificate, consent, statement, instrument, document or other writing (including any electronic message, Internet or intranet website posting or other distribution) believed by it
to be genuine and to have been signed, sent or otherwise authenticated by the proper Person. The Agent also may rely upon any statement made to it orally or by telephone and believed by it to have been made by the proper Person, and shall not incur
any liability for relying thereon. In determining compliance with any condition hereunder to the making of a Loan, that by its terms must be fulfilled to the satisfaction of a Bank, the Agent may presume that such condition is satisfactory to such
Bank unless the Agent shall have 

  

 61 

 
received notice to the contrary from such Bank prior to the making of such Loan. The Agent may consult with legal counsel (who may be counsel for the
Company), independent accountants and other experts selected by it, and shall not be liable for any action taken or not taken by it in accordance with the advice of any such counsel, accountants or experts. 
  
 9.05 Delegation of Duties. The Agent may perform any and all of its
duties and exercise its rights and powers hereunder or under any other Loan Document by or through any one or more sub-agents appointed by the Agent. The Agent and any such sub-agent may perform any and all of its duties and exercise its rights and
powers by or through their respective Related Parties. The exculpatory provisions of this Article shall apply to any such sub-agent and to the Related Parties of the Agent and any such sub-agent, and shall apply to their respective activities in
connection with the syndication of the credit facilities provided for herein as well as activities as Agent. 
  
 9.06 Resignation of Agent. The Agent may at any time give notice of its resignation to the Banks and the Company. Upon receipt of any such notice
of resignation, the Majority Banks shall have the right, with the consent of the Company at all times other than during the existence of an Event of Default (which consent shall not be unreasonably withheld or delayed), to appoint a successor, which
shall be a bank with an office in the United States, or an Affiliate of any such bank with an office in the United States. If no such successor shall have been so appointed by the Majority Banks, shall have been consented to by the Company (to the
extent required) and shall have accepted such appointment within 30 days after the retiring Agent gives notice of its resignation, then the retiring Agent may on behalf of the Banks, appoint a successor Agent meeting the qualifications set forth
above; provided that if the Agent shall notify the Company and the Banks that no qualifying Person has accepted such appointment, then such resignation shall nonetheless become effective in accordance with such notice and (1) the retiring Agent
shall be discharged from its duties and obligations hereunder and under the other Loan Documents and (2) all payments, communications and determinations provided to be made by, to or through the Agent shall instead be made by or to each Bank
directly, until such time as the Majority Banks appoint and, to the extent required, the Company consents to, a successor Agent as provided for above in this Section. Upon the acceptance of a successor’s appointment as Agent hereunder, such
successor shall succeed to and become vested with all of the rights, powers, privileges and duties of the retiring (or retired) Agent, and the retiring Agent shall be discharged from all of its duties and obligations hereunder or under the other
Loan Documents (if not already discharged therefrom as provided above in this Section). The fees payable by the Company to a successor Agent shall be the same as those payable to its predecessor unless otherwise agreed between the Company and such
successor. After the retiring Agent’s resignation hereunder and under the other Loan Documents, the provisions of this Article and Section 10.04 shall continue in effect for the benefit of such retiring Agent, its sub-agents and their
respective Related Parties in respect of any actions taken or omitted to be taken by any of them while the retiring Agent was acting as Agent. 
  
 9.07 Non-Reliance on Agent and Other Banks. Each Bank acknowledges that it has, independently and without reliance upon the Agent or any other Bank
or any of their Related Parties and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement. Each Bank also acknowledges that it will, independently and without
reliance upon the Agent or any other Bank or any of their 

  

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Related Parties and based on such documents and information as it shall from time to time deem appropriate, continue to make its own decisions in taking or
not taking action under or based upon this Agreement, any other Loan Document or any related agreement or any document furnished hereunder or thereunder. 
  
 9.08 No Other Duties, Etc. Anything herein to the contrary notwithstanding, none of the Arranger or the Documentation Agent listed on the cover
page hereof shall have any powers, duties or responsibilities under this Agreement or any of the other Loan Documents, except in its capacity, as applicable, as the Agent, or a Bank hereunder. 
  
 9.09 Agent May File Proofs of Claim. In case of the pendency of any
receivership, insolvency, liquidation, bankruptcy, reorganization, arrangement, adjustment, composition or other judicial proceeding relative to any Loan Party, the Agent (irrespective of whether the principal of any Loan shall then be due and
payable as herein expressed or by declaration or otherwise and irrespective of whether the Agent shall have made any demand on the Company) shall be entitled and empowered, by intervention in such proceeding or otherwise 
  
 (a) to file and prove a claim for the whole amount of the principal and
interest owing and unpaid in respect of the Loans and all other Obligations that are owing and unpaid and to file such other documents as may be necessary or advisable in order to have the claims of the Banks and the Agent (including any claim for
the reasonable compensation, expenses, disbursements and advances of the Banks and the Agent and their respective agents and counsel and all other amounts due the Banks and the Agent under Sections 2.09 and 10.04) allowed in such judicial
proceeding; and 
  
 (b) to collect and receive any monies or other
property payable or deliverable on any such claims and to distribute the same; 
  
 and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such judicial proceeding is hereby authorized by each Bank to make such payments to the Agent and, in the event that the Agent shall
consent to the making of such payments directly to the Banks, to pay to the Agent any amount due for the reasonable compensation, expenses, disbursements and advances of the Agent and its agents and counsel, and any other amounts due the Agent under
Sections 2.09 and 10.04. 
  
 Nothing contained herein shall be
deemed to authorize the Agent to authorize or consent to or accept or adopt on behalf of any Bank any plan of reorganization, arrangement, adjustment or composition affecting the Obligations or the rights of any Bank or to authorize the Agent to
vote in respect of the claim of any Bank in any such proceeding. 
  
 9.10 Guaranty Matters. The Banks irrevocably authorize the Agent, at its option and in its discretion, to release any Guarantor from its obligations under the Guaranty if such Person ceases to be a Subsidiary or a Material Domestic
Subsidiary as a result of a transaction permitted hereunder, provided, however, that no such release shall be authorized where the sale or other disposition of substantially all of the equity interest of a Guarantor is to an Affiliate of Company.
Upon request by the Agent at any time, the Majority Banks will confirm in writing the Agent’s authority to release any Guarantor from its obligations under the Guaranty pursuant to this Section 9.10. 
  

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 Anything contained in any of the Loan Documents to the contrary notwithstanding, the Company, the Agent
and each Bank hereby agree that no Bank shall have any right individually to enforce the Guaranty, it being understood and agreed that all powers, rights and remedies under the Guaranty may be exercised solely by the Agent for the benefit of the
Banks in accordance with the terms thereof. 
  
 ARTICLE X 

  
 MISCELLANEOUS 
  
 10.01 Amendments and Waivers. No amendment or waiver of any provision
of this Agreement or any other Loan Document, and no consent to any departure by any Loan Party therefrom, shall be effective unless in writing signed by the Majority Banks and the applicable Loan Party, as the case may be, and acknowledged by the
Agent, and each such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given; provided, however, that no such amendment, waiver or consent shall: 
  
 (a) waive any condition set forth in Section 4.01 without the written
consent of each Bank; 
  
 (b) extend or increase the Commitment of
any Bank (or reinstate any Commitment terminated pursuant to Section 8.02) without the written consent of such Bank; 
  
 (c) postpone any date fixed by this Agreement or any other Loan Document for any payment of principal, interest, fees or other amounts due to the Banks
(or any of them) hereunder or under any other Loan Document without the written consent of each Bank directly affected thereby; 
  
 (d) reduce the principal of, or the rate of interest specified herein on, any Loan, or (subject to clause (ii) of the second proviso to this Section
10.01) any fees or other amounts payable hereunder or under any other Loan Document without the written consent of each Bank directly affected thereby; provided, however, that only the consent of the Majority Banks shall be necessary (i) to amend
the definition of “Default Rate” or to waive any obligation of the Company to pay interest at the Default Rate or (ii) to amend any financial covenant hereunder (or any defined term used therein) even if the effect of such amendment
would be to reduce the rate of interest on any Loan or to reduce any fee payable hereunder; 
  
 (e) change Section 2.12 or Section 8.04 in a manner that would alter the pro rata sharing of payments required thereby without the written consent of each Bank; 
  
 (f) change any provision of this Section or the definition of
“Majority Banks” or any other provision hereof specifying the number or percentage of Banks required to amend, waive or otherwise modify any rights hereunder or make any determination or grant any consent hereunder without the
written consent of each Bank; 
  

 64 

 (g) release all or substantially all of the value of the Guaranty without the written consent of each
Bank; 
  
 and, provided further, that (i) no amendment, waiver or consent
shall, unless in writing and signed by the Agent in addition to the Banks required above, affect the rights or duties of the Agent under this Agreement or any other Loan Document; and (ii) the Fee Letter may be amended, or rights or privileges
thereunder waived, in a writing executed only by the parties thereto. Notwithstanding anything to the contrary herein, no Defaulting Bank shall have any right to approve or disapprove any amendment, waiver or consent hereunder, except that the
Commitment of such Bank may not be increased or extended without the consent of such Bank. 
  
 10.02 Notices. 
  
 (a)
Except in the case of notices and other communications expressly permitted to be given by telephone (and except as provided in subsection (b) below), all notices and other communications provided for herein shall be in writing and shall be delivered
by hand or overnight courier service, mailed by certified or registered mail or sent by telecopier as follows, and all notices and other communications expressly permitted hereunder to be given by telephone shall be made to the applicable telephone
number, as follows: 
  
 (i) if to the Company or
the Agent, to the address, telecopier number, electronic mail address or telephone number specified for such Person on Schedule 10.02; and 
  
 (ii) if to any other Bank, to the address, telecopier number, electronic mail address or telephone number specified in its Administrative
Questionnaire. 
  
 Notices sent by hand or overnight courier service, or mailed by
certified or registered mail, shall be deemed to have been given when received; notices sent by telecopier shall be deemed to have been given when sent (except that, if not given during normal business hours for the recipient, shall be deemed to
have been given at the opening of business on the next business day for the recipient). Notices delivered through electronic communications to the extent provided in subsection (b) below, shall be effective as provided in such subsection (b).

  
 (b) Electronic Communications. Notices and other
communications to the Banks hereunder may be delivered or furnished by electronic communication (including e-mail and Internet or intranet websites) pursuant to procedures approved by the Agent, provided that the foregoing shall not apply to notices
to any Bank pursuant to Article II if such Bank, as applicable, has notified the Agent that it is incapable of receiving notices under such Article by electronic communication. The Agent or the Company may, in its discretion, agree to accept
notices and other communications to it hereunder by electronic communications pursuant to procedures approved by it, provided that approval of such procedures may be limited to particular notices or communications. 
  
 Unless the Agent otherwise prescribes, (i) notices and other communications
sent to an e-mail address shall be deemed received upon the sender’s receipt of an acknowledgement from the intended recipient (such as by the “return receipt requested” function, as available, return e-mail or other written
acknowledgement), provided that if such notice or other 

  

 65 

 
communication is not sent during the normal business hours of the recipient, such notice or communication shall be deemed to have been sent at the opening of
business on the next business day for the recipient, and (ii) notices or communications posted to an Internet or intranet website shall be deemed received upon the deemed receipt by the intended recipient at its e-mail address as described in the
foregoing clause (i) of notification that such notice or communication is available and identifying the website address therefor. 
  
 (c) The Platform. THE PLATFORM IS PROVIDED “AS IS” AND “AS AVAILABLE.” THE AGENT PARTIES DO NOT WARRANT THE ACCURACY OR
COMPLETENESS OF THE COMPANY MATERIALS OR THE ADEQUACY OF THE PLATFORM, AND EXPRESSLY DISCLAIM LIABILITY FOR ERRORS IN OR OMISSIONS FROM THE COMPANY MATERIALS. NO WARRANTY OF ANY KIND, EXPRESS, IMPLIED OR STATUTORY, INCLUDING ANY WARRANTY OF
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, NON-INFRINGEMENT OF THIRD PARTY RIGHTS OR FREEDOM FROM VIRUSES OR OTHER CODE DEFECTS, IS MADE BY ANY AGENT PARTY IN CONNECTION WITH THE COMPANY MATERIALS OR THE PLATFORM. In no event shall the Agent
or any of its Related Parties (collectively, the “Agent Parties”) have any liability to the Company, any Bank or any other Person for losses, claims, damages, liabilities or expenses of any kind (whether in tort, contract or
otherwise) arising out of the Company’s or the Agent’s transmission of Company Materials through the Internet, except to the extent that such losses, claims, damages, liabilities or expenses are determined by a court of competent
jurisdiction by a final and nonappealable judgment to have resulted from the gross negligence or willful misconduct of such Agent Party; provided, however, that in no event shall any Agent Party have any liability to the Company, any Bank or any
other Person for indirect, special, incidental, consequential or punitive damages (as opposed to direct or actual damages). 
  
 (d) Change of Address, Etc. Each of the Company and the Agent may change its address, telecopier or telephone number for notices and other
communications hereunder by notice to the other parties hereto. Each other Bank may change its address, telecopier or telephone number for notices and other communications hereunder by notice to the Company and the Agent. In addition, each Bank
agrees to notify the Agent from time to time to ensure that the Agent has on record (i) an effective address, contact name, telephone number, telecopier number and electronic mail address to which notices and other communications may be sent and
(ii) accurate wire instructions for such Bank. 
  
 (e) Reliance
by Agent and Banks. The Agent and the Banks shall be entitled to rely and act upon any notices (including telephonic Notices of Borrowing) believed in good faith by the Agent or the Banks to have been given by or on behalf of the Company
by a Responsible Officer or other individual authorized for such purpose in a written notice to the Agent signed by a Responsible Officer of the Company even if (i) such notices were not made in a manner specified herein, were incomplete or were not
preceded or followed by any other form of notice specified herein, or (ii) the terms thereof, as understood by the recipient, varied from any confirmation thereof. The Company shall indemnify the Agent, each Bank and the Related Parties of each of
them from all losses, costs, expenses and liabilities resulting from the reliance by such Person on each notice believed in good faith to have been given by or on behalf of the Company. All telephonic notices to and other telephonic communications
with the Agent may be recorded by the Agent, and each of the parties hereto hereby consents to such recording. 
  

 66 

 10.03 No Waiver; Cumulative Remedies. No failure to exercise and no delay in exercising, on the
part of the Agent or any Bank, any right, remedy, power or privilege hereunder, shall operate as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise
thereof or the exercise of any other right, remedy, power or privilege. 
  
 10.04 Expenses; Indemnity; Damage Waiver.  
  
 (a) Costs and Expenses. The Company shall pay (i) all reasonable out-of-pocket expenses incurred by the Agent and its Affiliates (including the reasonable fees, charges and disbursements of counsel for the Agent), in connection with
the syndication of the credit facilities provided for herein, the preparation, negotiation, execution, delivery and administration of this Agreement and the other Loan Documents or any amendments, modifications or waivers of the provisions hereof or
thereof (whether or not the transactions contemplated hereby or thereby shall be consummated), and (ii) following an Event of Default, all out-of-pocket expenses incurred by the Agent, or any Bank (including the fees, charges and disbursements of
any counsel for the Agent, or any Bank), in connection with the enforcement or protection of its rights (A) in connection with this Agreement and the other Loan Documents, including its rights under this Section 10.04, or (B) in connection with the
Loans made hereunder, including all such out-of-pocket expenses incurred during any workout, restructuring or negotiations in respect of such Loans. 
  
 (b) Indemnification by the Company. The Company shall indemnify the Agent (and any sub-agent thereof), each Bank, and each Related Party of any of
the foregoing Persons (each such Person being called an “Indemnitee”) against, and hold each Indemnitee harmless from, any and all losses, claims, damages, liabilities and related expenses (including the fees, charges and
disbursements of any counsel for any Indemnitee), and shall indemnify and hold harmless each Indemnitee from all fees and time charges and disbursements for attorneys who may be employees of any Indemnitee, incurred by any Indemnitee or asserted
against any Indemnitee by any third party or any Loan Party arising out of, in connection with, or as a result of (i) the execution or delivery of this Agreement, any other Loan Document or any agreement or instrument contemplated hereby or thereby,
the performance by the parties hereto of their respective obligations hereunder or thereunder, the consummation of the transactions contemplated hereby or thereby, or, in the case of the Agent (and any sub-agent thereof) and its Related Parties
only, the administration of this Agreement and the other Loan Documents, (ii) any Loan or the use or proposed use of the proceeds therefrom, (iii) any actual or alleged presence or release of Hazardous Materials on or from any property owned or
operated by the Company or any of its Subsidiaries, or any Environmental Liability related in any way to the Company or any of its Subsidiaries, or (iv) any actual or prospective claim, litigation, investigation or proceeding relating to any of the
foregoing, whether based on contract, tort or any other theory, whether brought by a third party or by any Loan Party, and regardless of whether any Indemnitee is a party thereto (all the foregoing, the “Indemnified Liabilities”),
in all cases, whether or not caused by or arising, in whole or in part, out of the comparative, contributory or sole negligence of the Indemnitee; provided that such indemnity shall not, as to 

  

 67 

 
any Indemnitee, be available to the extent that such Indemnified Liabilities (x) are determined by a court of competent jurisdiction by final and
nonappealable judgment to have resulted from the gross negligence or willful misconduct of such Indemnitee or (y) result from a claim brought by any Loan Party against an Indemnitee for breach of such Indemnitee’s obligations hereunder or under
any other Loan Document, if such Loan Party has obtained a final and nonappealable judgment in its favor on such claim as determined by a court of competent jurisdiction. 
  
 (c) Reimbursement by Banks. To the extent that the Company for any reason fails to indefeasibly pay any amount
required under subsection (a) or (b) of this Section to be paid by it to the Agent (or any sub-agent thereof) or any Related Party of any of the foregoing, each Bank severally agrees to pay to the Agent (or any such sub-agent) or such Related Party,
as the case may be, such Bank’s Pro Rata Share (determined as of the time that the applicable unreimbursed expense or indemnity payment is sought) of such unpaid amount, provided that the unreimbursed expense or indemnified loss, claim, damage,
liability or related expense, as the case may be, was incurred by or asserted against the Agent (or any such sub-agent) in its capacity as such, or against any Related Party of any of the foregoing acting for the Agent (or any such sub-agent) in
connection with such capacity. The obligations of the Banks under this subsection (c) are subject to the provisions of Section 2.12(f). 
  
 (d) Waiver of Consequential Damages, Etc. To the fullest extent permitted by applicable law, the Company shall not assert, and hereby waives, any
claim against any Indemnitee, on any theory of liability, for special, indirect, consequential or punitive damages (as opposed to direct or actual damages) arising out of, in connection with, or as a result of, this Agreement, any other Loan
Document or any agreement or instrument contemplated hereby, the transactions contemplated hereby or thereby, any Loan or the use of the proceeds thereof. No Indemnitee referred to in subsection (b) above shall be liable for any damages arising from
the use by unintended recipients of any information or other materials distributed by it through telecommunications, electronic or other information transmission systems in connection with this Agreement or the other Loan Documents or the
transactions contemplated hereby or thereby. 
  
 (e)
Payments. All amounts due under this Section shall be payable not later than ten Business Days after demand therefor. 
  
 (f) Survival. The agreements in this Section shall survive the resignation of the Agent, the replacement of any Bank, the termination of the
Commitments and the repayment, satisfaction or discharge of all the other Obligations. 
  
 10.05 Payments Set Aside. To the extent that any Loan Party makes a payment to the Agent or the Banks, or the Agent or the Banks exercise their right of set-off, and such payment or the proceeds of such set-off
or any part thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside or required (including pursuant to any settlement entered into by the Agent or such Bank in its discretion) to be repaid to a trustee, receiver or
any other party, in connection with any Insolvency Proceeding or otherwise, then (a) to the extent of such recovery the obligation or part thereof originally intended to be satisfied shall be revived and continued in full force and effect as if such
payment had not been made or such set-off had not occurred, and (b) each Bank severally agrees to pay to the Agent upon demand its pro rata share of any amount so recovered from or repaid by the Agent. 
  

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 10.06 Successors and Assigns. 
  
 (a) Successors and Assigns Generally. The provisions of this Agreement shall be binding upon and inure to the benefit
of the parties hereto and their respective successors and assigns permitted hereby, except that no Loan Party may assign or otherwise transfer any of its rights or obligations hereunder without the prior written consent of the Agent and each Bank
and no Bank may assign or otherwise transfer any of its rights or obligations hereunder except (i) to an Eligible Assignee in accordance with the provisions of subsection (b) of this Section, (ii) by way of participation in accordance with the
provisions of subsection (d) of this Section, or (iii) by way of pledge or assignment of a security interest subject to the restrictions of subsection (f) of this Section (and any other attempted assignment or transfer by any party hereto shall be
null and void). Nothing in this Agreement, expressed or implied, shall be construed to confer upon any Person (other than the parties hereto, their respective successors and assigns permitted hereby, Participants to the extent provided in subsection
(d) of this Section and, to the extent expressly contemplated hereby, the Related Parties of each of the Agent and the Banks) any legal or equitable right, remedy or claim under or by reason of this Agreement. 
  
 (b) Assignments by Banks. Any Bank may at any time assign to one or
more Eligible Assignees all or a portion of its rights and obligations under this Agreement (including all or a portion of its Commitment and the Loans at the time owing to it); provided that 
  
 (i) except in the case of an assignment of the entire
remaining amount of the assigning Bank’s Commitment and the Loans at the time owing to it or in the case of an assignment to a Bank or an Affiliate of a Bank or an Approved Fund with respect to a Bank, the aggregate amount of the Commitment
(which for this purpose includes Loans outstanding thereunder) or, if the Commitment is not then in effect, the principal outstanding balance of the Loans of the assigning Bank subject to each such assignment, determined as of the date the
Assignment and Assumption with respect to such assignment is delivered to the Agent or, if “Trade Date” is specified in the Assignment and Assumption, as of the Trade Date, shall not be less than $5,000,000 unless each of the Agent
and, so long as no Event of Default has occurred and is continuing, the Company otherwise consents (each such consent not to be unreasonably withheld or delayed); provided, however, that concurrent assignments to members of an Assignee Group and
concurrent assignments from members of an Assignee Group to a single Eligible Assignee (or to an Eligible Assignee and members of its Assignee Group) will be treated as a single assignment for purposes of determining whether such minimum amount has
been met; 
  
 (ii) each partial assignment shall
be made as an assignment of a proportionate part of all the assigning Bank’s rights and obligations under this Agreement with respect to the Loans or the Commitment assigned; 
  
 (iii) any assignment of a Commitment must be approved by the Agent unless the Person that is the proposed
assignee is itself a Bank (whether or not the proposed assignee would otherwise qualify as an Eligible Assignee); and 
  

 69 

 (iv) the parties to each assignment shall execute and deliver to the Agent an Assignment
and Assumption, together with a processing and recordation fee in the amount, if any, required as set forth in Schedule 10.06, and the Eligible Assignee, if it shall not be a Bank, shall deliver to the Agent an Administrative Questionnaire.

  
 Subject to acceptance and recording thereof by the Agent pursuant to
subsection (c) of this Section, from and after the effective date specified in each Assignment and Assumption, the Eligible Assignee thereunder shall be a party to this Agreement and, to the extent of the interest assigned by such Assignment and
Assumption, have the rights and obligations of a Bank under this Agreement, and the assigning Bank thereunder shall, to the extent of the interest assigned by such Assignment and Assumption, be released from its obligations under this Agreement
(and, in the case of an Assignment and Assumption covering all of the assigning Bank’s rights and obligations under this Agreement, such Bank shall cease to be a party hereto) but shall continue to be entitled to the benefits of Sections 3.01,
3.03, 3.04, and 10.04 with respect to facts and circumstances occurring prior to the effective date of such assignment. Upon request, the Company (at its expense) shall execute and deliver a Note to the assignee Bank. Any assignment or transfer by a
Bank of rights or obligations under this Agreement that does not comply with this subsection shall be treated for purposes of this Agreement as a sale by such Bank of a participation in such rights and obligations in accordance with subsection (d)
of this Section. 
  
 (c) Register. The Agent, acting solely
for this purpose as an agent of the Company, shall maintain at the Agent’s Office a copy of each Assignment and Assumption delivered to it and a register for the recordation of the names and addresses of the Banks, and the Commitments of, and
principal amounts of the Loans owing to, each Bank pursuant to the terms hereof from time to time (the “Register”). The entries in the Register shall be conclusive, and the Company, the Agent and the Banks may treat each Person
whose name is recorded in the Register pursuant to the terms hereof as a Bank hereunder for all purposes of this Agreement, notwithstanding notice to the contrary. The Register shall be available for inspection by each of the Company at any
reasonable time and from time to time upon reasonable prior notice. In addition, at any time that a request for a consent for a material or substantive change to the Loan Documents is pending, any Bank may request and receive from the Agent a copy
of the Register. 
  
 (d) Participations. Any Bank may at
any time, without the consent of, or notice to, the Company or the Agent, sell participations to any Person (other than a natural person or the Company or any of the Company’s Affiliates or Subsidiaries) (each, a “Participant”)
in all or a portion of such Bank’s rights and/or obligations under this Agreement (including all or a portion of its Commitment and/or the Loans owing to it); provided that (i) such Bank’s obligations under this Agreement shall remain
unchanged, (ii) such Bank shall remain solely responsible to the other parties hereto for the performance of such obligations and (iii) the Company, the Agent, the Banks shall continue to deal solely and directly with such Bank in connection with
such Bank’s rights and obligations under this Agreement. 
  
 Any agreement or
instrument pursuant to which a Bank sells such a participation shall provide that such Bank shall retain the sole right to enforce this Agreement and to approve any amendment, modification or waiver of any provision of this Agreement; provided that
such agreement or instrument may provide that such Bank will not, without the consent of the Participant, agree to any amendment, waiver or other modification described in the first proviso 

  

 70 

 
to Section 10.01 that affects such Participant. Subject to subsection (e) of this Section, the Company agrees that each Participant shall be entitled to the
benefits of Sections 3.01, 3.03 and 3.04 to the same extent as if it were a Bank and had acquired its interest by assignment pursuant to subsection (b) of this Section. 
  
 (e) Limitations upon Participant Rights. A Participant shall not be entitled to receive any greater payment under
Section 3.01 or 3.03 than the applicable Bank would have been entitled to receive with respect to the participation sold to such Participant. A Participant that would be a foreign Bank if it were a Bank shall not be entitled to the benefits of
Section 3.01 unless the Company is notified of the participation sold to such Participant and such Participant complies with Section 10.07 as though it were a Bank. 
  
 (f) Certain Pledges. Any Bank may at any time pledge or assign a security interest in all or any portion of its
rights under this Agreement (including under its Note, if any) to secure obligations of such Bank, including any pledge or assignment to secure obligations to a Federal Reserve Bank; provided that no such pledge or assignment shall release such Bank
from any of its obligations hereunder or substitute any such pledgee or assignee for such Bank as a party hereto. 
  
 (g) Electronic Execution of Assignments. The words “execution,” “signed,” “signature,” and words of like import in
any Assignment and Assumption shall be deemed to include electronic signatures or the keeping of records in electronic form, each of which shall be of the same legal effect, validity or enforceability as a manually executed signature or the use of a
paper-based recordkeeping system, as the case may be, to the extent and as provided for in any applicable law, including the Federal Electronic Signatures in Global and National Commerce Act, the New York State Electronic Signatures and Records Act,
or any other similar state laws based on the Uniform Electronic Transactions Act. 
  
 10.07 Withholding Tax. 
  
 (a) If any Bank is a “foreign corporation, partnership or trust” within the meaning of the Code and such Bank claims exemption from, or a reduction of, U.S. withholding tax under Sections 1441 or 1442 of the Code, such Bank agrees
with and in favor of the Agent, to deliver to the Agent: 
  
 (i) if such Bank claims an exemption from, or a reduction of, withholding tax under a United States tax treaty, two properly completed and executed copies of IRS Form W-8BEN before the payment of any interest in the
first calendar year and before the payment of any interest in each third succeeding calendar year during which interest may be paid under this Agreement; 
  
 (ii) if such Bank claims that interest paid under this Agreement is exempt from United States withholding tax because it is effectively
connected with a United States trade or business of such Bank, two properly completed and executed copies of IRS Form W-8ECI before the payment of any interest is due in the first taxable year of such Bank and in each succeeding taxable year of such
Bank during which interest may be paid under this Agreement; and 
  

 71 

 (iii) such other form or forms as may be required under the Code or other laws of the
United States as a condition to exemption from, or reduction of, United States withholding tax. 
  
 Such Bank agrees to promptly notify the Agent of any change in circumstances which would modify or render invalid any claimed exemption or reduction. 
  
 (b) If any Bank claims exemption from, or reduction of, withholding tax under a United States tax treaty by providing IRS
Form W-8BEN and such Bank sells, assigns, grants a participation in, or otherwise transfers all or part of the Obligations of the Company to such Bank, such Bank agrees to notify the Agent of the percentage amount in which it is no longer the
beneficial owner of Obligations of the Company to such Bank. To the extent of such percentage amount, the Agent will treat such Bank’s IRS Form W-8BEN as no longer valid. 
  
 (c) If any Bank claiming exemption from United States withholding tax by filing IRS Form W-8ECI with the Agent sells,
assigns, grants a participation in, or otherwise transfers all or part of the Obligations of the Company to such Bank, such Bank agrees to undertake sole responsibility for complying with the withholding tax requirements imposed by Sections 1441 and
1442 of the Code. 
  
 (d) If any Bank is entitled to a reduction
in the applicable withholding tax, the Agent may withhold from any interest payment to such Bank an amount equivalent to the applicable withholding tax after taking into account such reduction. However, if the forms or other documentation required
by subsection (a) of this Section are not delivered to the Agent, then the Agent may withhold from any interest payment to such Bank not providing such forms or other documentation an amount equivalent to the applicable withholding tax imposed by
Sections 1441 and 1442 of the Code, without reduction. 
  
 (e) If
the IRS or any other Governmental Authority of the United States or other jurisdiction asserts a claim that the Agent did not properly withhold tax from amounts paid to or for the account of any Bank (because the appropriate form was not delivered
or was not properly executed, or because such Bank failed to notify the Agent of a change in circumstances which rendered the exemption from, or reduction of, withholding tax ineffective, or for any other reason) such Bank shall indemnify the Agent
fully for all amounts paid, directly or indirectly, by the Agent as tax or otherwise, including penalties and interest, and including any taxes imposed by any jurisdiction on the amounts payable to the Agent under this Section, together with all
costs and expenses (including reasonable Attorney Costs). The obligation of the Banks under this subsection shall survive the payment of all Obligations and the resignation or replacement of the Agent. 
  
 10.08 Treatment of Certain Information; Confidentiality. Each of the
Agent and the Banks agrees to maintain the confidentiality of the Information, except that Information may be disclosed (a) to its Affiliates and to its and its Affiliates’ respective partners, directors, officers and employees (it being
understood that the Persons to whom such disclosure is made will be informed of the confidential nature of such Information and instructed to keep such Information confidential), (b) to the agents, advisors and representatives of any Person
identified in the foregoing clause (a) (it being understood that the Persons to whom such disclosure is made will 

  

 72 

 
be informed of the confidential nature of such Information and will either have a legal obligation to keep the Information confidential or enter into an
agreement to keep the Information confidential), (c) to the extent requested by any regulatory authority purporting to have jurisdiction over it (including any self-regulatory authority, such as the National Association of Insurance Commissioners),
(d) to the extent required by applicable laws or regulations or by any subpoena or similar legal process, (e) to any other party hereto, (f) in connection with the exercise of any remedies hereunder or under any other Loan Document or any action or
proceeding relating to this Agreement or any other Loan Document or the enforcement of rights hereunder or thereunder, (g) subject to an agreement containing provisions substantially the same as those of this Section 10.08, to (i) any Eligible
Assignee of or Participant in, or any prospective Eligible Assignee of or Participant in, any of its rights or obligations under this Agreement or (ii) any actual or prospective counterparty (or its professional advisors who have a legal obligation
to keep the Information confidential or enter into an agreement to keep the Information confidential) to any swap or derivative transaction relating to the Company and its obligations, (h) with the written consent of the Company or (i) to the extent
such Information (x) becomes publicly available other than as a result of a breach of this Section or (y) becomes available to the Agent, any Bank or any of their respective Affiliates on a nonconfidential basis from a source other than the Company
provided that such source is not bound by a confidentiality agreement with the Company known to the Agent or such Bank, as the case may be. 
  
 For purposes of this Section, “Information” means all information received from the Company or any Subsidiary relating to the Company or
any Subsidiary or any of their respective businesses, other than any such information that is available to the Agent, any Bank on a nonconfidential basis prior to disclosure by the Company or any Subsidiary, provided that, in the case of information
received from the Company or any Subsidiary after the date hereof, such information is clearly identified at the time of delivery as confidential or secret. Any Person required to maintain the confidentiality of Information as provided in this
Section shall be considered to have complied with its obligation to do so if such Person has exercised the same degree of care to maintain the confidentiality of such Information as such Person would accord to its own confidential information.

  
 Each of the Agent and the Banks acknowledges that (a) the
Information may include material non-public information concerning the Company or a Subsidiary, as the case may be, (b) it has developed compliance procedures regarding the use of material non-public information and (c) it will handle such material
non-public information in accordance with applicable law, including Federal and state securities laws. 
  
 10.09 Set-off. In addition to any rights and remedies of the Banks provided by law, if an Event of Default exists or the Loans have been
accelerated, each Bank is authorized at any time and from time to time, without prior notice to the Company, any such notice being waived by the Company to the fullest extent permitted by law, to set off and apply any and all deposits (general or
special, time or demand, provisional or final) at any time held by, and other indebtedness at any time owing by, such Bank to or for the credit or the account of the Company against any and all Obligations owing to such Bank, now or hereafter
existing, irrespective of whether or not the Agent or such Bank shall have made demand under this Agreement or any Loan Document and although such Obligations may be contingent or unmatured. Each Bank agrees promptly to notify the Company and the
Agent after any such set-off and application made by such Bank; provided, however, that the failure to give such notice shall not affect the validity of such set-off and application. 
  

 73 

 10.10 Automatic Debits of Fees. With respect to any commitment fee, arrangement fee, or other fee,
or any other cost or expense (including Attorney Costs) due and payable to the Agent, Bank of America or the Arranger under the Loan Documents, the Company hereby irrevocably authorizes Bank of America to debit any deposit account of the Company
with Bank of America in an amount such that the aggregate amount debited from all such deposit accounts does not exceed such fee or other cost or expense. If there are insufficient funds in such deposit accounts to cover the amount of the fee or
other cost or expense then due, such debits will be reversed (in whole or in part, in Bank of America’s sole discretion) and such amount not debited shall be deemed to be unpaid. No such debit under this Section shall be deemed a set-off.
 
  
 10.11 Notification of Addresses, Lending Offices,
Etc. Each Bank shall notify the Agent in writing of any changes in the address to which notices to the Bank should be directed, of addresses of any Lending Office, of payment instructions in respect of all payments to be made to it hereunder and
of such other administrative information as the Agent shall reasonably request. 
  
 10.12 Release of Guaranty. In the event that any Subsidiary that was a Material Domestic Subsidiary ceases to be a Material Domestic Subsidiary as of the last Business Day of any calendar quarter, so long as no
Default shall have occurred and be continuing, the Agent shall, as of the first Business Day of the subsequent calendar quarter, be deemed to have released the Guaranty. In such event, or in the event that any Guarantor ceases to be a Subsidiary of
the Company in accordance with the terms of this Agreement, the Agent shall, at such Subsidiary’s expense, execute and deliver such releases of such Guaranty, as may be reasonably requested by such Subsidiary. 
  
 10.13 Counterparts. This Agreement may be executed in any number of
separate counterparts, each of which, when so executed, shall be deemed an original, and all of said counterparts taken together shall be deemed to constitute but one and the same instrument. 
  
 10.14 Severability. The illegality or unenforceability of any
provision of this Agreement or any instrument or agreement required hereunder shall not in any way affect or impair the legality or enforceability of the remaining provisions of this Agreement or any instrument or agreement required hereunder.

  
 10.15 No Third Parties Benefited. This Agreement is
made and entered into for the sole protection and legal benefit of the Company, the Banks, the Agent and the Agent Parties and the Indemnitees, and their permitted successors and assigns, and no other Person shall be a direct or indirect legal
beneficiary of, or have any direct or indirect cause of action or claim in connection with, this Agreement or any of the other Loan Documents. 
  
 10.16 Replacement of Banks. If any Bank requests compensation under Section 3.03, or if the Company is required to pay any additional amount to any
Bank or any Governmental Authority for the account of any Bank pursuant to Section 3.01, or if any Bank is a Defaulting Bank, then the Company may, at its sole expense and effort, upon notice to such Bank and the 

  

 74 

 
Agent, require such Bank to assign and delegate, without recourse (in accordance with and subject to the restrictions contained in, and consents required by,
Section 10.06), all of its interests, rights and obligations under this Agreement and the related Loan Documents to an assignee that shall assume such obligations (which assignee may be another Bank, if a Bank accepts such assignment), provided
that: 
  
 (a) the Agent shall have been paid the assignment fee
specified in Section 10.06(b); 
  
 (b) such Bank shall have
received payment of an amount equal to the outstanding principal of its Loans, accrued interest thereon, accrued fees and all other amounts payable to it hereunder and under the other Loan Documents (including any amounts under Section 3.04) from
the assignee (to the extent of such outstanding principal and accrued interest and fees) or the Company (in the case of all other amounts); 
  
 (c) in the case of any such assignment resulting from a claim for compensation under Section 3.03 or payments required to be made pursuant to Section
3.01, such assignment will result in a reduction in such compensation or payments thereafter; and 
  
 (d) such assignment does not conflict with applicable Laws. 
  
 A Bank shall not be required to make any such assignment or delegation if, prior thereto, as a result of a waiver by such Bank or otherwise, the
circumstances entitling the Company to require such assignment and delegation cease to apply. 
  
 10.17 Governing Law and Jurisdiction. 
  
 (a) THIS AGREEMENT AND THE NOTES SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF CALIFORNIA, WITHOUT REGARD TO CONFLICT OF LAW PRINCIPLES THAT WOULD REQUIRE APPLICATION OF ANOTHER LAW;
PROVIDED THAT THE AGENT AND THE BANKS SHALL RETAIN ALL RIGHTS ARISING UNDER FEDERAL LAW. 
  
 (b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF CALIFORNIA OR OREGON OR OF THE UNITED STATES FOR THE NORTHERN DISTRICT OF
CALIFORNIA OR OREGON, AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH OF THE COMPANY, THE AGENT AND THE BANKS CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE NON-EXCLUSIVE JURISDICTION OF THOSE COURTS. EACH OF THE COMPANY, THE
AGENT AND THE BANKS IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING IN SUCH
JURISDICTION IN RESPECT OF THIS AGREEMENT OR ANY DOCUMENT RELATED HERETO. THE COMPANY, THE AGENT AND THE BANKS EACH WAIVE PERSONAL SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER PROCESS, WHICH MAY BE MADE BY ANY OTHER MEANS PERMITTED BY CALIFORNIA LAW.

  

 75 

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

  
 10.19 Survival of Representations and Warranties. All
representations and warranties made hereunder and in any other Loan Document or other document delivered pursuant hereto or thereto or in connection herewith or therewith shall survive the execution and delivery hereof and thereof. Such
representations and warranties have been or will be relied upon by the Agent and each Bank, regardless of any investigation made by the Agent or any Bank or on their behalf and notwithstanding that the Agent or any Bank may have had notice or
knowledge of any Default at the time of any Borrowing, and shall continue in full force and effect as of each date made as long as any Loan or any other Obligation hereunder shall remain unpaid or unsatisfied. 
  
 10.20 USA PATRIOT Act Notice. Each Bank that is subject to the Act (as
hereinafter defined) and the Agent (for itself and not on behalf of any Bank) hereby notifies the Company that pursuant to the requirements of the USA Patriot Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)) (the
“Act”), it is required to obtain, verify and record information that identifies the Company, which information includes the name and address of the Company and other information that will allow such Bank or the Agent, as applicable,
to identify the Company in accordance with the Act. 
  
 10.21
Entire Agreement. This Agreement, together with the other Loan Documents, embodies the entire agreement and understanding among the Company, the Banks and the Agent, and supersedes all prior or contemporaneous agreements and understandings of
such Persons, verbal or written, relating to the subject matter hereof and thereof. 
  
 [Signature pages follow.] 
  

 76 

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

			
	MENTOR GRAPHICS CORPORATION
		
	By:	 	 /s/ Dennis Weldon

	Name:	 	Dennis Weldon
	Title:	 	Treasurer
	
	and
		
	By:	 	 /s/ Dean Freed

	Name:	 	Dean Freed
	Title:	 	Vice President and General Counsel

  

 S-1 

			
	BANK OF AMERICA, N.A.,
	as Agent and as a Bank
		
	By:	 	 /s/ Kevin McMahon

	Name:	 	Kevin McMahon
	Title:	 	Senior Vice President

  

 S-2 

			
	KEYBANK NATIONAL ASSOCIATION,
	as Documentation Agent and as a Bank
		
	By:	 	 /s/ Robert W. Boswell

	Name:	 	Robert W. Boswell
	Title:	 	Vice President

  

 S-3 

			
	MIZUHO CORPORATE BANK, LTD.,
	as a Bank
		
	By:	 	 /s/ Bertram H. Tang

	Name:	 	Bertram H. Tang
	Title:	 	Senior Vice President & Team Leader

			
	U.S. BANK NATIONAL ASSOCIATION,
	as a Bank
		
	By:	 	 /s/ Douglas A. Rich

	Name:	 	Douglas A. Rich
	Title:	 	Vice President

			
	WELLS FARGO BANK, N.A.,
	as a Bank
		
	By:	 	 /s/ James R. Bednark

	Name:	 	James R. Bednark
	Title:	 	Senior Vice President

 ANNEX I 
  

PRICING GRID 
  
 (in basis points) 
  

							
	 	  	Senior Indebtedness/Consolidated EBITDA (x)

	 	  	x<0.50

	  	0.50£ x £1.00

	  	x>1.00

	 Commitment Fee
	  	25.0	  	25.0	  	35.0
	 Applicable Margin with respect to Offshore Rate Loans
	  	100.0	  	125.0	  	160.0
	 Applicable Margin with respect to Base Rate Loans
	  	0.0	  	25.0	  	60.0

  
 The Senior
Indebtedness and Consolidated EBITDA used to compute the Commitment Fee and the Applicable Margin shall be the Senior Indebtedness and Consolidated EBITDA set forth in the Compliance Certificate most recently delivered by the Company to the Agent
pursuant to Section 4.01(g) or 6.02(a) of the Credit Agreement; changes in the Commitment Fee and the Applicable Margin resulting from a change in the Senior Indebtedness or Consolidated EBITDA shall become effective on the date of delivery by the
Company to the Agent of a new Compliance Certificate and accompanying financial statements pursuant to Section 6.02(a). If the Company shall fail to deliver a Compliance Certificate within the number of days after the end of any calendar quarter or
calendar year as required pursuant to Section 6.02(a) (without giving effect to any grace period), the Commitment Fee and the Applicable Margin from the first day after the date on which such Compliance Certificate was required to be delivered to
the Agent until the day on which the Company delivers to the Agent a Compliance Certificate and accompanying financial statements shall conclusively equal the highest Commitment Fee and Applicable Margin set forth above. 
  
 ANNEX I-1 

 SCHEDULE 2.01 
  
 COMMITMENTS AND PRO RATA SHARES 
  

							
	 Bank

	  	Commitment

	  	Pro Rata Share

	 
	 Bank of America, N.A.
	  	$	30,000,000.00	  	25.000000000	%
	 KeyBank National Association
	  	$	30,000,000.00	  	25.000000000	%
	 Mizuho Corporate Bank, Ltd.
	  	$	20,000,000.00	  	16.666666667	%
	 U.S. Bank National Association
	  	$	20,000,000.00	  	16.666666667	%
	 Wells Fargo Bank, N.A.
	  	$	20,000,000.00	  	16.666666667	%
	 	  	
	
	  	
	

	 TOTAL
	  	$	120,000,000.00	  	100.000000000	%

  
 SCHEDULE 2.01

 SCHEDULE 10.02 
  
 OFFSHORE AND DOMESTIC LENDING OFFICES, ADDRESSES FOR NOTICES 
  
 MENTOR GRAPHICS CORPORATION 
  
 Address for Notices: 
  
 Mentor Graphics Corporation 
 8005 S.W. Boeckman
Road 
 Wilsonville, OR 97070-7777 

			
	Attention:	  	Dennis Weldon
	Telephone:	  	(503) 685-7830
	Facsimile:	  	(503) 685-7707
	Website:	  	www.mentorg.com

  
 BANK OF AMERICA, N.A., 
 as Agent 
  
 Borrowing Notices: 
  
 Bank of America,
N.A. 
 Agency Services West 
 Mail Code: CA4-706-05-09

 1850 Gateway Boulevard 
 Concord, California 94520-3282

			
	Attention:	  	Brian Graybill
	Telephone:	  	(925) 675-8414
	Facsimile:	  	(888) 969-9147
	Email:	  	brian.graybill@bankofamerica.com

  
 Agent’s Payment Office:

  
 Bank of America, N.A. 
 ABA No.: 111000012 
 Account No.: 3570836479 
 Reference: Mentor Graphics Corp. 
 Attention: Brian Graybill, Agency Services
West 
 Mail Code: CA4-706-05-09 
 1850 Gateway Boulevard

 Concord, California 94520-3282 
  
 SCHEDULE 10.02 - 1 

 All Other Notices: 
  
 Bank of America, N.A., 
 Mail Code CA5-701-05-19 
 1455 Market Street, 5th Floor

 San Francisco, California 94103 

			
	Attention:	 	Robert J. Rittelmeyer, Vice President
	Telephone:	 	(415) 436-2616
	Facsimile:	 	(415) 503-5099
	Email:	 	robert.j.rittelmeyer@bankofamerica.com

  
 BANK OF AMERICA, N.A., 
 as Bank 
  
 Domestic and Offshore Lending Office: 
  
 Bank of America, N.A. 
 Agency Services West 
 Mail
Code: CA4-706-05-09 
 1850 Gateway Boulevard 
 Concord,
California 94520-3282 

			
	Attention:	 	Brian Graybill
	Telephone:	 	(925) 675-8414
	Facsimile:	 	(888) 969-9147
	Email:	 	brian.graybill@bankofamerica.com

  
 Notices (other than Borrowing
Notices and 
 Notices of Conversion/Continuation): 
  
 Bank of America, N.A., 
 Mail Code CA5-704-06-37 
 315 Montgomery Street - 6th Floor 
 San Francisco, California 94104

			
	Attention:	 	Kevin McMahon, Senior Vice President
	Telephone:	 	(415) 622-8088
	Facsimile:	 	(415) 622-4057
	Email:	 	kevin.mcmahon@bankofamerica.com

  
 SCHEDULE 10.02 -
2 

 SCHEDULE 10.06 
  
 PROCESSING AND RECORDATION FEES 
  
 The Agent will charge a processing and recordation fee (an “Assignment Fee”) in the amount of $2,500 for each assignment;
provided, however, that in the event of two or more concurrent assignments to members of the same Assignee Group (which may be effected by a suballocation of an assigned amount among members of such Assignee Group) or two or more concurrent
assignments by members of the same Assignee Group to a single Eligible Assignee (or to an Eligible Assignee and members of its Assignee Group), the Assignment Fee will be $2,500 plus the amount set forth below: 
  

				
	 Transaction

	  	Assignment Fee

	 First four concurrent assignments or suballocations to members of an Assignee Group (or from members of an Assignee Group, as
applicable)
	  	 	-0-
		
	 Each additional concurrent assignment or suballocation to a member of such Assignee Group (or from a member of such Assignee Group, as
applicable)
	  	$	500

  
 SCHEDULE 10.06 -
1 

 EXHIBIT A 
  

FORM OF NOTICE OF BORROWING 
  
 Date:             , 20     
  

	To:	Bank of America, N.A., as Agent for the Banks parties to the Credit Agreement dated as of June 1, 2005 (as extended, renewed, amended or restated from time to time, the
“Credit Agreement”) among Mentor Graphics Corporation, certain Banks which are signatories thereto, KeyBank National Association, as documentation agent and Bank of America, N.A., as Agent 

  
 Ladies and Gentlemen: 
  
 The undersigned, Mentor Graphics Corporation (the “Company”), refers to the Credit Agreement, the terms
defined therein being used herein as therein defined, and hereby gives you notice irrevocably, pursuant to Section 2.03 of the Credit Agreement, of the Borrowing specified below: 
  
 1. The Business Day of the proposed Borrowing is
                    . 
  
 2. The aggregate amount of the proposed Borrowing is
$                    . 
  
 3. The Borrowing is to be comprised of $             of [Base Rate] [Offshore Rate]
Loans. 
  
 4. [The duration of the Interest Period for the
Offshore Rate Loans included in the Borrowing shall be              months.] 
  
 The undersigned hereby certifies that the following statements are true on the date hereof, and will be true on the date of the proposed Borrowing, before
and after giving effect thereto and to the application of the proceeds therefrom: 
  
 (a) the representations and warranties of each Loan Party contained in Article V of the Credit Agreement or in any other Loan Document are
true and correct in all material respects on and as of such date, with the same effect as if made on and as of such date (except to the extent such representations and warranties expressly refer to an earlier date, in which case they are true and
correct in all material respects as of such earlier date); provided that, if a representation and warranty is generally qualified as to materiality, with respect to such representation and warranty the applicable materiality qualifier set forth
above shall be disregarded for purposes of this condition; 
  
 (b) no Default or Event of Default exists, or would result from such proposed Borrowing; and 
  
 (c) the proposed Borrowing will not cause the aggregate principal amount of all outstanding Loans to exceed the combined Commitments of
the Banks. 
  

 A-1 

			
	MENTOR GRAPHICS CORPORATION
		
	By:	 	  

	Title:	 	  

		
	and	 	 
		
	By:	 	  

	Title:	 	  

  

 A-2 

 EXHIBIT B 
  

FORM OF NOTICE OF CONVERSION/CONTINUATION 
  
 Date:                      
  

	To:	Bank of America, N.A., as Agent for the Banks parties to the Credit Agreement dated as of June 1, 2005 (as extended, renewed, amended or restated from time to time, the
“Credit Agreement”) among Mentor Graphics Corporation, certain Banks which are signatories thereto, KeyBank National Association, as documentation agent and Bank of America, N.A., as Agent 

  
 Ladies and Gentlemen: 
  
 The undersigned, Mentor Graphics Corporation (the “Company”), refers to the Credit Agreement, the terms
defined therein being used herein as therein defined, and hereby gives you notice irrevocably, pursuant to Section 2.04 of the Credit Agreement, of the [conversion] [continuation] of the Loans specified herein, that: 
  
 1. The Conversion/Continuation Date is
                    . 
  
 2. The aggregate amount of the Loans to be [converted] [continued] is
$                    . 
  
 3. The Loans are to be [converted into] [continued as] [Offshore Rate] [Base Rate] Loans. 
  
 4. [The duration of the Interest Period for the Offshore Rate Loans included in the [conversion] [continuation] shall be
             months.] 
  
 The undersigned hereby certifies that the following statements are true on the date hereof, and will be true on the proposed Conversion/Continuation Date, before and after giving effect thereto and to the application
of the proceeds therefrom: 
  
 (a) the
representations and warranties of each Loan Party contained in Article V of the Credit Agreement or in any other Loan Document are true and correct in all material respects on and as of such date, with the same effect as if made on and as of such
date (except to the extent such representations and warranties expressly refer to an earlier date, in which case they are true and correct in all material respects as of such earlier date); provided that, if a representation and warranty is
generally qualified as to materiality, with respect to such representation and warranty the applicable materiality qualifier set forth above shall be disregarded for purposes of this condition; 
  
 (b) no Default or Event of Default exists, or would result
from such proposed [conversion] [continuation]; and 
  

 B-1 

 (c) the proposed [conversion] [continuation] will not cause the aggregate principal
amount of all outstanding Loans to exceed the combined Commitments of the Banks. 
  

			
	MENTOR GRAPHICS CORPORATION
		
	By:	 	  

	Title:	 	  

		
	and	 	 
		
	By:	 	  

	Title:	 	  

  

 B-2 

 EXHIBIT D 
  

FORM OF ASSIGNMENT AND ASSUMPTION AGREEMENT 
  
 This Assignment and Assumption (this “Assignment and Assumption”) is dated as of the Effective Date set forth below and is entered into
by and between [Insert name of Assignor] (the “Assignor”) and [Insert name of Assignee] (the “Assignee”). Capitalized terms used but not defined herein shall have the meanings given to them in the
Credit Agreement identified below (the “Credit Agreement”), receipt of a copy of which is hereby acknowledged by the Assignee. The Standard Terms and Conditions set forth in Annex 1 attached hereto are hereby agreed to and
incorporated herein by reference and made a part of this Assignment and Assumption as if set forth herein in full. 
  
 For an agreed consideration, the Assignor hereby irrevocably sells and assigns to the Assignee, and the Assignee hereby irrevocably purchases and assumes
from the Assignor, subject to and in accordance with the Standard Terms and Conditions and the Credit Agreement, as of the Effective Date inserted by the Agent as contemplated below (i) all of the Assignor’s rights and obligations as a Bank
under the Credit Agreement and any other documents or instruments delivered pursuant thereto to the extent related to the amount and percentage interest identified below of all of such outstanding rights and obligations of the Assignor under the
respective facilities identified below and (ii) to the extent permitted to be assigned under applicable law, all claims, suits, causes of action and any other right of the Assignor (in its capacity as a Bank) against any Person, whether known or
unknown, arising under or in connection with the Credit Agreement, any other documents or instruments delivered pursuant thereto or the loan transactions governed thereby or in any way based on or related to any of the foregoing, including, but not
limited to, contract claims, tort claims, malpractice claims, statutory claims and all other claims at law or in equity related to the rights and obligations sold and assigned pursuant to clause (i) above (the rights and obligations sold and
assigned pursuant to clauses (i) and (ii) above being referred to herein collectively as, the “Assigned Interest”). Such sale and assignment is without recourse to the Assignor and, except as expressly provided in this Assignment
and Assumption, without representation or warranty by the Assignor. 
  

	1.	Assignor:
                                        
                 

  

	2.	Assignee:
                                        
                 [and is an Affiliate/Approved Fund of [identify Bank]1] 

  

	3.	Company: Mentor Graphics Corporation 

  

	4.	Agent: Bank of America, N.A., as the administrative agent under the Credit Agreement 

	1	Select as applicable. 

  

 D-1 

	5.	Credit Agreement: Credit Agreement, dated as of June 1, 2005, among Mentor Graphics Corporation, the Banks from time to time party thereto, KeyBank National Association, as
documentation agent and Bank of America, N.A., as Agent 

  

	6.	Assigned Interest: 

  

										
	Facility Assigned

	 	 Aggregate Amount of
 Commitment
 for all Banks*

	 	 Amount of
 Commitment
 Assigned*

	 	 Percentage
 Assigned of
 Commitment2

	 
	            	 	$	            	 	$	            	 	            	%
	            	 	$	            	 	$	            	 	            	%
	            	 	$	            	 	$	            	 	            	%

  

	[7.	Trade Date:
                            ]3 

  
 Effective Date:             , 20     [TO BE INSERTED BY AGENT AND WHICH SHALL BE THE EFFECTIVE DATE OF RECORDATION OF
TRANSFER IN THE REGISTER THEREFOR.] 
  
 The terms set forth in
this Assignment and Assumption are hereby agreed to: 
  

			
	ASSIGNOR
	[NAME OF ASSIGNOR]
		
	By:	 	  

	Title:	 	 
	
	ASSIGNEE
	[NAME OF ASSIGNEE]
		
	By:	 	  

	Title:	 	 

	*	Amount to be adjusted by the counterparties to take into account any payments or prepayments made between the Trade Date and the Effective Date. 

	2	Set forth, to at least 9 decimals, as a percentage of the Commitment of all Banks thereunder. 

	3	To be completed if the Assignor and the Assignee intend that the minimum assignment amount is to be determined as of the Trade Date. 

  

 D-2 

 [Consented to and]4 Accepted: 
  

			
	BANK OF AMERICA, N.A., as
	  Agent
		
	By:	 	  

	Title:	 	 
	
	[Consented to:]5
	
	MENTOR GRAPHICS CORPORATION
		
	By:	 	  

	Title:	 	 
	
	and
		
	By:	 	  

	Title:	 	 

	4	To be added only if the consent of the Agent is required by the terms of the Credit Agreement. 

	5	To be added only if the consent of the Company is required by the terms of the Credit Agreement. 

  

 D-3 

 ANNEX 1 TO ASSIGNMENT AND ASSUMPTION 
  
 MENTOR GRAPHICS CORPORATION 
  
 STANDARD TERMS AND CONDITIONS FOR 
  
 ASSIGNMENT AND ASSUMPTION 
  
 Representations and Warranties. 
  
 1.1. Assignor. The Assignor (a) represents and warrants that (i) it
is the legal and beneficial owner of the Assigned Interest, (ii) the Assigned Interest is free and clear of any lien, encumbrance or other adverse claim and (iii) it has full power and authority, and has taken all action necessary, to execute and
deliver this Assignment and Assumption and to consummate the transactions contemplated hereby; and (b) assumes no responsibility with respect to (i) any statements, warranties or representations made in or in connection with the Credit Agreement or
any other Loan Document, (ii) the execution, legality, validity, enforceability, genuineness, sufficiency or value of the Loan Documents or any collateral thereunder, (iii) the financial condition of the Company, any of its Subsidiaries or
Affiliates or any other Person obligated in respect of any Loan Document or (iv) the performance or observance by the Company, any of its Subsidiaries or Affiliates or any other Person of any of their respective obligations under any Loan Document.

  
 1.2. Assignee. The Assignee (a) represents and warrants
that (i) it has full power and authority, and has taken all action necessary, to execute and deliver this Assignment and Assumption and to consummate the transactions contemplated hereby and to become a Bank under the Credit Agreement, (ii) it meets
all requirements of an Eligible Assignee under the Credit Agreement (subject to receipt of such consents as may be required under the Credit Agreement), (iii) from and after the Effective Date, it shall be bound by the provisions of the Credit
Agreement as a Bank thereunder and, to the extent of the Assigned Interest, shall have the obligations of a Bank thereunder, (iv) it has received a copy of the Credit Agreement, together with copies of the most recent financial statements delivered
pursuant to Section 6.01 thereof, as applicable, and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into this Assignment and Assumption and to purchase the Assigned Interest on
the basis of which it has made such analysis and decision independently and without reliance on the Agent or any other Bank, and (v) if it is a foreign Bank, attached hereto is any documentation required to be delivered by it pursuant to the terms
of the Credit Agreement, duly completed and executed by the Assignee; and (b) agrees that (i) it will, independently and without reliance on the Agent, the Assignor or any other Bank, and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Loan Documents, and (ii) it will perform in accordance with their terms all of the obligations which by the terms of the Loan Documents are
required to be performed by it as a Bank. 
  
 2. Payments.
From and after the Effective Date, the Agent shall make all payments in respect of the Assigned Interest (including payments of principal, interest, fees and 
  

 ANNEX 1 TO EXHIBIT D –1 

 other amounts) to the Assignor for amounts which have accrued to but excluding the Effective Date and to the Assignee for
amounts which have accrued from and after the Effective Date. 
  
 3. General Provisions. This Assignment and Assumption shall be binding upon, and inure to the benefit of, the parties hereto and their respective successors and assigns. This Assignment and Assumption may be executed in any number of
counterparts, which together shall constitute one instrument. Delivery of an executed counterpart of a signature page of this Assignment and Assumption by telecopy shall be effective as delivery of a manually executed counterpart of this Assignment
and Assumption. This Assignment and Assumption shall be governed by, and construed in accordance with, the law of the State of California. 
  

 ANNEX 1 TO EXHIBIT D –2 

 EXHIBIT E 
  

FORM OF PROMISSORY NOTE 
  

			
	$                     	  	June 1, 2005

  
 FOR VALUE RECEIVED,
the undersigned, Mentor Graphics Corporation, an Oregon corporation (the “Company”), hereby promises to pay to the order of
                         (the “Bank”) or its registered assigns the principal sum of
                     Dollars ($            ) or, if less, the aggregate
unpaid principal amount of all Loans made by the Bank to the Company pursuant to the Credit Agreement dated as of June 1, 2005 (as extended, renewed, amended or restated from time to time, the “Credit Agreement”) among the Company,
certain Banks which are signatories thereto, KeyBank National Association, as documentation agent and Bank of America, N.A., as Agent for the Banks, on the dates and in the amounts provided in the Credit Agreement. The Company further promises to
pay interest on the unpaid principal amount of the Loans evidenced hereby from time to time at the rates, on the dates, and otherwise as provided in the Credit Agreement. 
  
 The Bank is authorized to endorse the amount and the date on which each Loan is made, the maturity date therefor and each
payment of principal with respect thereto on the schedules annexed hereto and made a part hereof, or on continuations thereof which shall be attached hereto and made a part hereof; provided, that any failure to endorse such information on such
schedule or continuation thereof shall not in any manner affect any obligation of the Company under the Credit Agreement and this Promissory Note (this “Note”). 
  
 Unless and until an Assignment and Assumption effecting the assignment or transfer of this Note shall have been accepted by
the Agent and recorded in the Register as provided in Section 10.06(c) of the Credit Agreement, the Company and the Agent shall be entitled to deem and treat the Bank as the owner and holder of this Note and the Loans evidenced hereby. 

 
 This Note is one of the Notes referred to in, and is entitled to the
benefits and subject to the terms of, the Credit Agreement, which Credit Agreement, among other things, contains provisions for acceleration of the maturity hereof upon the happening of certain stated events and also for prepayments on account of
principal hereof prior to the maturity hereof upon the terms and conditions therein specified. This Note is also entitled to the benefits of the Guaranty. 
  
 No reference herein to the Credit Agreement and no provision of this Note or the Credit Agreement shall alter or impair the obligations of the Company,
which are absolute and unconditional, to pay the principal of and interest on this Note at the place, at the respective times, and in the currency herein prescribed. Terms defined in the Credit Agreement are used herein with their defined meanings
therein unless otherwise defined herein. 
  
 THIS NOTE SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF CALIFORNIA, WITHOUT REGARD TO CONFLICT OF LAW PRINCIPLES THAT WOULD REQUIRE 
  

 E-1 

 APPLICATION OF ANOTHER LAW; PROVIDED THAT THE AGENT AND THE BANKS SHALL RETAIN ALL RIGHTS ARISING UNDER FEDERAL
LAW. 
  

			
	MENTOR GRAPHICS CORPORATION
		
	By:	 	  

	Title:	 	  

		
	and	 	 
		
	By:	 	  

	Title:	 	  

  

 E-2 

 Schedule A to Note 
  
 BASE RATE LOANS AND REPAYMENT OF BASE RATE LOANS 
  

									
	(1)	 	(2)	 	(3)	 	(4)	 	(5)
	Date

	 	Amount of Base
Rate Loan

	 	 Maturity Date
 of
 Base Rate Loan

	 	Amount of
Base Rate Loan
Repaid

	 	 Notation
 Made By

  

 SCHEDULE A TO EXHIBIT E 

 Schedule B to Note 
  
 OFFSHORE RATE LOANS AND REPAYMENT OF OFFSHORE RATE LOANS 
  

									
	(1)	 	(2)	 	(3)	 	(4)	 	(5)
	Date

	 	 Amount of
 Offshore Rate
Loan

	 	 Maturity Date
of
 Offshore
 Rate Loan

	 	Amount of
Offshore Rate Loan
Repaid

	 	 Notation
 Made By

  

 SCHEDULE B TO EXHIBIT E 

 EXHIBIT F 
  

FORM OF NOTICE OF DESIGNATION OF UNRESTRICTED SUBSIDIARY 
  

Date:             , 20     
  

	To:	Bank of America, N.A. as Agent for the Banks parties to the Credit Agreement dated as of June 1, 2005 (as extended, renewed, amended or restated from time to time, the
“Credit Agreement”) among Mentor Graphics Corporation, certain Banks which are signatories thereto, KeyBank National Association, as documentation agent and Bank of America, N.A., as Agent 

  
 Ladies and Gentlemen: 
  
 The undersigned, Mentor Graphics Corporation (the “Company”), refers to the Credit Agreement, the terms
defined therein being used herein as therein defined, and hereby gives you notice, pursuant to Section 1.04 of the Credit Agreement, of the designation of the Subsidiary identified below as an Unrestricted Subsidiary: 
  
 Name of Subsidiary:
                    , a
[                    ] corporation (the “Designated Subsidiary”). 
  
 The Designated Subsidiary [is/is not] a Material Subsidiary. [Accordingly, as
provided in Section 1.04 of the Credit Agreement and subject to the limitations thereof, this designation of the Designated Subsidiary as an Unrestricted Subsidiary shall become effective [three Business Days after the Agent’s receipt of this
Notice of Designation] [only upon the written consent of the Majority Banks]. 
  
 The undersigned hereby certifies that the following statements are true on the date hereof and will be true on the date on which this designation of the Designated Subsidiary as an Unrestricted Subsidiary becomes
effective: 
  
 (a) the Designated Subsidiary [is/is not] a
Material Subsidiary; 
  
 (b) the representations and
warranties of each Loan Party contained in Article V of the Credit Agreement or in any other Loan Document are true and correct in all material respects on and as of such date, with the same effect as if made on and as of such date (except to the
extent such representations and warranties expressly refer to an earlier date, in which case they are true and correct as of such earlier date); provided that, if a representation and warranty is generally qualified as to materiality, with respect
to such representation and warranty the applicable materiality qualifier set forth above shall be disregarded for purposes of this condition; 
  
 (c) no Default or Event of Default exists (unless such designation would cure such Default or Event of Default), or would result from the designation of
the Designated Subsidiary as an Unrestricted Subsidiary; 
  

 F-1 

 (d) immediately after giving effect to such designation, the aggregate revenues for the most recently
ended calendar quarter of all Unrestricted Subsidiaries, taken as a whole, will not exceed 15% of the aggregate revenues for such calendar quarter of the Company, its Subsidiaries and its Unrestricted Subsidiaries, taken as a whole, and 

 
 (e) immediately after giving effect to such designation, the aggregate
assets of all Unrestricted Subsidiaries, taken as a whole, will not exceed 15% of the aggregate assets of the Company, its Subsidiaries and its Unrestricted Subsidiaries, taken as a whole. 
  

 F-2 

			
	MENTOR GRAPHICS CORPORATION
		
	 By:
	 	  

	 Title:
	 	  

		
	 and
	 	 
		
	 By:
	 	  

	 Title:
	 	  

  

 F-3

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