Document:

Active_59270322_1_Exhibit102-SecondARCreditandSecurityAgreement

Exhibit 10.2

SECOND AMENDED AND RESTATED CREDIT AND SECURITY AGREEMENT

DATED AS OF APRIL 28, 2014

AMONG

SMITHFIELD RECEIVABLES FUNDING LLC,
AS BORROWER,

SMITHFIELD FOODS, INC.,
AS SERVICER,

THE LENDERS AND CO-AGENTS FROM TIME TO TIME PARTY HERETO, 

AND

COÖPERATIEVE CENTRALE RAIFFEISEN-BOERENLEENBANK B.A., “RABOBANK NEDERLAND”, NEW YORK BRANCH,
AS ADMINISTRATIVE AGENT AND LETTER OF CREDIT ISSUER

 

		
	ARTICLE I.
	THE ADVANCES    3

		
	Section 1.1.
	Credit Facility    3

		
	Section 1.2.
	Increases    4

		
	Section 1.3.
	Decreases    5

		
	Section 1.4.
	Deemed Collections; Borrowing Limit    5

		
	Section 1.5.
	Payment Requirements    6

		
	Section 1.6.
	Advances; Ratable Loans; Funding Mechanics; Liquidity Fundings    6

		
	Section 1.7.
	Letters of Credit    6

		
	Section 1.8.
	Letters of Credit Fees    6

		
	ARTICLE II.
	PAYMENTS AND COLLECTIONS    7

		
	Section 2.1.
	Payments    7

		
	Section 2.2.
	Collections Prior to an Event of Default    7

		
	Section 2.3.
	Collections Following an Event of Default    8

		
	Section 2.4.
	Payment Rescission    9

		
	ARTICLE III.
	CONDUIT FUNDING    9

		
	Section 3.1.
	CP Costs    9

		
	Section 3.2.
	Calculation of CP Costs    9

		
	Section 3.3.
	CP Costs Payments    9

		
	Section 3.4.
	Default Rate    9

		
	ARTICLE IV.
	COMMITTED LENDER FUNDING    9

		
	Section 4.1.
	Committed Lender Funding    9

		
	Section 4.2.
	Interest Payments    10

		
	Section 4.3.
	Selection and Continuation of Interest Periods    10

		
	Section 4.4.
	Committed Lender Interest Rates    10

		
	Section 4.5.
	Suspension of the Adjusted Federal Funds Rate and LIBO Rate    11

		
	Section 4.6.
	Default Rate    11

		
	ARTICLE V.
	REPRESENTATIONS AND WARRANTIES    11

		
	Section 5.1.
	Representations and Warranties of the Loan Parties    11

		
	Section 5.2.
	Certain Committed Lender Representations and Warranties    16

		
	ARTICLE VI.
	CONDITIONS OF ADVANCES    16

		
	Section 6.1.
	Conditions Precedent to Initial Advance    16

		
	Section 6.2.
	Conditions Precedent to All Advances and L/C Credit Extensions    17

		
	ARTICLE VII.
	COVENANTS    17

		
	Section 7.1.
	Affirmative Covenants of the Loan Parties    17

		
	Section 7.2.
	Negative Covenants of the Loan Parties    27

		
	ARTICLE VIII.
	ADMINISTRATION AND COLLECTION    28

		
	Section 8.1.
	Designation of Servicer    28

		
	Section 8.2.
	Duties of Servicer    29

		
	Section 8.3.
	Collection Notices    30

		
	Section 8.4.
	Responsibilities of Borrower    31

		
	Section 8.5.
	Monthly Reports    31

		
	Section 8.6.
	Servicing Fee    31

ARTICLE IX.    EVENTS OF DEFAULT..........................................................31
		
	Section 9.1.
	Events of Default    31

		
	Section 9.2.
	Remedies    34

		
	ARTICLE X.
	INDEMNIFICATION    34

		
	Section 10.1.
	Indemnities by the Loan Parties    34

		
	Section 10.2.
	Increased Cost and Reduced Return    38

		
	Section 10.3.
	Other Costs and Expenses    39

		
	ARTICLE XI.
	THE AGENTS    39

		
	Section 11.1.
	Authorization and Action    39

		
	Section 11.2.
	Delegation of Duties    40

		
	Section 11.3.
	Exculpatory Provisions    40

		
	Section 11.4.
	Reliance by Agents    41

		
	Section 11.5.
	Non-Reliance on Other Agents and Other Lenders    41

		
	Section 11.6.
	Reimbursement and Indemnification    42

		
	Section 11.7.
	Agents in their Individual Capacities    42

		
	Section 11.8.
	Conflict Waivers    42

		
	Section 11.9.
	UCC Filings    42

		
	Section 11.10.
	Successor Administrative Agent and Letter of Credit Issuer    43

		
	ARTICLE XII.
	ASSIGNMENTS; PARTICIPATIONS    43

		
	Section 12.1.
	Assignments    43

		
	Section 12.2.
	Participations    44

		
	Section 12.3.
	Register    45

		
	Section 12.4
	Federal Reserve    45

		
	ARTICLE XIII.
	SECURITY INTEREST    45

		
	Section 13.1.
	Grant of Security Interest    45

		
	Section 13.2.
	Termination after Final Payout Date    45

		
	ARTICLE XIV.
	MISCELLANEOUS    46

		
	Section 14.1.
	Waivers and Amendments    46

		
	Section 14.2.
	Notices    47

		
	Section 14.3.
	Ratable Payments    47

		
	Section 14.4.
	Protection of Administrative Agent’s Security Interest    48

		
	Section 14.5.
	Confidentiality    48

		
	Section 14.6.
	Bankruptcy Petition    49

		
	Section 14.7.
	Limitation of Liability    49

		
	Section 14.8.
	CHOICE OF LAW    50

		
	Section 14.9.
	CONSENT TO JURISDICTION    50

		
	Section 14.10.
	WAIVER OF JURY TRIAL    50

		
	Section 14.11.
	Integration; Binding Effect; Survival of Terms    51

		
	Section 14.12.
	Counterparts; Severability; Section References    51

		
	Section 14.13.
	Intercreditor Agreement    51

EXHIBITS AND SCHEDULES

		
	Exhibit I
	Definitions

		
	Exhibit II-A
	Form of Borrowing Notice

		
	Exhibit II-B
	Form of Reduction Notice

		
	Exhibit III
	Places of Business of the Loan Parties and the Performance Guarantor; Locations of Records; Federal Employer Identification Number(s)

		
	Exhibit IV
	Form of Compliance Certificate

		
	Exhibit V
	Form of Assignment Agreement

		
	Exhibit VI
	Form of Monthly Report

		
	Exhibit VII
	Form of Performance Undertaking

Exhibit VIII    Form of Request for Letter of Credit

		
	Schedule A
	Commitments

		
	Schedule B
	Closing Documents

		
	Schedule C
	Lender Supplement

SECOND AMENDED AND RESTATED CREDIT AND SECURITY AGREEMENT
THIS SECOND AMENDED AND RESTATED CREDIT AND SECURITY AGREEMENT, dated as of April 28, 2014 is entered into by and among Smithfield Receivables Funding LLC, a Delaware limited liability company (“Borrower”), Smithfield Foods, Inc., a Virginia corporation (“Smithfield”), as initial servicer (the “Servicer” together with Borrower, the “Loan Parties” and each, a “Loan Party”), Coöperatieve Centrale Raiffeisen-Boerenleenbank B.A., “Rabobank Nederland”, New York Branch (“Rabobank”), in its capacity as administrative agent for the Lenders hereunder or any successor administrative agent hereunder (the “Administrative Agent” collectively with the Administrative Agent and Co-Agents, the “Agents”) and in its capacity as letter of credit issuer hereunder or any successor letter of credit issuer hereunder (the “Letter of Credit Issuer”), and the Lenders and the Co-Agents from time to time party hereto, and amends and restates in its entirety that certain Amended and Restated Credit and Security Agreement, dated as of January 31, 2013, by and among the Loan Parties, Rabobank, as administrative agent and letter of credit issuer and the Lenders and Co-Agents from time to time party thereto. 
Unless defined elsewhere herein, capitalized terms used in this Agreement shall have the meanings assigned to such terms in Exhibit I.
PRELIMINARY STATEMENTS

WHEREAS, Borrower desires to borrow from the Lenders from time to time, which borrowings may take the form of an Advance or Letter of Credit Extension.
WHEREAS, subject to the terms and conditions hereof, the Letter of Credit Issuer shall, at the request of Borrower, issue Letters of Credit.
WHEREAS, subject to the terms and conditions hereof, each Unaffiliated Committed Lender shall, at the request of Borrower, make its Percentage of such Advance or L/C Participation Funding.
WHEREAS, the Conduits may, in their absolute and sole discretion, make Advances or L/C Participation Fundings to Borrower from time to time.  In the event that any Conduit declines to make its Conduit Group’s Percentage of any Advance or any L/C Participation Funding, the applicable Conduit’s Committed Lender(s) shall, subject to the terms and conditions hereof, unless Borrower cancels its Borrowing Notice as to all Lenders, make such Conduit Group’s Percentage of such Advance or L/C Participation Funding, as applicable.
WHEREAS, Rabobank has been requested and is willing to act as Administrative Agent on behalf of the Lenders in accordance with the terms hereof.
NOW THEREFORE, in consideration of the foregoing premises and the mutual agreements herein contained and other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereto agree as follows.
ARTICLE I. 
THE ADVANCES
Section 1.1.    Credit Facility.
(a)    Upon the terms and subject to the conditions hereof, from time to time prior to the Facility Termination Date:
(i)    Borrower may request Advances in an aggregate principal amount at any one time outstanding not to exceed the lesser of (x) the Aggregate Commitment less the Letter of Credit Liability and (y) the Borrowing Base (such lesser amount, the “Borrowing Limit”); and
(ii)    upon receipt of a copy of each Borrowing Notice from Borrower, (A) each Unaffiliated Committed Lender severally agrees to fund a Loan in an amount equal to its Percentage of the requested Advance specified in such Borrowing Notice, and (B) each Co-Agent belonging to a Conduit Group shall determine whether its Conduit will fund a Loan in an amount equal to its Conduit Group’s Percentage of the requested Advance specified in such Borrowing Notice.  In the event that a Conduit elects not to make any such Loan to Borrower, the applicable Co-Agent shall promptly notify the Borrower and, unless Borrower cancels its Borrowing Notice as to all Lenders, (1) each Unaffiliated Committed Lender severally agrees to fund a Loan in an amount equal to its Percentage of the requested Advance, (2) each of such Conduit’s Committed Lenders severally agrees to fund a Loan in an amount equal to its Pro Rata Share of its Conduit Group’s Percentage of such Loan and (3) each other Conduit shall fund a Loan in an amount equal to its Percentage of the required Advance; provided that (I) at no time may the aggregate principal amount of  any Conduit Group’s Loans and Percentage of Letter of Credit Liability outstanding, exceed the lesser of (x) the aggregate amount of such Conduit’s Committed Lenders’ Commitments, and (y) such Conduit Group’s Percentage of the Borrowing Base (such lesser amount, such Conduit Group’s “Allocation Limit”), and (II) at no time may the aggregate principal amount of any Unaffiliated Committed Lender’s Loans and Percentage of Letter of Credit Liability outstanding exceed  the lesser of (x) such Unaffiliated Committed Lender’s Commitment and (y) such Unaffiliated Committed Lender’s Percentage of the Borrowing Base (such lesser amount, such Unaffiliated Committed Lender’s “Allocation Limit”).
Each Advance shall be made ratably amongst the Conduit Groups and the Unaffiliated Committed Lenders, collectively, in accordance with their respective Percentages.  Each of the Advances, and all other Obligations of Borrower, shall be secured by the Collateral as provided in Article XIII.  Subject to Sections 1.6(d) and (e), it is the intent of the Conduits, but not the Committed Lenders, to fund all Advances by the issuance of Commercial Paper.  Borrower shall not make a request for more than one (1) Advance, and no more than one (1) Advance shall occur, during any calendar week.
(b)    Borrower may, upon at least thirty (30) Business Days’ notice to the Co-Agents, terminate in whole or reduce in part, ratably among the Committed Lenders in accordance with their respective Commitments, the unused portion of the Aggregate Commitment; provided that each partial reduction of the Aggregate Commitment shall be in an amount equal to $20,000,000 (or a larger integral multiple of $1,000,000 if in excess thereof) and shall reduce the Commitments of the Committed Lenders ratably in accordance with their respective Commitments.
Section 1.2.    Increases.  Not later than 2:00 p.m. (New York City time) on the second (2nd) Business Day prior to a proposed borrowing, Borrower shall provide the Co-Agents with written notice of each Advance in the form set forth as Exhibit II-A hereto (each, a “Borrowing Notice”).   Each Borrowing Notice shall be subject to Section 6.2 hereof and, except as set forth below, shall be irrevocable and shall specify the requested increase in Aggregate Principal (which shall not be less than $5,000,000 or a larger integral multiple of $100,000) and the Borrowing Date and the requested Interest Rate and Interest Period for any portion to be funded by any Committed Lender.  Upon receipt of a Borrowing Notice, (a) each Unaffiliated Committed Lender severally agrees to fund a Loan in an amount equal to its Percentage of the requested Advance specified in such Borrowing Notice, and (b) each Co-Agent shall determine whether its Conduit will fund a Loan in an amount equal to its Conduit Group’s Percentage of the requested Advance specified in such Borrowing Notice.  If a Conduit declines to make its Percentage of a proposed Advance, Borrower may cancel the Borrowing Notice as to all Lenders or, in the absence of such a cancellation, the Advance will be made by each Unaffiliated Committed Lender, each other Conduit and such Conduit’s Committed Lenders.  On the date of each Advance, upon satisfaction of the applicable conditions precedent set forth in Article VI, each applicable Lender will cause the proceeds of its Loan comprising a portion of such Advance to be deposited to the Facility Account, in immediately available funds, no later than 3:00 p.m. (New York City time), an amount equal to (i) in the case of a Conduit or an Unaffiliated Committed Lender, its Percentage of the principal amount of the requested Advance or (ii) in the case of a Conduit’s Committed Lender, each such Committed Lender’s Pro Rata Share of its Conduit Group’s Percentage of the principal amount of the requested Advance.  
Section 1.3.    Decreases.  Except as provided in Section 1.4, Borrower shall provide the Co-Agents with prior written notice by 2:00 p.m. (New York City time) of any proposed reduction of Aggregate Principal in the form of Exhibit II-B hereto in conformity with the Required Notice Period (each, a “Reduction Notice”).  Such Reduction Notice shall designate (i) the date (the “Proposed Reduction Date”) upon which any such reduction of Aggregate Principal shall occur (which date shall give effect to the applicable Required Notice Period), and (ii) the amount of Aggregate Principal to be reduced which shall be applied ratably to the Loans of each of the Lenders in accordance with the principal amount (if any) thereof (the “Aggregate Reduction”).  
Section 1.4.    Deemed Collections; Borrowing Limit.
(a)    If on any day:
(i)    the Outstanding Balance of any Receivable is reduced as a result of any defective or rejected goods or services (including any In-Transit Collateral that is returned or not accepted by the relevant Obligor), any cash discount or any other adjustment by the applicable Originator or any Affiliate thereof, or
(ii)    the Outstanding Balance of any Receivable is reduced or canceled as a result of a setoff in respect of any claim by the applicable Obligor thereof (whether such claim arises out of the same or a related or an unrelated transaction), or
(iii)    the Outstanding Balance of any Receivable is reduced on account of the obligation of any Originator or any Affiliate thereof to pay to the related Obligor any rebate or refund, or
(iv)    the Outstanding Balance of any Receivable is less than the amount included in calculating the Net Pool Balance for purposes of any Monthly Report (for any reason other than receipt of Collections thereon or such Receivable becoming a Defaulted Receivable), or
(v)    any of the representations or warranties of Borrower set forth in Section 5.1(i), (j), (r), (s), (t) or (u) were not true when made with respect to any Receivable,
then, on such day, Borrower shall be deemed to have received a Collection of such Receivable in the following amounts: (A) in the case of clauses (i)-(iv) above, in the amount of such reduction or cancellation or the difference between the actual Outstanding Balance of such Receivable and the amount included with respect to such Receivable in calculating the then applicable Net Pool Balance, as applicable; and (B) in the case of clause (v) above, in the amount of the Outstanding Balance of such Receivable and, effective as of the date on which the next succeeding Monthly Report is required to be delivered, the Borrowing Base shall be reduced by the amount of such Deemed Collection.   
(b)    Borrower shall ensure that the Aggregate Principal at no time exceeds the Borrowing Limit.  If at any time the sum of (x) the aggregate outstanding principal amount of the Loans and (y) the Percentage of Letter of Credit Liability relating to any Unaffiliated Committed Lender or any Conduit Group exceeds such Unaffiliated Committed Lender’s or such Conduit Group’s Allocation Limit, Borrower shall prepay such Loans by wire transfer to the applicable Co-Agent received not later than 12:00 noon (New York City time) on the next succeeding Settlement Date in an amount sufficient to eliminate such excess, together with accrued and unpaid interest on the amount prepaid (as allocated by the applicable Co-Agent), such that after giving effect to such payment the Aggregate Principal is less than or equal to the Borrowing Limit and each Conduit Group’s and each Unaffiliated Committed Lender’s respective Percentage of the Aggregate Principal is less than or equal to the applicable Allocation Limit.
Section 1.5.    Payment Requirements.  All amounts to be paid or deposited by any Loan Party pursuant to any provision of this Agreement shall be paid or deposited in accordance with the terms hereof no later than 12:00 noon (New York City time) on the day when due in immediately available funds, and if not received before 12:00 noon (New York City time) shall be deemed to be received on the next succeeding Business Day.  For the avoidance of doubt, the delivery times referenced in the preceding sentence shall only apply to the payment of amounts due and payable by the Loan Parties.  If such amounts are payable to a Lender they shall be paid to the applicable Payment Account, for the account of such Lender, until otherwise notified by such Lender.  The fees of the Lenders shall be invoiced and paid on a monthly basis pursuant to Article II hereof.  All computations of CP Costs, Interest at the LIBO Rate, per annum fees calculated as part of any CP Costs, per annum fees hereunder and per annum fees under the Fee Letter and the L/C Fee Letter shall be made on the basis of a year of 360 days for the actual number of days elapsed.  All computations of Interest at the Alternate Base Rate, the Adjusted Federal Funds Rate or the Default Rate shall be made on the basis of a year of 365 days (or 366 days, when appropriate) for the actual number of days elapsed.  If any amount hereunder shall be payable on a day which is not a Business Day, such amount shall be payable on the next succeeding Business Day.
Section 1.6.    Advances; Ratable Loans; Funding Mechanics; Liquidity Fundings.
(a)    Each Advance hereunder shall be made ratably by the Unaffiliated Committed Lenders and the Conduit Groups, collectively, in accordance with their respective Percentages.
(b)    Each Advance hereunder shall consist of one or more Loans made by (i) each Unaffiliated Committed Lender and (ii) the Conduits and/or the Committed Lenders in their Conduit Groups.
(c)    Each Lender funding any Loan shall cause the principal amount thereof to be wire transferred to the Facility Account (or to such other account as may be specified by Borrower in its Borrowing Notice) in immediately available funds as soon as possible but in no event later than 3:00 p.m. (New York City time) on the applicable Borrowing Date.  
(d)    While it is the intent of each Conduit (but not of any Committed Lender) to fund and maintain its Percentage of each requested Advance through the issuance of Commercial Paper, the parties acknowledge that if any Conduit is unable, or determines that it is undesirable, to issue Commercial Paper to fund all or any portion of its Loans, or is unable to repay such Commercial Paper upon the maturity thereof, such Conduit shall put all or any portion of its Loans to the Committed Lenders in its Conduit Group at any time pursuant to its applicable Liquidity Agreement to finance or refinance the necessary portion of its Loans through a Liquidity Funding to the extent available.  The Liquidity Fundings may be Alternate Base Rate Loans, Adjusted Federal Funds Rate Loans or LIBO Rate Loans, or a combination thereof, selected by Borrower in accordance with Article IV and agreed to by the applicable Co-Agent.  Regardless of whether a Liquidity Funding constitutes the direct funding of a Loan, an assignment of a Loan made by a Conduit or the sale of one or more participations in a Loan made by a Conduit, each Committed Lender in such Conduit’s Conduit Group participating in a Liquidity Funding shall have the rights of a “Lender” hereunder with the same force and effect as if it had directly made a Loan to Borrower in the amount of its Liquidity Funding.  
(e)    Nothing herein shall be deemed to commit any Conduit to make Loans.
Section 1.7.    Letters of Credit.
(a)    Letter of Credit Commitment.  (i) Subject to the terms and conditions hereof: (A) the Letter of Credit Issuer agrees, in reliance upon the agreements of the Lenders set forth in this Section 1.7: (1) from time to time on any Business Day during the period from the Closing Date until the Letter of Credit Expiration Date, to issue Letters of Credit denominated in Dollars for the account of the Borrower, in aggregate face amounts that shall be not less than $100,000 or such lesser amount as shall be acceptable to the Letter of Credit Issuer, as the Borrower may request, and to amend or extend Letters of Credit previously issued by it; and (2) to honor drawings under the Letters of Credit; and (B) the Committed Lenders severally agree to participate in Letters of Credit issued for the account of the Borrower and any drawings thereunder; provided that the Borrower may not request, and the Letter of Credit Issuer shall have no obligation to effect, any L/C Credit Extension unless (1) the conditions precedent set forth in Section 6.2 are satisfied, and (2) after giving effect to such L/C Credit Extension the Aggregate Principal will not exceed the Borrowing Limit.  Within the foregoing limits, and subject to the terms and conditions hereof, the Borrower’s ability to obtain Letters of Credit shall be fully revolving, and accordingly the Borrower may, during the foregoing period, obtain Letters of Credit to replace Letters of Credit that have expired or that have been drawn upon and reimbursed.  The form of Letter of Credit requested by the Borrower shall be in a form reasonably acceptable to the Letter of Credit Issuer.  The Letter of Credit Issuer acknowledges that Letters of Credit may be issued in favor of one or more beneficiaries notified to the Borrower by one or more Originators (other than the Canadian Originator).
(i)    The Letter of Credit Issuer shall not issue any Letter of Credit, if: (A) subject to Section 1.7(b)(iii), the expiry date of such Letter of Credit would occur later than the close of business on the earlier of (x) the date twelve months after the date of the issuance of such Letter of Credit (or, in the case of any renewal or extension thereof, twelve months after the then-current expiration date of such Letter of Credit, so long as such renewal or extension occurs within three months of such then-current expiration date) and (y) the Letter of Credit Expiration Date; provided that any Letter of Credit may provide for the renewal thereof for additional periods not to exceed one year (which shall in no event extend beyond the Letter of Credit Expiration Date) under customary “evergreen” provisions; (B) the Letter of Credit Issuer has received written notice from a Co-Agent that an Unmatured Event of Default or an Event of Default has occurred and is continuing; or (C) after giving effect to such L/C Credit Extension, the Aggregate Principal would exceed the Borrowing Limit.  
(ii)    The Letter of Credit Issuer shall be under no obligation to issue any Letter of Credit only if: (A) any order, judgment or decree of any Governmental Authority or arbitrator shall by its terms purport to enjoin or restrain the Letter of Credit Issuer from issuing such Letter of Credit, or any requirement of law applicable to the Letter of Credit Issuer or any request or directive (whether or not having the force of law) from any Governmental Authority with jurisdiction over the Letter of Credit Issuer shall prohibit, or request that the Letter of Credit Issuer refrain from, the issuance of letters of credit generally or such Letter of Credit in particular or shall impose upon the Letter of Credit Issuer with respect to such Letter of Credit any restriction, reserve or capital requirement (for which the Letter of Credit Issuer is not otherwise compensated hereunder) not in effect on the date hereof, or shall impose upon the Letter of Credit Issuer any unreimbursed loss, cost or expense which was not applicable on the date hereof and which the Letter of Credit Issuer in good faith deems material to it; (B) the issuance of such Letter of Credit would violate any requirement of law or one or more policies of the Letter of Credit Issuer; (C) such Letter of Credit is to be denominated in a currency other than Dollars; or (D) a default of any Lender’s obligations hereunder exists or any Committed Lender does not have a short term debt rating of at least A-1 by S&P and P-1 by Moody’s, unless the Letter of Credit Issuer has entered into satisfactory arrangements with the Borrower or such Lender to eliminate the Letter of Credit Issuer’s risk with respect to such Lender.
(iii)    The Letter of Credit Issuer shall be under no obligation to amend any Letter of Credit if: (A) the Letter of Credit Issuer would have no obligation at such time to issue such Letter of Credit in its amended form under the terms hereof; or (B) the beneficiary of such Letter of Credit does not accept the proposed amendment to such Letter of Credit.
(v)    It is understood that the Borrower shall be permitted to request Letters of Credit hereunder that contain a requirement that the stated amount of the Letter of Credit be reinstated following a drawing thereunder, and that such reinstatement of all or any portion of the Letter of Credit shall not be treated as the issuance of a new Letter of Credit, or an amendment, renewal or extension of such existing Letter of Credit, for any purpose hereunder or under the L/C Fee Letter; provided, for the avoidance of doubt, that any such reinstatement shall be taken into account for purposes of calculating Letter of Credit Liability.
(b)    Procedures for Issuance and Amendment of Letters of Credit; Auto Extension Letters of Credit.
(i)    Each Letter of Credit shall be issued or amended, as the case may be, upon the request of the Borrower delivered to the Letter of Credit Issuer (with a copy to each Co-Agent) in the form of a Request for Letter of Credit and a Letter of Credit Application, each appropriately completed and signed by an Authorized Officer of the Borrower.  Such Request for Letter of Credit and Letter of Credit Application must be received by the Letter of Credit Issuer and each Agent not later than 11:00 a.m. (New York time) at least five (5) Business Days prior to the proposed issuance date or date of amendment, as the case may be, or such later date and time as each Co-Agent and the Letter of Credit Issuer may agree in a particular instance in their sole discretion.  In the case of a request for an initial issuance of a Letter of Credit, such Request of Letter of Credit and Letter of Credit Application shall specify in form and detail satisfactory to the Letter of Credit Issuer:  (A) the proposed issuance date of the requested Letter of Credit (which shall be a Business Day); (B) the amount thereof; (C) the expiry date thereof; (D) the name and address of the beneficiary thereof; (E) the documents, if any, to be presented by such beneficiary in case of any drawing thereunder; (F) the full text of any certificate to be presented by such beneficiary in case of any drawing thereunder; and (G) such other matters as the Letter of Credit Issuer may reasonably require.  In the case of a request for an amendment of any outstanding Letter of Credit, the related Letter of Credit Application shall specify in form and detail satisfactory to the Letter of Credit Issuer:  (1) the Letter of Credit to be amended; (2) the proposed date of amendment thereof (which shall be a Business Day); (3) the nature of the proposed amendment; and (4) such other matters as the Letter of Credit Issuer may reasonably require.  Additionally, the Borrower shall furnish to the Letter of Credit Issuer and the Administrative Agent such other documents and information pertaining to such requested Letter of Credit issuance or amendment, as the Letter of Credit Issuer or the Administrative Agent may reasonably require.
(ii)    Promptly after receipt of any Letter of Credit Application, the Letter of Credit Issuer will confirm with each Co-Agent (by telephone or in writing) that such Co-Agent has received a copy of such Letter of Credit Application from the Borrower and, if not, the Letter of Credit Issuer will provide such Co-Agent with a copy thereof.  The Letter of Credit Issuer shall also promptly (and in any event on the same day) notify each Co-Agent (which in turn shall promptly notify its related Committed Lenders) of the Request for Letter of Credit and Letter of Credit Application and the terms thereof.  Unless the Letter of Credit Issuer has received written notice from any Co-Agent, the Servicer or the Borrower, at least one (1) Business Day prior to the requested date of issuance or amendment of the applicable Letter of Credit, that any applicable condition precedent contained in Section 6.2 shall not then be satisfied, then, subject to the terms and conditions hereof, the Letter of Credit Issuer shall, on the requested date, issue a Letter of Credit for the account of the Borrower or enter into the applicable amendment, as the case may be, in each case in accordance with the Letter of Credit Issuer’s usual and customary business practices.
(iii)    If the Borrower so requests in any applicable Letter of Credit Application, the Letter of Credit Issuer may, in its sole and absolute discretion, agree to issue a Letter of Credit that has automatic extension provisions (each, an “Auto Extension Letter of Credit”); provided that any such Auto-Extension Letter of Credit must permit the Letter of Credit Issuer to prevent any such extension at least once in each twelve-month period (commencing with the date of issuance of such Letter of Credit) by giving prior notice to the beneficiary thereof not later than a day (the “Non-Extension Notice Date”) in each such twelve-month period to be agreed upon at the time such Letter of Credit is issued.  Unless otherwise directed by the Letter of Credit Issuer, the Borrower shall not be required to make a specific request to the Letter of Credit Issuer for any such extension.  Once an Auto-Extension Letter of Credit has been issued, the Lenders shall be deemed to have authorized (but may not require) the Letter of Credit Issuer to permit the extension of such Letter of Credit at any time to an expiry date not later than the Letter of Credit Expiration Date; provided, however, that the Letter of Credit Issuer shall not permit any such extension if: (A) the Letter of Credit Issuer has determined that it would not be permitted, or would have no obligation, at such time to issue such Letter of Credit in its revised form (as extended) under the terms hereof (by reason of the provisions of clauses (i), (ii) or (iii) of Section 1.7(a) or otherwise); or (B) it has received notice (which may be by telephone or in writing) on or before the day that is five (5) Business Days before the Non-Extension Notice Date from the Administrative Agent that it elects not to permit such extension, and directing the Letter of Credit Issuer not to permit such extension.
(iv)    Promptly after its delivery of any Letter of Credit or any amendment to a Letter of Credit to an advising bank with respect thereto or to the beneficiary thereof, the Letter of Credit Issuer will also deliver to the Borrower and the Administrative Agent a true and complete copy of such Letter of Credit or amendment.
(v)    Whenever the Letter of Credit Issuer issues a Letter of Credit, each Committed Lender shall, automatically and without further action of any kind upon the effective date of issuance of such Letter of Credit, have irrevocably (i) agreed to acquire a participation interest therein in an amount equal to the applicable Percentage of the Letter of Credit Liability attributable to such Letter of Credit and (ii) committed to make an Advance equal to the applicable Percentage of the applicable reimbursement amount in the event that such Letter of Credit is subsequently drawn and such drawn amount shall not have been reimbursed by the Borrower upon such draw or an Advance with respect to such unreimbursed draw is not made by such Committed Lender’s related Conduit or a L/C Participation Funding.  In the event that any Letter of Credit expires or is surrendered to the Letter of Credit Issuer without being drawn (in whole or in part) then, in such event, the foregoing commitment to make either an Advance or an L/C Participation Funding with respect to draws under such Letter of Credit shall expire with respect to such Letter of Credit and the Letter of Credit Liability shall automatically reduce by the amount of the Letter of Credit which is no longer outstanding.  Each Lender shall share in all rights and obligations resulting therefrom in accordance with such participation interest, including: (i) the right to receive from the Administrative Agent its share of any reimbursement of the amount of each draft drawn under each Letter of Credit, including any interest payable with respect thereto; (ii) the right to receive its share of the Letter of Credit Fee described in Section 1.8(a); and (iii) the obligation to reimburse the Letter of Credit Issuer through an Advance or an L/C Participation Funding hereunder upon receipt of notice of any payment by the Letter of Credit Issuer.
(c)    Drawings and Reimbursements; Funding of Participation.
(i)    Upon receipt from the beneficiary of any Letter of Credit of any notice of a drawing under such Letter of Credit, the Letter of Credit Issuer shall notify the Borrower and each Co-Agent thereof. Not later than 10:00 a.m. (New York time) on the date of any payment by the Letter of Credit Issuer (an “Honor Date”), the Borrower shall reimburse the Letter of Credit Issuer in an amount equal to the amount of such drawing.  If the Borrower fails to so reimburse the Letter of Credit Issuer by such time, the Letter of Credit Issuer shall promptly notify each Co-Agent of the Honor Date, the amount of the unreimbursed drawing (the “Unreimbursed Amount”), and the amount of each Lender’s Percentage thereof.  Prior to the Facility Termination Date, and so long as the conditions precedent set forth in Section 6.2 are satisfied, each such notice by the Letter of Credit Issuer shall be treated as a Borrowing Notice by the Borrower for an Advance to be disbursed on the Honor Date in an amount equal to the Unreimbursed Amount. In all other cases such notice shall be treated as a request for a L/C Participation Funding.  Any notice given by the Letter of Credit Issuer pursuant to this Section 1.7(c)(i) may be given by telephone if immediately confirmed in writing; provided that the lack of such an immediate confirmation shall not affect the conclusiveness or binding effect of such notice.
(ii)    If the Letter of Credit Issuer so notifies a Co-Agent prior to 11:30 a.m. (New York time) on any Business Day, such Co-Agent shall make available to the Administrative Agent, for the account of the Letter of Credit Issuer, the applicable Percentage of the Unreimbursed Amount by 4:30 p.m. (New York time) on such Business Day (or a subsequent day specified by the Administrative Agent) in immediately available funds.  If the Letter of Credit Issuer or the Administrative Agent so notifies a Co-Agent after 11:00 a.m. (New York time) on any Business Day, such Co-Agent shall make available to the Administrative Agent, for the account of the Letter of Credit Issuer the applicable Percentage of the Unreimbursed Amount by 12:00 noon (New York time) on the next Business Day (or a subsequent day specified by the Administrative Agent) in immediately available funds.  If any amounts have been deposited into a segregated interest-bearing cash collateral account for the purpose of Cash Collateralizing the Letter of Credit Liability, the Letter of Credit Issuer shall use such funds to satisfy any drawings under the Letters of Credit prior to notifying the Co-Agents of the need for an Advance with respect thereto.  Lenders may conclusively rely on the Letter of Credit Issuer as to the amount due the Administrative Agent by reason of any draft of a Letter of Credit or due the Letter of Credit Issuer under any Letter of Credit Application.  Each Conduit may (but is not committed to) fund an amount required to be paid by its Conduit Group under this Section 1.7.  If any Conduit does not fund such amount, each Committed Lender in such Conduit’s Conduit Group shall fund such amount.  Each Unaffiliated Committed Lender shall fund an amount required to be paid by it under this Section 1.7.  For the avoidance of doubt, each Committed Lender may assign all or part of any L/C Participation Funding to a Conduit in its Conduit Group at any time. 
(iii)    With respect to any Unreimbursed Amount that is not fully refinanced by an Advance because the conditions set forth in Section 6.2 cannot be satisfied or for any other reason, the Borrower shall be deemed to have incurred from the Letter of Credit Issuer an L/C Funding in the amount of the Unreimbursed Amount that is not so refinanced, which L/C Funding shall be due and payable on demand (together with interest) and shall bear interest at the Alternate Base Rate plus 2.0%.  In such event, each Conduit Group’s and Unaffiliated Committed Lender’s payment to the Administrative Agent for the account of the Letter of Credit Issuer pursuant to this Section 1.7(c) shall be deemed payment in respect of its participation in such L/C Funding and shall constitute an L/C Participation Funding from the applicable Unaffiliated Committed Lenders or the applicable Lenders in such Conduit Group, as applicable, in satisfaction of its participation obligation under this Section 1.7.
(iv)    Until each applicable Lender funds its Advance or L/C Participation Funding pursuant to this Section 1.7(c) to reimburse the Letter of Credit Issuer for any amount drawn under any Letter of Credit, interest in respect of such Lender’s Percentage of such amount shall be solely for the account of the Letter of Credit Issuer.
(v)    Each Committed Lender’s obligation to make L/C Participation Fundings to reimburse the Letter of Credit Issuer for amounts drawn under Letters of Credit, as contemplated by this Section 1.7(c), shall be absolute and unconditional and shall not be affected by any circumstance, including:  (A) any set-off, counterclaim, recoupment, defense or other right which such Lender may have against the Letter of Credit Issuer, the Borrower, or any other Person for any reason whatsoever; (B) the occurrence or continuance of an Unmatured Event of Default or an Event of Default; or (C) any other occurrence, event or condition, whether or not similar to any of the foregoing. No such making of an L/C Participation Funding shall relieve or otherwise impair the obligation of the Borrower to reimburse the Letter of Credit Issuer for the amount of any payment made by the Letter of Credit Issuer under any Letter of Credit, together with interest as provided herein.
(vi)    If any Committed Lender fails to make available to the Administrative Agent for the account of the Letter of Credit Issuer any amount required to be paid by such Committed Lender pursuant to the foregoing provisions of this Section 1.7(c) by the time specified in Section 1.7(c)(ii), the Letter of Credit Issuer shall be entitled to recover from such Committed Lender (acting through the Administrative Agent), on demand, such amount with interest thereon for the period from the date such payment is required to the date on which such payment is immediately available to the Letter of Credit Issuer at a rate per annum equal to the Federal Funds Rate from time to time in effect.  A certificate of the Letter of Credit Issuer submitted to any Committed Lender (through the Administrative Agent) with respect to any amounts owing under this clause (vi) shall be conclusive absent manifest error.
(d)    Repayment of Participations.
(i)    At any time after the Letter of Credit Issuer has made a payment under any Letter of Credit and has received from any Lender such Lender’s L/C Participation Funding in respect of such payment in accordance with Section 1.7(c), if the Administrative Agent receives for the account of the Letter of Credit Issuer any payment in respect of the related Unreimbursed Amount or interest thereon (whether directly from the Borrower or otherwise, including proceeds of cash collateral applied thereto by the Administrative Agent), the Administrative Agent will distribute to such Lender its Percentage thereof (appropriately adjusted, in the case of interest payments, to reflect the period of time during which such Lender’s L/C Participation Funding was outstanding) in the same funds as those received by the Administrative Agent.
(ii)    If any payment received by the Administrative Agent for the account of the Letter of Credit Issuer pursuant to Section 1.7(c) or otherwise in respect of any Letter of Credit Liability is rescinded, set aside or otherwise required to be returned or paid over to another Person for any reason (including pursuant to any settlement entered into by the Letter of Credit Issuer in its discretion), each Committed Lender shall, and each Conduit may (and if a Conduit does not, the Committed Lenders in its Conduit Group shall), pay to the Administrative Agent for the account of the Letter of Credit Issuer the Pro Rata Share (in the case of a Committed Lender) of the related Percentage thereof on demand of the Administrative Agent, plus interest thereon from the date of such demand to the date such amount is returned by such Lender, at a rate per annum equal to the Federal Funds Rate from time to time in effect.  The provisions of this Section 1.7(d)(ii) shall survive the termination of this Agreement.
(e)    Obligations Absolute. The obligation of the Borrower to reimburse the Letter of Credit Issuer for each drawing under each Letter of Credit and to repay each L/C Funding shall be absolute, unconditional and irrevocable, and shall be paid strictly in accordance with the terms of this Agreement under all circumstances, including the following:
(i)    any lack of validity or enforceability of such Letter of Credit, this Agreement, or any other Transaction Document;
(ii)    the existence of any claim, counterclaim, set-off, defense or other right that the Borrower may have at any time against any beneficiary or any transferee of such Letter of Credit (or any Person for whom any such beneficiary or any such transferee may be acting), the Letter of Credit Issuer or any other Person, whether in connection with this Agreement, the transactions contemplated hereby or by such Letter of Credit or any agreement or instrument relating thereto, or any unrelated transaction;
(iii)    any draft, demand, certificate or other document presented under such Letter of Credit proving to be forged, fraudulent, invalid or insufficient in any respect or any statement therein being untrue or inaccurate in any respect; or any loss or delay in the transmission or otherwise of any document required in order to make a drawing under such Letter of Credit;
(iv)    any payment by the Letter of Credit Issuer under such Letter of Credit against presentation of a draft or certificate that does not comply with the terms of such Letter of Credit; or any payment made by the Letter of Credit Issuer under such Letter of Credit to any Person purporting to be a trustee in bankruptcy, debtor-in-possession, assignee for the benefit of creditors, liquidator, receiver or other representative of or successor to any beneficiary or any transferee of such Letter of Credit, including any arising in connection with any proceeding under any applicable bankruptcy, insolvency, reorganization, debt arrangement, dissolution or other similar law; or
(v)    any other circumstance or happening whatsoever, whether or not similar to any of the foregoing, including any other circumstance that might otherwise constitute a defense available to, or a discharge of, the Borrower.
The Borrower shall promptly examine a copy of each Letter of Credit and each amendment thereto that is delivered to it and, in the event of any claim of noncompliance with the Borrower’s instructions or other irregularity, the Borrower will immediately notify the Letter of Credit Issuer.  The Borrower shall be conclusively deemed to have waived any such claim against the Letter of Credit Issuer and its correspondents unless such notice is given as aforesaid.
(f)    Role of Letter of Credit Issuer.  Each Lender and the Borrower agree that, in paying any drawing under a Letter of Credit, the Letter of Credit Issuer shall not have any responsibility to obtain any document (other than any sight draft, certificates and documents expressly required by the Letter of Credit) or to ascertain or inquire as to the validity or accuracy of any such document or the authority of the Person executing or delivering any such document.  None of the Letter of Credit Issuer, any Agent, or any Affiliates, officers, directors, employees, agents and attorneys-in-fact of such Persons and their respective Affiliates, nor any of the respective correspondents, participants or assignees of the Letter of Credit Issuer shall be liable to any Lender or any other Person for: (i) any action taken or omitted in connection herewith at the request or with the approval of the Required Committed Lenders; (ii) any action taken or omitted in the absence of gross negligence or willful misconduct; or (iii) the due execution, effectiveness, validity or enforceability of any document or instrument related to any Letter of Credit or Letter of Credit Application.  The Borrower hereby assumes all risks of the acts or omissions of any beneficiary or transferee with respect to its use of any Letter of Credit; provided, however, that this assumption is not intended to, and shall not, preclude the Borrower’s pursuing such rights and remedies as it may have against the beneficiary or transferee at law or under any other agreement.  None of the Letter of Credit Issuer, any Agent, or any Affiliates, officers, directors, employees, agents and attorneys-in-fact of such Persons and their respective Affiliates, nor any of the respective correspondents, participants or assignees of the Letter of Credit Issuer, shall be liable or responsible for any of the matters described in clauses (i) through (v) of Section 1.7(e); provided, however, that anything in such clauses to the contrary notwithstanding, the Borrower may have a claim against the Letter of Credit Issuer, and the Letter of Credit Issuer may be liable to the Borrower, to the extent, but only to the extent, of any direct, as opposed to consequential or exemplary, damages suffered by the Borrower which the Borrower proves were caused by the Letter of Credit Issuer’s willful misconduct or gross negligence or the Letter of Credit Issuer’s willful failure to pay under any Letter of Credit after the presentation to it by the beneficiary of a sight draft and certificate(s) strictly complying with the terms and conditions of a Letter of Credit.  In furtherance and not in limitation of the foregoing, the Letter of Credit Issuer may accept documents that appear on their face to be in order, without responsibility for further investigation, regardless of any notice or information to the contrary, and the Letter of Credit Issuer shall not be responsible for the validity or sufficiency of any instrument transferring or assigning or purporting to transfer or assign a Letter of Credit or the rights or benefits thereunder or proceeds thereof, in whole or in part, which may prove to be invalid or ineffective for any reason.
(g)    Cash Collateral.  Upon the request of the Administrative Agent:  (A) if the Letter of Credit Issuer has honored any full or partial drawing request under any Letter of Credit and such drawing has resulted in an L/C Funding; or (B) if, as of the Letter of Credit Expiration Date, any Letter of Credit for any reason remains outstanding and partially or wholly undrawn, the Borrower shall immediately Cash Collateralize the then-outstanding amount of the Letter of Credit Liability (determined as of the date of such L/C Funding or the Letter of Credit Expiration Date, as the case may be).  In the event that, notwithstanding the foregoing, the Borrower fails to Cash Collateralize all or part of the then-outstanding amount of the Letter of Credit Liability as required pursuant to clause (B) of the immediately preceding sentence within one (1) Business Day of the Letter of Credit Expiration Date, each Conduit Group and Unaffiliated Committed Lender agrees to immediately pay to the Administrative Agent the amount needed to Cash Collateralize its Percentage of such amount, which amount shall be deemed to be an L/C Participation Funding for all purposes hereunder.  In addition to the foregoing, the Borrower shall immediately Cash Collateralize the amount (if any) of any Defaulting Lender’s Percentage of Letter of Credit Liability that is not reallocated to another Committed Lender pursuant to Section 12.1(c)(ii). 
(i)    “Cash Collateralize” means to pledge and deposit with or deliver to the Administrative Agent, for the benefit of the Letter of Credit Issuer, as collateral for the Letter of Credit Liability, cash or deposit account balances in Dollars pursuant to documentation in form and substance satisfactory to the Administrative Agent and the Letter of Credit Issuer in an amount equal to the Letter of Credit Liability plus accrued and unpaid interest and fees and expected future interest and fees with respect thereto. Derivatives of such term have corresponding meanings.  The Borrower hereby grants to the Administrative Agent, for the benefit of the Letter of Credit Issuer and the Lenders, a security interest in all such cash, deposit accounts and all balances therein and all proceeds of the foregoing.  Cash collateral shall be maintained in blocked, interest bearing deposit accounts at Rabobank or another institution acceptable to the Administrative Agent (provided that upon the occurrence of an Unmatured Event of Default or an Event of Default, any such interest accrued to the date thereof shall be applied as additional compensation to the Letter of Credit Issuer).  Unless otherwise required by law, upon the full and final payment of the Letter of Credit Liability, or the termination of all outstanding Letter of Credit Liability due to the expiration of all outstanding Letters of Credit prior to draws thereon, the Administrative Agent shall return to the Borrower any amounts remaining in any cash collateral account maintained by it with respect to the Letter of Credit Liability; provided, however, that, so long as no Unmatured Event of Default or Event of Default exists, to the extent individual Letters of Credit expire, the Administrative Agent will return to the Borrower any amount remaining in the cash collateral account in excess of the amount required to Cash Collateralize the Letter of Credit Liability in full as described above.
(h)    Applicability of ISP.  Unless otherwise expressly agreed by the Letter of Credit Issuer and the Borrower, the rules of the ISP shall apply to each Letter of Credit.
Section 1.8.    Letter of Credit Fees.  The Borrower shall pay: (a) to the Administrative Agent for the account of the Committed Lenders, in consideration for the issuance of Letters of Credit hereunder, a fee (as defined in the L/C Fee Letter) per annum on the aggregate available undrawn amount of the outstanding Letters of Credit (such fee to be allocated among the Lenders in accordance with their respective Percentages); and (b) to the Letter of Credit Issuer for its own account the fees specified in the L/C Fee Letter (collectively, the “Letter of Credit Fees”).  The Letter of Credit Fees shall be payable monthly in arrears on each Settlement Date for the Calculation Period preceding such Settlement Date, commencing on the first such Settlement Date to occur after the issuance of any Letter of Credit, and continuing for so long as any Letter of Credit remains outstanding.
ARTICLE II.     
PAYMENTS AND COLLECTIONS
Section 2.1.    Payments.  Borrower hereby promises to pay:
(a)    subject to Section 9.2, the Aggregate Principal on and after the Facility Termination Date as and when Collections are received;
(b)    the fees set forth in the Fee Letter and the L/C Fee Letter on the dates specified therein or herein;
(c)    all accrued and unpaid Interest and CP Costs on the Loans on each Settlement Date applicable thereto; 
(d)    all Broken Funding Costs and Indemnified Amounts upon demand; and
(e)    any amounts required to paid by the Borrower pursuant to Section 1.7(g) to Cash Collateralize Letter of Credit Liability on the dates specified herein.
Section 2.2.    Collections Prior to the Commitment Termination Date.  On each Settlement Date prior to the Commitment Termination Date, the Borrower shall deposit to each applicable Payment Account, for distribution to the applicable Lenders, a portion of the Collections received by it during the preceding Settlement Period (after deduction of the Servicing Fee) equal to the sum of the following amounts for application to the Obligations in the order specified:
first, ratably to the payment of (i) all accrued and unpaid CP Costs, Interest and Broken Funding Costs (if any) that are then due and owing and (ii) all accrued and unpaid fees under the Fee Letter and/or the L/C Fee Letter,
second, if required under Section 1.3 or 1.4, to the ratable reduction of the outstanding principal of each of the Loans, and
third, for the ratable payment of all other unpaid Obligations of Borrower, if any, that are then due and owing.
The balance, if any, shall be paid to Borrower or otherwise in accordance with Borrower’s instructions.  Collections applied to the payment of Obligations of Borrower shall be distributed in accordance with the aforementioned provisions, and, giving effect to each of the priorities set forth above in this Section 2.2, shall be shared ratably (within each priority) among the applicable payees in accordance with the amount of such Obligations owing to each of them in respect of each such priority.
Section 2.3.    Collections Following the Commitment Termination Date.  On the Commitment Termination Date and on each day thereafter, the Borrower (and the Servicer, to the extent the Servicer comes into possession of Collections on any such day) shall set aside and hold in trust, for the Secured Parties, all Collections received on such day.  On and after the Commitment Termination Date, the Borrower shall, on each Settlement Date and on each other Business Day specified by the Administrative Agent (as directed by any Co-Agent) (after payment or deduction of any accrued and unpaid Servicing Fee as of such date): (i) remit to the applicable Payment Account the applicable Percentage of the amounts set aside and held in trust pursuant to the preceding sentence, and (ii) apply such amounts to reduce the Obligations of Borrower as follows:
first, to the reimbursement of each Unaffiliated Committed Lender’s or the applicable Conduit Group’s Percentage of the costs of collection and enforcement of this Agreement incurred by the Administrative Agent,
second, ratably to the payment of (i) all accrued and unpaid CP Costs, Interest and Broken Funding Costs (if any), and (ii) all accrued and unpaid fees under the Fee Letter and/or the L/C Fee Letter,
third, to the ratable reduction of each Unaffiliated Committed Lender’s or each Conduit Group’s Percentage of the Aggregate Principal,
fourth, for the ratable payment of all other unpaid Obligations of Borrower, and
fifth, after the Final Payout Date, to Borrower.
Collections applied to the payment of Obligations of Borrower shall be distributed in accordance with the aforementioned provisions, and, giving effect to each of the priorities set forth above in this Section 2.3, shall be shared ratably (within each priority) among the Co-Agents and the Lenders in accordance with the amount of such Obligations owing to each of them in respect of each such priority.
Section 2.4.    Payment Rescission.  No payment of any of the Obligations shall be considered paid or applied hereunder to the extent that, at any time, all or any portion of such payment or application is rescinded by application of law or judicial authority, or must otherwise be returned or refunded for any reason.  Borrower shall remain obligated for the amount of any payment or application so rescinded, returned or refunded, and shall promptly pay to the applicable Payment Account (for application to the Person or Persons who suffered such rescission, return or refund) the full amount thereof, plus Interest on such amount at the Default Rate from the date of any such rescission, return or refunding.
ARTICLE III.     
CONDUIT FUNDING
Section 3.1.    CP Costs.  Borrower shall pay CP Costs with respect to the principal balance of each Conduit’s Loans from time to time outstanding.
Section 3.2.    Calculation of CP Costs.  Not later than the 3rd Business Day immediately preceding each Monthly Reporting Date, each Conduit shall calculate the aggregate amount of CP Costs applicable to its CP Rate Loans for the Calculation Period then most recently ended and shall notify the Administrative Agent, who shall promptly notify the Borrower of such aggregate amount, not later than the 2nd Business Day immediately preceding such Monthly Reporting Date.
Section 3.3.    CP Costs Payments.  (a) With respect to CP Rate Loans made by a Pooled Fund Conduit, on each Settlement Date, Borrower shall pay to each of the Co-Agents (for the benefit of its respective Conduit) an aggregate amount equal to all accrued and unpaid CP Costs in respect of the principal associated with all such CP Rate Loans of such Conduit for the calendar month then most recently ended and (b) with respect to CP Rate Loans made by a Conduit that is not a Pooled Fund Conduit, on each Settlement Date, the Borrower shall pay to each of the Co-Agents (for the benefit of its respective Conduit) an aggregate amount equal to all accrued and unpaid CP Costs in respect of the principal associated with all such CP Rate Loans of such Conduit, in each case in accordance with Article II.
Section 3.4.    Default Rate.  From and after the occurrence of an Event of Default, all Loans of the Conduits shall accrue Interest at the Default Rate and shall cease to be CP Rate Loans.
ARTICLE IV.     
COMMITTED LENDER FUNDING
Section 4.1.    Committed Lender Funding.  Prior to the occurrence of an Event of Default, the outstanding principal balance of each Loan made by an Unaffiliated Committed Lender and each Liquidity Funding shall accrue interest for each day during its Interest Period at either the LIBO Rate, the Adjusted Federal Funds Rate or the Alternate Base Rate in accordance with the terms and conditions hereof.  Until Borrower gives notice to the applicable Co-Agent of another Interest Rate in accordance with Section 4.4, the initial Interest Rate for any Loan transferred to the Committed Lenders in its Conduit Group by the applicable Conduit pursuant to its Liquidity Agreement shall be the Adjusted Federal Funds Rate (unless the Default Rate is then applicable).  If the applicable Committed Lenders in a Conduit Group acquire by assignment from the applicable Conduit any Loan pursuant to a Liquidity Agreement, each Loan so assigned shall each be deemed to have an Interest Period commencing on the date of any such assignment.
Section 4.2.    Interest Payments.  On the Settlement Date for each Loan of an Unaffiliated Committed Lender and each Liquidity Funding, Borrower shall pay to the applicable Co-Agent (for the benefit of the Committed Lenders in its Conduit Group) an aggregate amount equal to the accrued and unpaid Interest on each such Loan or Liquidity Funding in accordance with Article II.
Section 4.3.    Selection and Continuation of Interest Periods.
(f)    Borrower shall from time to time request Interest Periods for the Loans of each Unaffiliated Committed Lender and the Liquidity Fundings; provided that if at any time any Loan of such Unaffiliated Committed Lender or Liquidity Funding is outstanding, Borrower shall always request Interest Periods such that at least one Interest Period shall end on the date specified in clause (A) of the definition of Settlement Date; and provided, further, that the decision as to whether a Conduit will utilize Liquidity Fundings shall reside with the applicable Co-Agent and not with Borrower.
(g)    Borrower or the applicable Committed Lender (or, if applicable, such Committed Lender’s Co-Agent), upon notice to and consent by the other received at least three (3) Business Days prior to the end of an Interest Period (the “Terminating Tranche”) for any Loan of any Unaffiliated Committed Lender or Liquidity Funding, may, effective on the last day of the Terminating Tranche:  (i) divide any such Loan or Liquidity Funding into multiple Loans or Liquidity Fundings, as the case may be, (ii) combine any such Loan of such Unaffiliated Committed Lender or Liquidity Funding with one or more other Loans of such Unaffiliated Committed Lender or Liquidity Fundings, as applicable, that have a Terminating Tranche ending on the same day as such Terminating Tranche or (iii) combine any such Loan of such Unaffiliated Committed Lender or Liquidity Funding with a new Loan or Liquidity Funding, as applicable, to be made by the Committed Lenders on the day such Terminating Tranche ends.
Section 4.4.    Committed Lender Interest Rates.  Borrower may select the LIBO Rate, the Adjusted Federal Funds Rate or the Alternate Base Rate and agreed to by the related Co-Agent for each Loan of each Unaffiliated Committed Lender and each Liquidity Funding.  Borrower shall by 12:00 noon (New York City time):  (i) at least three (3) Business Days prior to the expiration of any Terminating Tranche with respect to which the LIBO Rate is being requested as the Interest Rate and (ii) at least one (1) Business Day prior to the expiration of any Terminating Tranche with respect to which the Alternate Base Rate or the Adjusted Federal Funds Rate is being requested as a new Interest Rate, give the Co-Agent irrevocable notice of the applicable Interest Rate for the Loan or Liquidity Funding associated with such Terminating Tranche.  Until Borrower gives notice of another Interest Rate, the initial Interest Rate for any Loan transferred by a Conduit to the Committed Lenders in its Conduit Group pursuant to its Liquidity Agreement shall be the Adjusted Federal Funds Rate (unless the Default Rate is then applicable).
Section 4.5.    Suspension of the Adjusted Federal Funds Rate and LIBO Rate.
(a)    If any Committed Lender notifies the Borrower that it has determined that funding at a  LIBO Rate or the Adjusted Federal Funds Rate would violate any applicable law, rule, regulation, or directive of any Governmental Authority, whether or not having the force of law, or that (i) deposits of a type and maturity appropriate to match-fund its Loan or Liquidity Funding at a LIBO Rate are not available or (ii) a LIBO Rate or the Adjusted Federal Funds Rate does not accurately reflect the cost of acquiring or maintaining a Loan or Liquidity Funding at such rate, then such Committed Lender may suspend the availability of such LIBO Rate or the Adjusted Federal Funds Rate, as the case may be, for such Committed Lender and require Borrower to select (by notice to the applicable Co-Agent) a different Interest Rate for such Loan or Liquidity Funding; provided, however, that in no event may Borrower select the CP Rate for any Loan of a Committed Lender or any Liquidity Funding.
(b)    If less than all of the Committed Lenders in a Conduit Group give a notice to Borrower pursuant to Section 4.5(a), each Committed Lender in such Conduit Group which gave such a notice shall be obliged, at the request of Borrower, the applicable Conduit or the applicable Co-Agent, to assign all of its rights and obligations hereunder to (i) another Committed Lender in such Conduit Group, or (ii) another funding entity nominated by Borrower or, if applicable, such Committed Lender’s Co-Agent that is an Eligible Assignee willing to participate in this Agreement through the Scheduled Termination Date in the place of such notifying Committed Lender; provided that (i) the notifying Committed Lender receives payment in full, pursuant to an Assignment Agreement, of all Obligations owing to it (whether due or accrued), and (ii) the replacement Committed Lender otherwise satisfies the requirements of Section 12.1(b).
Section 4.6.    Default Rate.  From and after the occurrence of an Event of Default, all Loans of any Unaffiliated Committed Lender and all Liquidity Fundings shall accrue Interest at the Default Rate.
ARTICLE V.     
REPRESENTATIONS AND WARRANTIES
Section 5.1.    Representations and Warranties of the Loan Parties.  Each Loan Party hereby represents and warrants to the Agents and the Lenders, as to itself, as of the Closing Date, as of the date hereof, as of the date of each Advance and each L/C Credit Extension and as of each Settlement Date that:
(a)    Existence and Power.  Such Loan Party’s jurisdiction of organization is correctly set forth in the preamble to this Agreement.  Such Loan Party is duly organized under the laws of that jurisdiction and no other state or jurisdiction, and such jurisdiction must maintain a public record showing the organization to have been organized.  Such Loan Party is validly existing and in good standing under the laws of its state of organization.  Such Loan Party is duly qualified to do business and is in good standing as a foreign entity, and has and holds all organizational power and all governmental licenses, authorizations, consents and approvals required to carry on its business in each jurisdiction in which its business is conducted except, in the case of Smithfield, where the failure to so qualify or so hold would not reasonably be expected to have a Material Adverse Effect.
(b)    Power and Authority; Due Authorization, Execution and Delivery.  The execution and delivery by such Loan Party of this Agreement and each other Transaction Document to which it is a party, and the performance of its obligations hereunder and thereunder and, in the case of Borrower, Borrower’s use of the proceeds of Advances made hereunder, are within its corporate powers and authority and have been duly authorized by all necessary corporate action on its part.  This Agreement and each other Transaction Document to which such Loan Party is a party have been duly executed and delivered by such Loan Party.
(c)    No Conflict.  The execution and delivery by such Loan Party of this Agreement and each other Transaction Document to which it is a party, and the performance of its obligations hereunder and thereunder do not contravene or violate (i) its certificate or articles of incorporation or by-laws, (ii) any law, rule or regulation applicable to it, (iii) any restrictions under any agreement, contract or instrument to which it is a party or by which it or any of its property is bound, or (iv) any order, writ, judgment, award, injunction or decree binding on or affecting it or its property, and do not result in the creation or imposition of any Adverse Claim on assets of such Loan Party or its Subsidiaries (except as created hereunder) except, in any case, where such contravention or violation would not reasonably be expected to have a Material Adverse Effect; and no transaction contemplated hereby requires compliance with any bulk sales act or similar law.
(d)    Governmental Authorization.  Other than the filing of the financing statements required hereunder, no authorization or approval or other action by, and no notice to or filing with, any Person or any Governmental Authority is required for the due execution and delivery by such Loan Party of this Agreement and each other Transaction Document to which it is a party and the performance of its obligations hereunder and thereunder.
(e)    Actions, Suits.  Except as disclosed in the filings made by the Servicer with the Securities and Exchange Commission, there are no actions, suits or proceedings pending, or to the best of such Loan Party’s knowledge, threatened, against or affecting such Loan Party, or any of its properties, in or before any court, arbitrator or other body, that would reasonably be expected to have a Material Adverse Effect.  Such Loan Party is not in default with respect to any order of any court, arbitrator or Governmental Authority.
(f)    Binding Effect.  This Agreement and each other Transaction Document to which such Loan Party is a party constitute the legal, valid and binding obligations of such Loan Party enforceable against such Loan Party in accordance with their respective terms, except as such enforcement may be limited by applicable bankruptcy, insolvency, reorganization or other similar laws relating to or limiting creditors’ rights generally and by general principles of equity (regardless of whether enforcement is sought in a proceeding in equity or at law).
(g)    Accuracy of Information.  All information heretofore furnished by such Loan Party or any of its Affiliates to the Agents or the Lenders for purposes of or in connection with this Agreement, any of the other Transaction Documents or any transaction contemplated hereby or thereby is, and all such information hereafter furnished by such Loan Party or any of its Affiliates to the Agents or the Lenders will be, true and accurate in every material respect on the date such information is stated or certified and does not and will not contain any material misstatement of fact or omit to state a material fact or any fact necessary to make the statements contained therein, in light of the circumstances in which they were made, not materially misleading; provided, that with respect to projected financial information, such Loan Party represents only that such information was prepared in good faith based upon assumptions believed to be reasonable at the time delivered.
(h)    Use of Proceeds.  Borrower represents and warrants that no proceeds of any Advance or Letter of Credit hereunder will be used (i) for a purpose that violates, or would be inconsistent with, (A) Section 7.2(e) of this Agreement or (B) Regulation T, U or X promulgated by the Board of Governors of the Federal Reserve System from time to time or (ii) to acquire any security in any transaction which is subject to Section 12, 13 or 14 of the Securities Exchange Act of 1934, as amended.
(i)    Good Title.  Borrower represents and warrants that:  (i) immediately after the contribution of the Initial Contributed Assets by SFFC in accordance with the Receivables Sale Agreement, and immediately after the transfer by each Originator of the Initial Purchased Assets and each subsequent Receivable under the Receivables Sale Agreement, Borrower is the legal and beneficial owner of all of the right, title and interest in the Receivables and Related Security with respect thereto, free and clear of any Adverse Claim, except an Adverse Claim in favor of the Administrative Agent for the benefit of the Secured Parties or an Adverse Claim arising under the Intercreditor Agreement that is subordinate to the lien of the Administrative Agent created hereby, and (ii) there have been duly filed all financing statements or other similar instruments or documents necessary under the UCC or the PPSA (or any comparable law) of all appropriate jurisdictions to perfect Borrower’s ownership interest in each Receivable, its Collections and the Related Security.
(j)    Perfection.  Borrower represents and warrants that:  (i) this Agreement is effective to create a valid security interest in favor of the Administrative Agent for the benefit of the Secured Parties in the Collateral to secure payment of the Obligations, free and clear of any Adverse Claim, except an Adverse Claim in favor of the Administrative Agent for the benefit of the Secured Parties or an Adverse Claim arising under the Intercreditor Agreement that is subordinate to the lien of the Administrative Agent created hereby, and (ii) there have been or (within 2 Business Days after the date of any Advance) will be duly filed all financing statements or other similar instruments or documents necessary under the UCC and the PPSA (or any comparable law) of all appropriate jurisdictions to perfect the Administrative Agent’s (on behalf of the Secured Parties) first priority security interest in the Collateral.  Each of the Loan Parties represents and warrants that such Loan Party’s jurisdiction of organization is a jurisdiction whose law generally requires information concerning the existence of a nonpossessory security interest to be made generally available in a filing, record or registration system as a condition or result of such a security interest’s obtaining priority over the rights of a lien creditor which respect to collateral.
(k)    Places of Business and Locations of Records.  The principal places of business and chief executive office of such Loan Party and the offices where it keeps all of its Records are located at the address(es) listed on Exhibit III or such other locations of which the Administrative Agent has been notified in accordance with Section 7.2(a) in jurisdictions where all action required by Section 14.4(a) has been taken and completed.  Borrower’s Federal Employer Identification Number is correctly set forth on Exhibit III.
(l)    Collections.  The conditions and requirements set forth in Section 7.1(j) and Section 8.2 have at all times been satisfied and duly performed.  The names, addresses and jurisdictions of organization of all Collection Banks, together with the account numbers of the Collection Accounts at each Collection Bank and the post office box number of each Lock-Box, are listed on Exhibit III to the Receivables Sale Agreement.  While Borrower has granted Servicer access to the Lock-Boxes and Collection Accounts prior to delivery of a Collection Notice, Borrower has not granted any Person, other than the Administrative Agent as contemplated by this Agreement, and the ABL Representative as contemplated by the Intercreditor Agreement, dominion and control of any Lock-Box or Collection Account, or the right to take dominion and control of any such Lock-Box or Collection Account at a future time or upon the occurrence of a future event.
(m)    Material Adverse Effect.  (i) The Servicer represents and warrants that since April 29, 2013, no event has occurred that would have a material adverse effect on the financial condition or operations of the Servicer or the ability of the Servicer to perform its obligations under this Agreement, and (ii) Borrower represents and warrants that since the date of its formation, no event has occurred that would have a material adverse effect on (A) the financial condition or operations of Borrower, (B) the ability of Borrower to perform its obligations under the Transaction Documents, or (C) the collectability of the Receivables generally or any material portion of the Receivables.
(n)    Names.  Borrower represents and warrants that:  (i) the name in which Borrower has executed this Agreement is identical to the name of Borrower as indicated on the public record of its state of organization which shows Borrower to have been organized, and (ii) in the past five (5) years, Borrower has not used any corporate names, trade names or assumed names other than the name in which it has executed this Agreement.
(o)    Ownership of Borrower.  After giving effect to the transactions on the Closing Date, Smithfield owns, directly or indirectly, 100% of the issued and outstanding Equity Interest of Borrower, free and clear of any Adverse Claim.  Such Equity Interests are validly issued, fully paid and nonassessable, and there are no options, warrants or other rights to acquire securities of Borrower. 
(p)    Not an Investment Company.  Such Loan Party is not an “investment company” within the meaning of the Investment Company Act of 1940, as amended, or any successor statute, without reliance on the exceptions contained in Sections 3(c)(1) and/or 3(c)(7) thereunder. 
(q)    Compliance with Law.  Such Loan Party has complied in all respects with all applicable laws, rules, regulations, orders, writs, judgments, injunctions, decrees or awards to which it may be subject, except where the failure to so comply would not reasonably be expected to have a Material Adverse Effect.  Borrower represents and warrants that each Receivable, together with the Contract related thereto, does not contravene any laws, rules or regulations applicable thereto (including, without limitation, laws, rules and regulations relating to truth in lending, fair credit billing, fair credit reporting, equal credit opportunity, fair debt collection practices and privacy), and no part of such Contract is in violation of any such law, rule or regulation, except where such contravention or violation would not reasonably be expected to have a Material Adverse Effect.
(r)    Compliance with Credit and Collection Policy.  Such Loan Party has complied in all material respects with the Credit and Collection Policy with regard to each Receivable and the related Contract, and has not made any material change to such Credit and Collection Policy (other than any change expressly permitted pursuant to the Receivables Sale Agreement).
(s)    Payments to Applicable Originator.  Borrower represents and warrants that:  (i) with respect to each Receivable purchased by Borrower under the Receivables Sale Agreement, Borrower has given reasonably equivalent value (constituting the approximate fair market value) to the applicable Originator in consideration therefor and such transfer was not made for or on account of an antecedent debt, and (ii) no transfer by any Originator of any Receivable under the Receivables Sale Agreement is or may be voidable under any section of the Bankruptcy Reform Act of 1978 (11 U.S.C. §§ 101 et seq.), as amended, or any of the laws of Canada or of a province thereof.
(t)    Enforceability of Contracts.  Borrower represents and warrants that each Contract with respect to each Receivable is effective to create, and has created (or with respect to In-Transit Receivables will create), a legal, valid and binding obligation of the related Obligor to pay the Outstanding Balance of the Receivable created thereunder and any accrued interest thereon, enforceable against the Obligor in accordance with its terms, except as such enforcement may be limited by applicable bankruptcy, insolvency, reorganization or other similar laws relating to or limiting creditors’ rights generally and by general principles of equity (regardless of whether enforcement is sought in a proceeding in equity or at law).
(u)    Eligible Receivables.  Each Receivable included in the Net Pool Balance as an Eligible Receivable on the date of any Monthly Report was an Eligible Receivable on such date.
(v)    Borrowing Limit.  Immediately after giving effect to each Advance, each L/C Credit Extension and each settlement on any Settlement Date hereunder, the Aggregate Principal is less than or equal to the Borrowing Limit.
(w)    Accounting.  The manner in which such Loan Party accounts for the transactions contemplated by this Agreement and the Receivables Sale Agreement does not jeopardize the true sale analysis.
(x)    OFAC.  None of the Loan Parties nor any Subsidiary or Affiliate of any Loan Party (a) is a Sanctioned Person, (b) does business in a Sanctioned Country or with a Sanctioned Person in violation of the economic sanctions of the United States administered by OFAC or (c) does business in such country or with any such agency, organization or person, in violation of the economic sanctions of the United States administered by OFAC.
(y)    Solvency.  Immediately after the consummation of the transactions to occur on the applicable Commencement Date, (a) the fair value of the assets of each Loan Party, at a fair valuation, will exceed its debts and liabilities, subordinated, contingent or otherwise; (b) the present fair saleable value of the property of each Loan Party will be greater than the amount that will be required to pay the probable liability of its debts and other liabilities, subordinated, contingent or otherwise, as such debts and other liabilities become absolute and matured; (c) each Loan Party will be able to pay its debts and liabilities, subordinated, contingent or otherwise, as such debts and liabilities become absolute and matured and (d) no Loan Party will have unreasonably small capital with which to conduct the business in which it is engaged as such business is now conducted and is proposed to be conducted after the applicable Commencement Date.  No Loan Party intends to, and no Loan Party believes that it or any of its Restricted Subsidiaries (other than Non-Material Subsidiaries) will, incur debts beyond its ability to pay such debts as they mature, taking into account the timing of and amounts of cash to be received by it or any such Restricted Subsidiary (whether from anticipated refinancings, asset sales, capital contributions or otherwise) and the timing of the amounts of cash to be payable on or in respect of its Debt or the Debt of any such Restricted Subsidiary.
(z)    Taxes.  Each Loan Party and its Restricted Subsidiaries have timely filed or caused to be filed all Tax returns and reports required to have been filed and has paid all Taxes required to be paid by it except (i) Taxes that are being contested in good faith by appropriate proceedings and for which such Loan Party or such Restricted Subsidiary has set aside on its books adequate reserves or (ii) to the extent that the failure to do so could not reasonably be expected to result in a Material Adverse Effect. The Borrower is and has always been treated as an entity that is disregarded as separate entity from its owner for U.S. federal income tax purposes and has not elected under Treasury regulations Section 301.7701-3(c) to be classified as an association taxable as a corporation for U.S. federal income tax purposes.  
(aa)    ERISA. Except as could not reasonably be expected, individually or in the aggregate, to result in a Material Adverse Effect, (a) each Loan Party and each of their respective ERISA Affiliates is in compliance with the applicable provisions of ERISA and of the Tax Code relating to Plans and the regulations and published interpretations thereunder, and (b) no ERISA Event has occurred or is reasonably expected to occur.  The minimum funding standards of ERISA and the Tax Code with respect to each Plan have been satisfied, except where the failure to do so could not reasonably be expected to result in a Material Adverse Effect.
Section 5.2.    Certain Committed Lender Representations and Warranties.  Each Committed Lender hereby represents and warrants to the Administrative Agent, the applicable Co-Agent and the applicable Conduit (if any) that:
(h)    Existence and Power.  Such Committed Lender is a banking association or a limited liability company, as the case may be, duly organized, validly existing and in good standing under the laws of its jurisdiction of organization, and has all organizational power to perform its obligations hereunder and under its Liquidity Agreement, if applicable.
(i)    No Conflict.  The execution and delivery by such Committed Lender of this Agreement and its Liquidity Agreement and the performance of its obligations hereunder and thereunder are within its corporate powers, have been duly authorized by all necessary corporate action, do not contravene or violate (i) its certificate or articles of incorporation or association or by-laws or other organizational documents, (ii) any law, rule or regulation applicable to it, (iii) any restrictions under any agreement, contract or instrument to which it is a party or any of its property is bound, or (iv) any order, writ, judgment, award, injunction or decree binding on or affecting it or its property, and do not result in the creation or imposition of any Adverse Claim on its assets.  This Agreement and, if applicable, its Liquidity Agreement have been duly authorized, executed and delivered by such Committed Lender.
(j)    Governmental Authorization.  No authorization or approval or other action by, and no notice to or filing with, any Governmental Authority is required for the due execution and delivery by such Committed Lender of this Agreement or, if applicable, its Liquidity Agreement and the performance of its obligations hereunder or thereunder.
(k)    Binding Effect.  Each of this Agreement and, if applicable, its Liquidity Agreement constitutes the legal, valid and binding obligation of such Committed Lender enforceable against such Committed Lender in accordance with its terms, except as such enforcement may be limited by applicable bankruptcy, insolvency, reorganization or other similar laws relating to or limiting creditors’ rights generally and by general principles of equity (regardless of whether such enforcement is sought in a proceeding in equity or at law).
ARTICLE VI.     
CONDITIONS OF ADVANCES
Section 6.1.    Conditions Precedent to Initial Advance.  No Lender shall be obligated to make any Advance hereunder on the occasion of the initial Advance nor shall the Letter of Credit Issuer be obligated to issue any Letter of Credit, nor shall any Lender, the Administrative Agent or any other party hereto be obligated to take, fulfill or perform any other action hereunder, until all of the following conditions, after giving effect to the proposed Advance or Letter of Credit Extension, in each case, have been satisfied, in the sole discretion of the Administrative Agent:
(l)    Each Transaction Document shall have been duly executed by, and delivered to, the parties hereto and thereto and the Administrative Agent shall have received such other documents, instruments, agreements and legal opinions as the Administrative Agent shall request in connection with the transactions contemplated by this Agreement, including all those documents listed on Schedule A to the Receivables Sale Agreement and those documents listed on Schedule B to this Agreement, each in form and substance satisfactory to the Administrative Agent;
(m)    The Borrower shall have paid all fees required to be paid by it, including all fees required hereunder, and shall have reimbursed each Lender and each Agent for all fees, costs and expenses of closing the transaction contemplated hereunder and under the other Transaction Documents, including the attorney fees and any other legal and document preparation costs incurred by any Lender and/or any Agent pursuant to the terms of this Agreement, the L/C Fee Letter and the Fee Letter; 
(n)    the applicable Commencement Date shall have occurred; and
(o)    the Rating Agency Condition shall have been satisfied.
Section 6.2.    Conditions Precedent to All Advances and L/C Credit Extensions.  Each Advance (including the initial Advance), each L/C Credit Extension and each rollover or continuation of the foregoing shall be subject to the further conditions precedent that (a) the Servicer shall have delivered to the Agents on or prior to the date thereof, in form and substance satisfactory to the Agents, all Monthly Reports as and when due under Section 8.5; (b) the Facility Termination Date shall not have occurred; (c) the Borrower shall have delivered the Borrowing Notice in accordance with Section 1.2 or the Request for Letter of Credit in accordance with Section 1.7; (d) the Agents shall have received such other approvals, opinions or documents as it may reasonably request; and (e) on the date thereof, the following statements shall be true (and acceptance of the proceeds of such Advance shall be deemed a representation and warranty by Borrower that such statements are then true):
(i)    the representations and warranties set forth in Section 5.1 are true and correct on and as of the date of such Advance or L/C Credit Extension  (or such Settlement Date, as the case may be) as though made on and as of such date;
(ii)    no event has occurred and is continuing, or would result from such Advance or L/C Credit Extension (or the continuation thereof), that will constitute (A) an Event of Default or (B) an Unmatured Event of Default; and
(iii)    after giving effect to such Advance or L/C Credit Extension (or the continuation thereof), the Aggregate Principal will not exceed the Borrowing Limit.
ARTICLE VII.     
COVENANTS
Section 7.1.    Affirmative Covenants of the Loan Parties.  Until the Final Payout Date, each Loan Party hereby covenants, as to itself, as set forth below:
(i)    Financial Reporting.  Such Loan Party will maintain, for itself and each of its Subsidiaries, a system of accounting established and administered in accordance with GAAP, and furnish or cause to be furnished to the Agents:
(i)    Annual Reporting.  Within 90 days after the end of each fiscal year of Servicer or Borrower, as applicable, Servicer’s and Borrower’s audited consolidated balance sheet and audited consolidated condensed statements of income, stockholders' equity and cash flows as of the end of and for such year, and related notes thereto, setting forth in each case in comparative form the corresponding figures for (or, in the case of the balance sheet, as of the end of) the previous fiscal year, all reported on by Ernst & Young LLP or other independent public accountants of recognized national standing (without a “going concern” or like qualification or exception and without any qualification or exception as to the scope of such audit) to the effect that such consolidated financial statements present fairly in all material respects the financial condition and results of operations of Servicer and its consolidated Subsidiaries or Borrower, as applicable, on a consolidated basis in accordance with GAAP consistently applied.
(ii)    Quarterly Reporting.  Within 45 days after the end of each of the first three (3) fiscal quarters of each fiscal year of Servicer, Servicer’s unaudited consolidated balance sheet and unaudited consolidated condensed statements of income and cash flows as of the end of and for such fiscal quarter and the then elapsed portion of the fiscal year, setting forth in each case in comparative form the figures for the corresponding period or periods of (or, in the case of the balance sheet, as of the end of) the previous fiscal year, all certified by the Financial Officer of Servicer as presenting fairly in all material respects the financial condition and results of operations of Servicer and its consolidated Subsidiaries on a consolidated basis in accordance with GAAP consistently applied, subject to normal year-end audit adjustments and the absence of footnotes.
(iii)    Compliance Certificate.  Together with the financial statements required hereunder, a compliance certificate in substantially the form of Exhibit IV signed by such Loan Party’s Authorized Officer and dated the date of such annual financial statement or such quarterly financial statement, as the case may be.
(iv)    SEC Filings.   Promptly after the same become publicly available, copies of all reports on Form 10-K, Form 10-Q and Form 8-K and all proxy statements filed by any Loan Party with the SEC, or any Governmental Authority succeeding to any or all of the functions of the SEC, or with any national securities exchange, or distributed by such Loan Party to the holders of its Equity Interests generally, as the case may be.
(v)    Copies of Notices.  Promptly upon its receipt of any notice, request for consent, financial statements, certification, report or other communication under or in connection with any Transaction Document from any Person other than the Administrative Agent or any Lender, copies of the same.
(vi)    Change in Credit and Collection Policy.  At least thirty (30) days prior to the effectiveness of any material change in or material amendment to the Credit and Collection Policy, a copy of the Credit and Collection Policy then in effect and a notice (A) indicating such change or amendment, and (B) if such proposed change or amendment would pursuant to the Receivables Sale Agreement require the consent of the Agent, requesting the Agents’ consent thereto.
(vii)    Other Information.  Promptly, from time to time, such other information, documents, records or reports relating to the Receivables or the condition or operations, financial or otherwise, of such Loan Party as any Agent may from time to time reasonably request in order to protect the interests of the Administrative Agent and the Lenders under or as contemplated by this Agreement.
(j)    Notices.  Such Loan Party will notify the Agents in writing of any of the following promptly upon learning of the occurrence thereof, describing the same and, if applicable, the steps being taken with respect thereto:
(i)    Events of Default or Unmatured Events of Default.  The occurrence of each Event of Default and each Unmatured Event of Default, by a statement of an Authorized Officer of such Loan Party.
(ii)    Termination Date.  The occurrence of the Termination Date under the Receivables Sale Agreement.
(iii)    Notices under Receivables Sale Agreement.  Copies of all notices delivered under the Receivables Sale Agreement.
(iv)    Downgrade of Performance Guarantor.  Any downgrade in the rating of any Debt of Performance Guarantor by S&P or Moody’s, setting forth the Debt affected and the nature of such change.
(v)    Material Events.  (i) With respect to Borrower, the occurrence of any other event or condition that has had, or would reasonably be expected to have, a Material Adverse Effect and (ii) with respect to Servicer, a copy of each notice delivered pursuant to Section 5.02 of the Parent Credit Agreement as and when such notice is delivered thereunder.
(vi)    Independent Director.  The decision to appoint a new director of the Borrower as the “Independent Director” for purposes of this Agreement, such notice to be issued not less than ten (10) Business Days prior to the effective date of such appointment and to certify that the designated Person satisfies the criteria set forth in the definition herein of “Independent Director.”
(vii)    ERISA. Promptly following receipt thereof, copies of any documents described in Sections 101(k) or 101(l) of ERISA that any Loan Party or any ERISA Affiliate may request with respect to any Multiemployer Plan; provided that if the Loan Parties or any of the ERISA Affiliates have not requested such documents or notices from the administrator or sponsor of the applicable Multiemployer Plan, then, upon reasonable request of the Administrative Agent, the Loan Parties and/or the ERISA Affiliates shall promptly make a request for such documents or notices from such administrator or sponsor and the Borrower shall provide copies of such documents and notices promptly to the Administrative Agent after receipt thereof, and further provided that the rights granted to the Administrative Agent in this section shall be exercised not more than once during a 12-month period.
(k)    Compliance with Laws and Preservation of Corporate Existence.  Such Loan Party will comply in all respects with all applicable laws, rules, regulations, orders, writs, judgments, injunctions, decrees or awards to which it may be subject, except where the failure to so comply would not reasonably be expected to have a Material Adverse Effect.  Such Loan Party will preserve and maintain its corporate existence, rights, franchises and privileges in the jurisdiction of its incorporation, and qualify and remain qualified in good standing as a foreign corporation in each jurisdiction where its business is conducted, except where the failure to so preserve and maintain or qualify would not reasonably be expected to have a Material Adverse Effect.
(l)    Audits.  Such Loan Party will furnish to each of the Co-Agents from time to time such information with respect to it and the Receivables such Co-Agent may reasonably request.  Such Loan Party will, from time to time during regular business hours as requested by any Co-Agent upon reasonable notice and at the sole cost of such Loan Party, permit such Co-Agent, or their agents or representatives (and shall cause each Originator to permit such Co-Agent or their agents or representatives):  (i) to examine and make copies of and abstracts from all Records in the possession or under the control of such Person relating to the Collateral, including, without limitation, the related Contracts, and (ii) to visit the offices and properties of such Person for the purpose of examining such materials described in clause (i) above, and to discuss matters relating to such Person’s financial condition or the Collateral or any Person’s performance under any of the Transaction Documents or any Person’s performance under the Contracts and, in each case, with any of the officers or employees of Borrower or the Servicer having knowledge of such matters (each of the foregoing examinations and visits, a “Review”); provided, however, that, so long as no Event of Default has occurred and is continuing, the Loan Parties shall only be responsible for the costs and expenses of one (1) Review in any one calendar year.
(m)    Keeping and Marking of Records and Books.
(i)    The Servicer will (and will cause each Originator to) maintain and implement administrative and operating procedures (including, without limitation, an ability to recreate records evidencing Receivables in the event of the destruction of the originals thereof), and keep and maintain all documents, books, records and other information reasonably necessary or advisable for the collection of all Receivables (including, without limitation, records adequate to permit the immediate identification of each new Receivable and all Collections of and adjustments to each existing Receivable).  The Servicer will (and will cause each Originator to) give the Agents notice of any material change in the administrative and operating procedures referred to in the previous sentence.
(ii)    Such Loan Party will (and the Servicer will cause each Originator to):  (A) on or prior to the Closing Date, mark its master data processing records and other books and records relating to the Loans with a legend, acceptable to the Agents, describing the Administrative Agent’s security interest in the Collateral and (B) upon the request of the Agents following the occurrence of an Event of Default:  (x) mark each Contract with a legend describing the Administrative Agent’s security interest and (y) deliver to the Administrative Agent all Contracts (including, without limitation, all multiple originals of any such Contract constituting an instrument, a certificated security or chattel paper) relating to the Receivables.
(n)    Compliance with Contracts and Credit and Collection Policy.  Such Loan Party will (and will cause each Originator to) timely and fully (i) perform and comply with all provisions, covenants and other promises required to be observed by it under the Contracts related to the Receivables, and (ii) comply in all respects with the Credit and Collection Policy in regard to each Receivable and the related Contract.
(o)    Maintenance and Enforcement of Receivables Sale Agreement and Performance Undertaking.  Borrower will maintain the effectiveness of, and continue to perform under the Receivables Sale Agreement and the Performance Undertaking, such that it does not amend, restate, supplement, cancel, terminate or otherwise modify the Receivables Sale Agreement or the Performance Undertaking, or give any consent, waiver, directive or approval thereunder or waive any default, action, omission or breach under the Receivables Sale Agreement or the Performance Undertaking or otherwise grant any indulgence thereunder, without (in each case) the prior written consent of the Agents.  Borrower will, and will require each Originator to, perform each of their respective obligations and undertakings under and pursuant to the Receivables Sale Agreement, will purchase Receivables thereunder in strict compliance with the terms thereof and will vigorously enforce the rights and remedies accorded to Borrower under the Receivables Sale Agreement and the Performance Undertaking.  Borrower will take all actions to perfect and enforce its rights and interests (and the rights and interests of the Agents and the Lenders as assignees of Borrower) under the Receivables Sale Agreement as any of the Agents may from time to time reasonably request, including, without limitation, making claims to which it may be entitled under any indemnity, reimbursement or similar provision contained in the Receivables Sale Agreement.
(p)    Ownership.  Borrower will (or will cause each Originator to) take all necessary action to (i) vest legal and equitable title to the Collateral purchased under the Receivables Sale Agreement irrevocably in Borrower, free and clear of any Adverse Claims (other than Adverse Claims in favor of the Administrative Agent, for the benefit of the Secured Parties) including, without limitation, the filing of all financing statements or other similar instruments or documents necessary under the UCC and the PPSA (or any comparable law) of all appropriate jurisdictions to perfect Borrower’s interest in such Collateral and such other action to perfect, protect or more fully evidence the interest of Borrower therein as any of the Agents may reasonably request, and (ii) establish and maintain, in favor of the Administrative Agent, for the benefit of the Secured Parties, a valid and perfected first priority security interest in all Collateral, free and clear of any Adverse Claims, including, without limitation, the filing of all financing statements or other similar instruments or documents necessary under the UCC and the PPSA (or any comparable law) of all appropriate jurisdictions to perfect the Administrative Agent’s (for the benefit of the Secured Parties) security interest in the Collateral and such other action to perfect, protect or more fully evidence the interest of the Administrative Agent for the benefit of the Secured Parties as any of the Agents may reasonably request.
(q)    Lenders’ Reliance.  Borrower acknowledges that the Agents and the Lenders are entering into the transactions contemplated by this Agreement in reliance upon Borrower’s identity as a legal entity that is separate from each Originator.  Therefore, from and after the date of execution and delivery of this Agreement, Borrower shall take all reasonable steps, including, without limitation, all steps that any Agent or any Lender may from time to time reasonably request, to maintain Borrower’s identity as a separate legal entity and to make it manifest to third parties that Borrower is an entity with assets and liabilities distinct from those of each Originator and any Affiliates thereof (other than Borrower) and not just a division of any Originator or any such Affiliate.  Without limiting the generality of the foregoing and in addition to the other covenants set forth herein, Borrower will:
(i)    maintain books, financial records and bank accounts in a manner so that it will not be difficult or costly to segregate, ascertain and otherwise identify the assets and liabilities of Borrower;
(ii)    not commingle any of its assets, funds, liabilities or business functions with the assets, funds, liabilities or business functions of any other person or entity except for payments that may be received in any Lock-Box prior to 30 days after the date of this Agreement;
(iii)    observe all appropriate limited liability company procedures and formalities;
(iv)    pay its own liabilities, losses and expenses only out of its own funds;
(v)    maintain separate annual and quarterly financial statements prepared in accordance with generally accepted accounting principles, consistently applied, showing its assets and liabilities separate and distinct from those of any other person or entity;
(vi)    pay or bear the cost (or if such statements are consolidated, the pro-rata cost) of the preparation of its financial statements, and have such financial statements audited by a certified public accounting firm that is not affiliated with Borrower or its Affiliates;
(vii)    not guarantee or become obligated for the debts or obligations of any other entity or person;
(viii)    not hold out its credit as being available to satisfy the debts or obligations of any other person or entity;
(ix)    hold itself out as an entity separate and distinct from any other person or entity (including its Affiliates);
(x)    correct any known misunderstanding regarding its separate identity;
(xi)    use separate stationery, invoices, checks and the like bearing its own name;
(xii)    compensate all consultants, independent contractors and agents from its own funds for services provided to it by such consultants, independent contractors and agents;
(xiii)    to the extent that Borrower and any of its Affiliates occupy any premises in the same location, allocate fairly, appropriately and nonarbitrarily any rent and overhead expenses among and between such entities with the result that the Borrower bears its fair share of all such rent and expenses;
(xiv)    to the extent that Borrower and any of its Affiliates share the same officers, allocate fairly, appropriately and nonarbitrarily any salaries and expenses related to providing benefits to such officers between or among such entities, with the result that the Borrower will bear its fair share of the salary and benefit costs associated with all such common or shared officers;
(xv)    to the extent that Borrower and any of its Affiliates jointly contract or do business with vendors or service providers or share overhead expenses, allocate fairly, appropriately and nonarbitrarily any costs and expenses incurred in so doing between or among such entities, with the result that the Borrower bears its fair share of all such costs and expenses;
(xvi)    to the extent Borrower contracts or does business with vendors or service providers where the goods or services are wholly or partially for the benefit of its Affiliates, allocate fairly, appropriately and nonarbitrarily any costs incurred in so doing to the entity for whose benefit such goods or services are provided, with the result that the Borrower bears its fair share of all such costs;
(xvii)    not make any loans to any person or entity (other than such intercompany loans between Borrower and each Originator contemplated by this Agreement) or buy or hold any indebtedness issued by any other person or entity (except for cash and investment-grade securities);
(xviii)    conduct its own business in its own name;
(xix)    hold all of its assets in its own name;
(xx)    maintain an arm’s-length relationship with its Affiliates and enter into transactions with Affiliates only on a commercially reasonable basis;
(xxi)    not pledge its assets for the benefit of any other Person;
(xxii)    not identify itself as a division or department of any other entity;
(xxiii)    maintain adequate capital in light of its contemplated business operations and in no event less than the Required Capital Amount (as defined in the Receivables Sale Agreement) and refrain from making any dividend, distribution, redemption of capital stock or payment of any subordinated indebtedness which would cause the Required Capital Amount to cease to be so maintained;
(xxiv)    conduct transactions between Borrower and third parties in the name of Borrower and as an entity separate and independent from each of its Affiliates;
(xxv)    cause representatives and agents of Borrower to hold themselves out to third parties as being representatives or agents, as the case may be, of Borrower;
(xxvi)    not enter into or be a party to, any transaction with its members or Affiliates except in the ordinary course of its business and on terms which are intrinsically fair and are substantially similar to those which would be obtained in a comparable arm’s-length transaction with an unrelated third party;
(xxvii)    not acquire or assume the obligations or acquire the securities of its Affiliates or owners, including partners of its Affiliates; provided, however, that notwithstanding the foregoing, Borrower is authorized to engage in and consummate each of the transactions contemplated by each Transaction Document and Borrower is authorized to perform its obligations under each Transaction Document;
(xxviii)    maintain its limited liability company status in conformity with this Agreement, such that (A) it does not amend, restate, supplement or otherwise modify its Certificate of Formation or Limited Liability Company Agreement in any respect that would impair its ability to comply with the terms or provisions of any of the Transaction Documents, including, without limitation, Section 7.1(i) of this Agreement; and (B) its corporate charter requires that the Board of Directors of the Borrower shall at all times include at least one “Independent Director” as such term is defined herein.
(xxix)    maintain its corporate separateness such that it does not merge or consolidate with or into, or convey, transfer, lease or otherwise dispose of (whether in one transaction or in a series of transactions, and except as otherwise contemplated herein) all or substantially all of its assets (whether now owned or hereafter acquired) to, or acquire all or substantially all of the assets of, any Person, nor at any time create, have, acquire, maintain or hold any interest in any Subsidiary; and
(xxx)    take such other actions as are necessary on its part to ensure that the facts and assumptions set forth in the opinion issued by Hogan Lovells US LLP, as counsel for Borrower, in connection with the closing or initial Advance under this Agreement and relating to substantive consolidation issues, and in the certificates accompanying such opinion, remain true and correct in all material respects at all times.
(r)    Collections.  Such Loan Party will cause (1) all proceeds from all Lock-Boxes to be directly deposited by a Collection Bank into a Collection Account and (2) each Lock-Box and Collection Account to be subject at all times to a Collection Account Agreement that is in full force and effect; provided, that amounts received in respect of any Excluded Receivables shall not be deposited in any Lock-Box or Collection Account.  In the event any payments relating to the Collateral are remitted directly to Borrower or any Affiliate of Borrower, Borrower will remit (or will cause all such payments to be remitted) directly to a Collection Bank and deposit into a Collection Account within two (2) Business Days following receipt thereof, and, at all times prior to such remittance, Borrower will itself hold or, if applicable, will cause such payments to be held in trust for the exclusive benefit of the Agents and the Lenders.  Borrower will maintain exclusive ownership, dominion and control (subject to the terms of this Agreement) of each Lock-Box and Collection Account and shall not grant the right to take dominion and control of any Lock-Box or Collection Account at a future time or upon the occurrence of a future event to any Person, except to the Administrative Agent as contemplated by this Agreement and to the ABL Representative as contemplated by the Intercreditor Agreement, and except for access granted to Servicer prior to delivery of Collection Notices.
(s)    Taxes.  Such Loan Party will file all Tax returns and reports required by law to be filed by it and will promptly pay all Taxes and governmental charges at any time owing, except any such Taxes which are not yet delinquent or are being diligently contested in good faith by appropriate proceedings and for which adequate reserves in accordance with GAAP shall have been set aside on its books.  Borrower will pay when due any and all present and future stamp, documentary, and other similar Taxes and governmental charges payable in connection with the Receivables, and hold each of the Indemnified Parties harmless from and against any and all liabilities (including penalties, interest and expenses) with respect to or resulting from any delay or omission to pay such Taxes and governmental charges.
(t)    Payment to Applicable Originator.  With respect to any Receivable purchased by Borrower from any Originator, such sale shall be effected under, and in strict compliance with the terms of, the Receivables Sale Agreement, including, without limitation, the terms relating to the amount and timing of payments to be made to such Originator in respect of the purchase price for such Receivable.
(u)    Amendment of Parent Credit Agreement.  Borrower or Servicer shall provide written notice to the Administrative Agent of any proposed amendment to the Parent Credit Agreement that would alter the definitions of “Applicable Percentage” or “Leverage Ratio” contained therein or that would alter in any way the manner in which “Applicable Percentage” or “Leverage Ratio” are determined under the Parent Credit Agreement, in each case, not later than five Business Days prior to the effectiveness of any such amendment.
(v)    Notice of Leverage Ratio.  On each Interest Determination Date (as defined in the Parent Credit Agreement, as in effect on the Closing Date), the Servicer shall provide to the Administrative Agent written notice of the “Leverage Ratio” as calculated pursuant to the terms of the Parent Credit Agreement, as in effect on the Closing Date.
Section 7.2.    Negative Covenants of the Loan Parties.  Until the Final Payout Date, each Loan Party hereby covenants, as to itself, that:
(c)    Name Change, Offices and Records.  Such Loan Party will not change its name, identity or structure (within the meaning of any applicable enactment of the UCC) or jurisdiction of organization, unless it shall have:  (i) given the Agents at least ten (10) Business Days’ prior written notice thereof and (ii) delivered to the Administrative Agent all financing statements, instruments and other documents requested by any Agent in connection with such change or relocation.
(d)    Change in Payment Instructions to Obligors.  Except as may be required by the Administrative Agent pursuant to Section 8.2(b), such Loan Party will not add or terminate any bank as a Collection Bank, or make any change in the instructions to Obligors regarding payments to be made to any Lock-Box or Collection Account, unless the Administrative Agent shall have received, at least ten (10) days before the proposed effective date therefor, (i) written notice of such addition, termination or change and (ii) with respect to the addition of a Collection Bank or a Collection Account or Lock-Box, an executed Collection Account Agreement with respect to the new Collection Account or Lock-Box; provided, however, that the Servicer may make changes in instructions to Obligors regarding payments if such new instructions require such Obligor to make payments to another existing Collection Account.
(e)    Modifications to Contracts and Credit and Collection Policy.  Such Loan Party will not, and will not permit any Originator to, make any change to the Credit and Collection Policy (other than any change expressly permitted by the Receivables Sale Agreement).  Except as provided in Section 8.2(d), the Servicer will not, and will not permit any Originator to, extend, amend or otherwise modify the terms of any Receivable or any Contract related thereto other than in accordance with the Credit and Collection Policy.
(f)    Sales, Liens.  Borrower will not sell, assign (by operation of law or otherwise) or otherwise dispose of, or grant any option with respect to, or create or suffer to exist any Adverse Claim upon (including, without limitation, the filing of any financing statement) or with respect to, any of the Collateral, or assign any right to receive income with respect thereto (other than, in each case, the creation of a security interest therein in favor of the Administrative Agent as provided for herein), and Borrower will defend the right, title and interest of the Secured Parties in, to and under any of the foregoing property, against all claims of third parties claiming through or under Borrower or any Originator.
(g)    Use of Proceeds.  Borrower will not use the proceeds of the Advances for any purpose other than (i) paying for Receivables and Related Security under and in accordance with the Receivables Sale Agreement, including without limitation, making payments on the Subordinated Notes to the extent permitted thereunder and under the Receivables Sale Agreement, (ii) paying its ordinary and necessary operating expenses when and as due, and (iii) making Restricted Junior Payments to the extent permitted under this Agreement.
(h)    Termination Date Determination.  Borrower will not designate the Termination Date, or send any written notice to any Originator in respect thereof, without the prior written consent of the Agents, except with respect to the occurrence of a Termination Date arising pursuant to Section 5.1(d) of the Receivables Sale Agreement.
(i)    Restricted Junior Payments.  Borrower will not make any Restricted Junior Payment if after giving effect thereto, Borrower’s Net Worth (as defined in the Receivables Sale Agreement) would be less than the Required Capital Amount (as defined in the Receivables Sale Agreement).
(j)    Borrower Debt.  Borrower will not incur or permit to exist any Debt or liability on account of deposits except:  (i) the Obligations, (ii) the Subordinated Loans, and (iii) other current accounts payable arising in the ordinary course of business and not overdue.
(k)    Merger; Consolidation. Subject to the limitations of Section 7.1(i),  no Loan Party will, nor will it permit any of its Restricted Subsidiaries to, merge into, amalgamate with or consolidate with any other Person, or permit any other Person to merge into or consolidate with it, or sell, transfer, lease or otherwise dispose of (in one transaction or in a series of transactions) all or substantially all of its assets, or all or substantially all of the stock of any of its Restricted Subsidiaries (in each case, whether now owned or hereafter acquired), or liquidate or dissolve, except that, if at the time thereof and immediately after giving effect thereto no Event of Default shall have occurred and be continuing: 
(i)    any Subsidiary (other than the Borrower) may merge or amalgamate with the Servicer in a transaction in which the Servicer is the surviving entity pursuant to documentation reasonably satisfactory to the Administrative Agent;
(ii)    any other Person (other than the Borrower) may merge into or amalgamate with the Servicer in a transaction in which the Servicer is the surviving corporation, or, concurrently with the consummation of such transaction, the surviving entity becomes the Servicer;
(iii)    any non-Loan Party may merge into or amalgamate with any other non-Loan Party;
(iv)    any Restricted Subsidiary may sell, transfer, lease or otherwise dispose of its assets to the Servicer or another Restricted Subsidiary; provided that if any such transferor is a Loan Party, such transferee shall be a Loan Party; 
(v)    any Restricted Subsidiary may liquidate or dissolve if the Servicer determines in good faith that such liquidation or dissolution is in the best interests of the Servicer and is not materially disadvantageous to the Lenders; and
(vi)    the Servicer or any Restricted Subsidiary may sell, transfer, lease or otherwise dispose of its assets (including for the avoidance of doubt any Excluded Receivable) in any manner expressly permitted by any Transaction Document or if permitted under Section 6.04 or Section 6.05 of the Parent Credit Agreement; 
provided, that any such merger or amalgamation that would otherwise be permitted by this Section 7.2(i) involving a Person that is not a wholly-owned Restricted Subsidiary immediately prior to such merger shall not be permitted unless also permitted by Section 6.04 of the Parent Credit Agreement.
(l)    Excluded Originators.  The Borrower shall not designate any Originator as an Excluded Originator pursuant to Section 1.8 of the Receivables Sale Agreement unless and until (i) the Servicer shall have prepared and forwarded to the Administrative Agent and the Lenders a restated Monthly Report for each of the twelve (12) prior Monthly Reporting Dates occurring since the date hereof, which such restated Monthly Report shall be prepared on the basis of the exclusion from the Collateral of the Receivables relating to such Originator and (ii) the Administrative Agent shall have provided its prior written consent to such designation; provided, however, that neither restated Monthly Reports nor consent of the Administrative Agent shall be required in the case of an Originator that has originated Receivables with an aggregate Outstanding Balance as of the related Effective Date that is less than 2.5% of Outstanding Balance of all Receivables as of the related Effective Date.  Any restated Monthly Report provided pursuant to this Section 7.2(j) shall be subject to the representations and warranties contained in  Section 5.1(g).
ARTICLE VIII.     
ADMINISTRATION AND COLLECTION
Section 8.1.    Designation of Servicer.
(m)    The servicing, administration and collection of the Receivables shall be conducted by such Person (the “Servicer”) so designated from time to time in accordance with this Section 8.1.  Smithfield is hereby designated as, and hereby agrees to perform the duties and obligations of, the Servicer pursuant to the terms of this Agreement.  After the occurrence of an Event of Default, the Administrative Agent, at the direction of the Required Committed Lenders, may at any time designate as Servicer any Person domiciled in the United States to succeed Smithfield or any successor Servicer; provided that the Rating Agency Condition (if applicable) is satisfied.
(n)    Smithfield may at any time and from time to time delegate any or all of its duties and obligations as Servicer hereunder to one or more Persons domiciled in the United States.  Notwithstanding the foregoing, so long as Smithfield remains the Servicer hereunder:  (i) Smithfield shall be and remain liable to the Agents and the Lenders for the full and prompt performance of all duties and responsibilities of the Servicer hereunder and (ii) the Agents and the Lenders shall be entitled to deal exclusively with Smithfield in matters relating to the discharge by the Servicer of its duties and responsibilities hereunder.  Notwithstanding the foregoing, any Person delegated with the servicing, administration and collection of Receivables originated by the Canadian Originator shall not be conferred with any power to enter into contracts or other agreements in the name of the Servicer or the Borrower.  To the extent any delegated servicing responsibilities require entering into contracts or other agreements in the name of the Borrower, such responsibility shall only be fulfilled upon the specific approval of the Borrower.  
Section 8.2.    Duties of Servicer.
(a)    The Servicer shall take or cause to be taken all such actions as may be necessary or advisable to collect each Receivable from time to time, all in accordance with applicable laws, rules and regulations, with reasonable care and diligence, and in accordance with the Credit and Collection Policy.
(b)    The Servicer will instruct (i) all Obligors in respect of Receivables other than Excluded Receivables to pay all Collections directly to a Lock-Box or Collection Account and (ii) all Obligors in respect of Excluded Receivables to pay all Collections to a designated account that is not a Lock-Box or Collection Account.  The Servicer shall effect a Collection Account Agreement with each bank party to a Collection Account at any time.  In the case of any remittances received in any Lock-Box or Collection Account that shall have been identified, to the satisfaction of the Servicer, to not constitute Collections or other proceeds of the Receivables or the Related Security, the Servicer shall promptly remit such items to the Person identified to it as being the owner of such remittances.  From and after the date the Administrative Agent delivers to any Collection Bank a Collection Notice pursuant to Section 8.3, the Administrative Agent may request that the Servicer, and the Servicer thereupon promptly shall instruct all Obligors with respect to the Receivables, to remit all payments thereon to a new depositary account specified by the Administrative Agent and, at all times thereafter, Borrower and the Servicer shall not deposit or otherwise credit, and shall not permit any other Person to deposit or otherwise credit to such new depositary account any cash or payment item other than Collections.
(c)    The Servicer shall administer the Collections in accordance with the procedures described herein and in Article II.  The Servicer shall set aside and hold in trust for the account of Borrower and the Lenders their respective shares of the Collections in accordance with Article II.  The Servicer shall, upon the request of any Agent, segregate, in a manner acceptable to the Agents, all cash, checks and other instruments received by it from time to time constituting Collections from the general funds of the Servicer or Borrower prior to the remittance thereof in accordance with Article II.  If the Servicer shall be required to segregate Collections pursuant to the preceding sentence, the Servicer shall segregate and deposit with a bank designated by the Administrative Agent such allocable share of Collections of Receivables set aside for the Lenders on the first Business Day following receipt by the Servicer of such Collections, duly endorsed or with duly executed instruments of transfer.
(d)    The Servicer may, in accordance with the Credit and Collection Policy, extend the maturity of any Receivable or adjust the Outstanding Balance of any Receivable as the Servicer determines to be appropriate to maximize Collections thereof; provided, however, that such extension or adjustment shall not alter the status of such Receivable as a Delinquent Receivable or Defaulted Receivable or limit the rights of the Agents or the Lenders under this Agreement.  Notwithstanding anything to the contrary contained herein, from and after the occurrence of an Event of Default, the Administrative Agent shall have the absolute and unlimited right to direct the Servicer to commence or settle any legal action with respect to any Receivable or to foreclose upon or repossess any Related Security.
(e)    The Servicer shall hold in trust for Borrower and the Lenders all Records that (i) evidence or relate to the Receivables, the related Contracts and Related Security or (ii) are otherwise necessary or desirable to collect the Receivables and shall, as soon as practicable upon demand of the Administrative Agent following the occurrence of an Event of Default, deliver or make available to the Administrative Agent all such Records, at a place selected by the Administrative Agent.  The Servicer shall, as soon as practicable following receipt thereof turn over to Borrower any cash collections or other cash proceeds received with respect to Debt not constituting Receivables or proceeds of Collateral.  The Servicer shall, from time to time at the request of any Lender, furnish to the Lenders (promptly after any such request) a calculation of the amounts set aside for the Lenders pursuant to Article II.  
(f)    Any payment by an Obligor in respect of any indebtedness owed by it to Originator or Borrower shall, except as otherwise specified by such Obligor or otherwise required by contract or law and unless otherwise instructed by the Administrative Agent, be applied as a Collection of any Receivable of such Obligor (starting with the oldest such Receivable) to the extent of any amounts then due and payable thereunder before being applied to any other receivable or other obligation of such Obligor.
(g)    All activities undertaken by the Servicer in such capacity hereunder in relation to Receivables sold by the Canadian Originator, including by any Person acting on its behalf or to whom the Servicer has delegated responsibility, shall take place in all material respects outside of Canada. 
Section 8.3.    Collection Notices.  The Administrative Agent is authorized at any time after the occurrence of an Event of Default to date and to deliver to the Collection Banks the Collection Notices.  Borrower hereby transfers to the Administrative Agent for the benefit of the Secured Parties, the exclusive ownership and control of each Lock-Box and Collection Account; provided, however, that Borrower shall retain the right to direct the disposition of funds from each of the Collection Accounts until the Administrative Agent (at the direction of any Co-Agent) delivers the applicable Collection Notice.  In case any authorized signatory of Borrower whose signature appears on a Collection Account Agreement shall cease to have such authority before the delivery of such notice, such Collection Notice shall nevertheless be valid as if such authority had remained in force.  Borrower hereby authorizes the Administrative Agent, and agrees that the Administrative Agent shall be entitled (i) at any time after delivery of the Collection Notices, to endorse Borrower’s name on checks and other instruments representing Collections, (ii) at any time after the occurrence of an Event of Default, to enforce the Receivables, the related Contracts and the Related Security, and (iii) at any time after the occurrence of an Event of Default, to take such action as shall be necessary or desirable to cause all cash, checks and other instruments constituting Collections of Receivables to come into the possession of the Administrative Agent rather than Borrower.
Section 8.4.    Responsibilities of Borrower.  Anything herein to the contrary notwithstanding, the exercise by the Administrative Agent on behalf of the Secured Parties of their rights hereunder shall not release the Servicer, any Originator or Borrower from any of their duties or obligations with respect to any Receivables or under the related Contracts.  The Lenders shall have no obligation or liability with respect to any Receivables or related Contracts, nor shall any of them be obligated to perform the obligations of Borrower.  Moreover, the ultimate responsibility for the servicing of the Receivables shall be borne by Borrower.
Section 8.5.    Monthly Reports.  The Servicer shall prepare and forward to the Lenders (i) on each Monthly Reporting Date, a Monthly Report in substantially the form of Exhibit VI hereto and an electronic file of the data contained therein, and (ii) at such times as any Co-Agent shall reasonably request, a listing by Obligor of all Receivables together with an aging of such Receivables.  After a Ratings Trigger Event, the Servicer shall prepare and forward to the Lenders on a weekly basis, a report that is acceptable in form and substance to the Administrative Agent.  On and after the date on which any Receivable is designated an Excluded Receivable under the Receivables Sale Agreement, each Monthly Report shall exclude any such Excluded Receivables.  On and after the date on which any Originator is designated an Excluded Originator under the Receivables Sale Agreement, each Monthly Report shall exclude any such Excluded Originator.
Section 8.6.    Servicing Fee.  As compensation for the Servicer’s servicing activities on their behalf, Borrower shall pay the Servicer the Servicing Fee, which fee shall be paid from Collections in arrears on each Settlement Date in accordance with Sections 2.2 and 2.3 herein.
ARTICLE IX.     
EVENTS OF DEFAULT
Section 9.1.    Events of Default.  The occurrence of any one or more of the following events shall constitute an Event of Default:
(h)    any Loan Party or Performance Guarantor shall fail to make any payment or deposit required to be made by it under the Transaction Documents when due and, for any such payment or deposit which is not in respect of principal, such failure continues for two consecutive Business Days.
(i)    any representation, warranty, certification or statement made by Performance Guarantor or any Loan Party in any Transaction Document to which it is a party or in any other document delivered pursuant thereto shall prove to have been materially incorrect when made or deemed made; provided that the materiality threshold in the preceding clause shall not be applicable with respect to any representation or warranty that itself contains a materiality threshold.
(j)    any Loan Party shall fail to perform or observe any covenant contained in Section 7.2 or 8.5 when due.
(k)    any Loan Party or Performance Guarantor shall fail to perform or observe any other covenant or agreement under any Transaction Documents and such failure shall remain unremedied for 15 days after the earlier of (i) an Executive Officer of any of such Persons obtaining knowledge thereof, or (ii) written notice thereof shall have been given to any Loan Party or Performance Guarantor by any of the Agents.
(l)    failure of Borrower to pay any Debt (other than the Obligations) when due or the default by Borrower in the performance of any term, provision or condition contained in any agreement under which any such Debt was created or is governed, the effect of which is to cause, or to permit the holder or holders of such Debt to cause, such Debt to become due prior to its stated maturity; or any such Debt of Borrower shall be declared to be due and payable or required to be prepaid (other than by a regularly scheduled payment) prior to the date of maturity thereof.
(m)    failure of Performance Guarantor or the Servicer or any of their respective Subsidiaries (other than the Borrower, any Non-Material Subsidiary and any Unrestricted Subsidiary) shall become unable, admit in writing its inability or fail generally to pay its debts as they become due.
(n)    a regulatory, tax or accounting body has ordered that the activities of the Borrower or any Affiliate of the Borrower contemplated hereby be terminated or, as a result of any other event or circumstance, the activities of the Borrower or any Affiliate of the Borrower contemplated hereby may reasonably be expected to cause the Borrower or any of its respective Affiliates to suffer materially adverse regulatory, accounting or tax consequences.
(o)    any Person who does not satisfy the requirements of an “Independent Director” shall be appointed as an independent director of the Borrower.
(p)    any change in the Credit and Collection Policy prohibited by Section 7.2(c) occurs, without the prior written consent of the Administrative Agent.
(q)    an Event of Bankruptcy shall occur with respect to Performance Guarantor, any Originator or any Loan Party.
(r)    as at the end of any Calculation Period:
(i)    the three-month rolling average Delinquency Ratio shall exceed three percent (3)%,
(ii)    the three-month rolling average Default Ratio shall exceed one percent (1)%,
(iii)    the three-month rolling average Dilution Ratio shall exceed five percent (5)%, or
(iv)    Days Sales Outstanding shall exceed 35 days.
(s)    a Change of Control shall occur or the Borrower shall enter into any merger.
(t)    one or more judgments for the payment of money in an aggregate amount in excess of $50,000,000 (to the extent not adequately covered by insurance as to which the insurer has not denied or contested coverage) shall be rendered against the Performance Guarantor, any Subsidiary of Performance Guarantor (other than any Unrestricted Subsidiary), any Loan Party, any Subsidiary of a Loan Party (other than any Unrestricted Subsidiary) or any combination thereof and the same shall remain unpaid or undischarged for a period of 45 consecutive days during which execution shall not be effectively stayed, or any action shall be legally taken by a judgment creditor to attach or levy upon any assets of the Performance Guarantor, any Subsidiary of Performance Guarantor, any Loan Party or any Subsidiary of any Loan Party (other than any Unrestricted Subsidiary) to enforce any such judgment, or the Performance Guarantor, any Subsidiary of Performance Guarantor (other than any Unrestricted Subsidiary), any Loan Party or any Subsidiary of any Loan Party (other than any Unrestricted Subsidiary) shall fail within 45 days to discharge one or more non-monetary judgments or orders which, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect, which judgments or orders, in any such case, are not stayed on appeal or otherwise being appropriately contested in good faith by proper proceedings diligently pursued.
(u)    (i) The “Termination Date” shall occur under the Receivables Sale Agreement as to any Originator or any Originator shall for any reason cease to transfer, or cease to have the legal capacity to transfer, or otherwise be incapable of transferring Receivables to Borrower under the Receivables Sale Agreement or (ii) (x) an “Event of Default” (as such term is defined in the Parent Credit Agreement) shall have occurred and be continuing under the Parent Credit Agreement and (y) to the extent that the Administrative Agent is also a party to the Parent Credit Agreement, such Event of Default has not been waived or cured in accordance with the terms of the Parent Credit Agreement.
(v)    This Agreement shall terminate in whole or in part (except in accordance with its terms), or shall cease to be effective or to be the legally valid, binding and enforceable obligation of Borrower, or any Obligor shall directly or indirectly contest in any manner such effectiveness, validity, binding nature or enforceability, or the Administrative Agent for the benefit of the Lenders shall cease to have a valid and perfected first priority security interest in the Collateral.
(w)    The Aggregate Principal shall exceed the Borrowing Limit for 2 consecutive Business Days.
(x)    The Performance Undertaking shall cease to be effective or to be the legally valid, binding and enforceable obligation of Performance Guarantor, or Performance Guarantor shall directly or indirectly contest in any manner such effectiveness, validity, binding nature or enforceability of any of its obligations thereunder.
(y)    The Internal Revenue Service shall file notice of a lien pursuant to Section 6323 of the Tax Code with regard to any of the Collateral and such lien shall not have been released within fifteen (15) days, or the PBGC shall, or shall indicate its intention to, file notice of a lien pursuant to Section 4068 of ERISA with regard to any of the Collateral.
(z)    ERISA. (23) an ERISA Event shall have occurred or (23) such other event or condition shall occur or exist with respect to a Plan; and in each case in clauses (i) and (ii) such event or condition, when taken together with all other such events or conditions, if any, that have occurred, is reasonably likely to result in a Material Adverse Effect;
(aa)    Any event shall occur which (i) materially and adversely impairs the ability of the Originators to originate Receivables of a credit quality that is, on average, at least equal to the average credit quality of the Receivables sold or contributed to Borrower on the date of this Agreement or (ii) has, or would be reasonably expected to have, a Material Adverse Effect.
(bb)    A Subordinated Lender shall fail to make any Subordinated Loan under the applicable subordinated loan agreement following the Borrower’s request therefor.
(cc)    Any Collection Account fails to be subject to a Collection Account Agreement at any time.
Section 9.2.    Remedies.  Upon the occurrence of an Event of Default:  (i) the Administrative Agent, upon the direction of the Required Committed Lenders, shall replace the Person then acting as Servicer, (ii) the Administrative Agent may (and, upon direction of the Required Committed Lenders, the Administrative Agent shall) declare the Commitment Termination Date to have occurred, whereupon the Aggregate Commitment shall immediately terminate and the Commitment Termination Date shall forthwith occur, all without demand, protest or further notice of any kind, all of which are hereby expressly waived by each Loan Party; provided, however, that upon the occurrence of an Event of Default described in Section 9.1(j), the Commitment Termination Date shall automatically occur, without demand, protest or any notice of any kind, all of which are hereby expressly waived by each Loan Party, (iii) the Administrative Agent may (and, upon the direction of the Required Committed Lenders, shall) deliver the Collection Notices to the Collection Banks, (iv) the Administrative Agent may (and, upon the direction of the Required Committed Lenders, shall) exercise all rights and remedies of a secured party upon default under the UCC and the PPSA and other applicable laws, and (v) the Administrative Agent may (and, upon the direction of the Required Committed Lenders, shall) notify Obligors of the Administrative Agent’s security interest in the Receivables and other Collateral and instruct them to make future payments into accounts designated by the Administrative Agent.  The aforementioned rights and remedies shall be without limitation, and shall be in addition to all other rights and remedies of the Agents and the Lenders otherwise available under any other provision of this Agreement, by operation of law, at equity or otherwise, all of which are hereby expressly preserved, including, without limitation, all rights and remedies provided under the UCC, all of which rights shall be cumulative.
ARTICLE X.     
INDEMNIFICATION
Section 10.1.    Indemnities by the Loan Parties.  Without limiting any other rights that the Administrative Agent or any Lender may have hereunder or under applicable law, (A) Borrower hereby agrees to indemnify (and pay upon demand to) each of the Agents, each of the Conduits, each of the Committed Lenders and each of the respective assigns, officers, directors, agents and employees of the foregoing (each, an “Indemnified Party”) from and against any and all damages, losses, claims, Taxes, liabilities, costs, expenses and for all other amounts payable, including reasonable attorneys’ fees actually incurred (which attorneys may be employees of the Administrative Agent or such Lender) and disbursements and, to the extent the Borrower does not timely pay such indemnity, any additional liability (including penalties, interest and expenses) arising from or with respect to any of the foregoing (all of the foregoing being collectively referred to as “Indemnified Amounts”) awarded against or incurred by any of them arising out of or as a result of this Agreement, any Letter of Credit or the acquisition, either directly or indirectly, by a Lender of an interest in the Receivables, (B) the Servicer hereby agrees to indemnify (and pay upon demand to) the Borrower for any Taxes imposed under Canadian federal or provincial law on the Borrower (including for greater certainty such Taxes on net income and branch profits and such Taxes, if any, that were required to be withheld from the Servicing Fees, and related penalties, interest and costs) arising out of the Servicer’s activities and services as Servicer hereunder (including its delegatees’ and sub-contractors’ activities and services); (C) the Servicer hereby agrees to indemnify and hold each Indemnified Party harmless against any Canadian withholding taxes (including any related penalties, interest and costs) that may be either assessed against such Indemnified Party or required to be withheld or recovered from the Borrower by the Canadian Originator as a result of (i) the purchase of Receivables from the Canadian Originator and any portion of the Purchase Price thereof remaining unpaid or being paid with a Subordinated Loan or contributed by the Canadian Originator to the capital of the Borrower, or (ii) the receipt by the Borrower of an indemnity payment pursuant to the foregoing. If the Borrower receives a refund of any such Canadian withholding taxes with respect to which it has received an indemnity payment from the Canadian Originator or the Servicer, the Borrower shall pay over such refund plus any interest received thereon to the Canadian Originator or the Servicer, as the case may be and (D) the Servicer hereby agrees to indemnify (and pay upon demand to) each Indemnified Party for Indemnified Amounts awarded against or incurred by any of them arising out of the Servicer’s activities as Servicer hereunder excluding, however, in all of the foregoing instances under the preceding clauses (A) and (D):
(a)    Indemnified Amounts to the extent a final judgment of a court of competent jurisdiction holds that such Indemnified Amounts resulted from gross negligence or willful misconduct on the part of the Indemnified Party seeking indemnification;
(b)    Indemnified Amounts to the extent the same includes losses in respect of Receivables that are uncollectible on account of the insolvency, bankruptcy or lack of creditworthiness of the related Obligor or the intentional non-payment of amounts due by the related Obligor in breach of its obligations in respect of such Receivable; or
(c)    (i) taxes imposed on or measured by such Indemnified Party’s net income, and franchise taxes and branch profit taxes imposed on it, by the jurisdiction under the laws of which such Indemnified Party is organized or any political subdivision thereof, (ii) taxes imposed on or measured by such Indemnified Party’s net income, and franchise taxes and branch profit taxes imposed on it, by the jurisdiction in which such Indemnified Party’s principal executive office is located or any political subdivision thereof and (iii) in the case of a Foreign Lender, any withholding tax that is imposed on amounts payable to such Foreign Lender at the time such Foreign Lender becomes a party to this Agreement (or designates a new lending office), except to the extent that such Foreign Lender was entitled at the time of designating a new lending office, to receive additional amounts with respect to such withholding tax pursuant to this Section 10.1 (all of the foregoing contained in clauses (i), (ii) and (iii) collectively, “Excluded Taxes”);
provided, however, that nothing contained in this sentence shall limit the liability of any Loan Party or limit the recourse of the Lenders to any Loan Party for amounts otherwise specifically provided to be paid by such Loan Party under the terms of this Agreement.  Without limiting the generality of the foregoing indemnification, Borrower shall indemnify the Agents and the Lenders for Indemnified Amounts (including, without limitation, losses in respect of uncollectible receivables, regardless of whether reimbursement therefor would constitute recourse to such Loan Party) relating to or resulting from:
(i)    any representation or warranty made by any Loan Party or any Originator (or any officers of any such Person) under or in connection with this Agreement, any other Transaction Document or any other information or report delivered by any such Person pursuant hereto or thereto, which shall have been false or incorrect when made or deemed made;
(ii)    the failure by Borrower, the Servicer or any Originator to comply with any applicable law, rule or regulation with respect to any Receivable or Contract related thereto, or the nonconformity of any Receivable or Contract included therein with any such applicable law, rule or regulation or any failure of any Originator to keep or perform any of its obligations, express or implied, with respect to any Contract;
(iii)    any failure of Borrower, the Servicer or any Originator to perform its duties, covenants or other obligations in accordance with the provisions of this Agreement or any other Transaction Document;
(iv)    any products liability, personal injury or damage suit, or other similar claim arising out of or in connection with merchandise, insurance or services that are the subject of any Contract or any Receivable;
(v)    any dispute, claim, offset or defense (other than a defense related to the financial condition, or discharge in bankruptcy, of the Obligor) of the Obligor to the payment of any Receivable (including, without limitation, a defense based on such Receivable or the related Contract not being a legal, valid and binding obligation of such Obligor enforceable against it in accordance with its terms), or any other claim resulting from the sale of the merchandise or service related to such Receivable or the furnishing or failure to furnish such merchandise or services or any reduction of the Outstanding Balance of any Receivable due to PASA;
(vi)    the commingling of Collections of Receivables at any time with other funds;
(vii)    any investigation, litigation or proceeding related to or arising from this Agreement or any other Transaction Document, the transactions contemplated hereby, the use of the proceeds of any Advance, the Collateral or any other investigation, litigation or proceeding relating to Borrower, the Servicer or any Originator in which any Indemnified Party becomes involved as a result of any of the transactions contemplated hereby;
(viii)    any Regulatory Change which increases the cost of, or lowers the Yield, to any Indemnified Party;
(ix)    any inability to litigate any claim against any Obligor in respect of any Receivable as a result of such Obligor being immune from civil and commercial law and suit on the grounds of sovereignty or otherwise from any legal action, suit or proceeding;
(x)    any Event of Default;
(xi)    any failure of Borrower to acquire and maintain legal and equitable title to, and ownership of any of the Collateral from the applicable Originator, free and clear of any Adverse Claim (other than as created hereunder); or any failure of Borrower to give reasonably equivalent value to any Originator under the Receivables Sale Agreement in consideration of the transfer by such Originator of any Receivable, or any attempt by any Person to void such transfer under statutory provisions or common law or equitable action;
(xii)    any failure to vest and maintain vested in the Administrative Agent for the benefit of the Lenders, or to transfer to the Administrative Agent for the benefit of the Secured Parties, a valid first priority perfected security interests in the Collateral, free and clear of any Adverse Claim (other than Adverse Claims in favor of the Administrative Agent, for the benefit of the Secured Parties);
(xiii)    the failure to have filed, or any delay in filing, financing statements or other similar instruments or documents under the UCC and the PPSA of any applicable jurisdiction or other applicable laws with respect to any Collateral, and the proceeds thereof, whether at the time of any Advance or at any subsequent time;
(xiv)    any action or omission by any Loan Party which reduces or impairs the rights of the Administrative Agent or the Lenders with respect to any Collateral or the value of any Collateral;
(xv)    any attempt by any Person to void any Advance or the Administrative Agent’s security interest in the Collateral under statutory provisions or common law or equitable action; 
(xvi)    any civil penalty or fine assessed by OFAC against, and all reasonable costs and expenses (including counsel fees and disbursements) incurred in connection with defense thereof by the Administrative Agent or any Lender as a result of the funding of the Commitments or the acceptance of payments due under the Transaction Documents;
(xvii)    the failure of any Receivable included in the calculation of the Net Pool Balance as an Eligible Receivable to be an Eligible Receivable at the time so included; and
(xviii)    any In-Transit Receivable included in the calculation of the Net Pool Balance as an Eligible Receivable ceasing to be deemed to be an Eligible Receivable.
Notwithstanding the foregoing, (A) the foregoing indemnification is not intended to, and shall not, constitute a guarantee of the collectability or payment of the Receivables; and (B) except as provided in clause (xviii) above solely in relation to In-Transit Receivables, nothing in this Section 10.1 shall require Borrower to indemnify the Indemnified Parties for Receivables which are not collected, not paid or otherwise uncollectible on account of the insolvency, bankruptcy, credit-worthiness or financial inability to pay of the applicable Obligor.
Section 10.2.    Increased Cost and Reduced Return
(a)    If after the Closing Date, any Affected Entity shall be charged any fee, expense or increased cost on account of any Regulatory Change (i) that subjects such Affected Entity to any charge or withholding on or with respect to any Funding Agreement or such Affected Entity’s obligations under any Funding Agreement, or on or with respect to the Receivables, or changes the basis of taxation of payments to such Affected Entity of any amounts payable under any Funding Agreement (except for changes in the rate of tax on the overall net income of such Affected Entity or Excluded Taxes) or (ii) that imposes, modifies or deems applicable any reserve, assessment, insurance charge, special deposit or similar requirement against assets of, deposits with or for the account of such Affected Entity, or credit extended by such Affected Entity pursuant to any Funding Agreement or (iii) that imposes any other condition the result of which is to increase the cost to such Affected Entity of performing its obligations under any Funding Agreement, or to reduce the rate of return on such Affected Entity’s capital as a consequence of its obligations under any Funding Agreement, or to reduce the amount of any sum received or receivable by such Affected Entity under any Funding Agreement or to require any payment calculated by reference to the amount of interests or loans held or interest received by it, then, upon demand by the applicable Co-Agent, on behalf of such Affected Entity, and receipt by Borrower of a certificate as to such amounts (to be conclusive absent manifest error), Borrower shall pay to such Co-Agent, as applicable, for the benefit of such Affected Entity, such amounts charged to such Affected Entity or such amounts to otherwise compensate such Affected Entity for such increased cost or such reduction.  Notwithstanding anything in this Agreement to the contrary, (x) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, regulations, guidelines, interpretations or directives thereunder, issued in connection therewith or in implementation thereof (whether or not having the force of law) and (y) all requests, rules, regulations, guidelines, interpretations or directives promulgated by the Bank for International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or the United States or foreign regulatory authorities (whether or not having the force of law), in each case pursuant to Basel III, shall be deemed to be adopted and effective after the Closing Date regardless of the date enacted, adopted, issued, promulgated or implemented (including for purposes of Section 10.1 and this Section 10.2). 
(b)    (i) Without limiting the generality of the foregoing, if Borrower shall be required by applicable law to deduct any Indemnified Taxes from any payments made to any Affected Entity, then (a) the sum payable shall be increased as necessary so that, after making all required deductions (including deductions applicable to additional sums payable under this Section 10.2), such Affected Entity receives an amount equal to the sum it would have received had no such deductions been made, (b) Borrower shall make such deductions and (c) Borrower shall timely pay the full amount deducted to the relevant Governmental Authority in accordance with applicable law.  As soon as practicable, but in no event more than 30 days after any payment of such Indemnified Taxes by Borrower to a Governmental Authority, Borrower shall deliver to the Administrative Agent and the applicable Co-Agent the original or a certified copy of a receipt issued by such Governmental Authority evidencing such payment, a copy of the return reporting such payment or other evidence of such payment reasonably satisfactory to the Administrative Agent or such Co-Agent, as the case may be.  
(i)    In addition, the Borrower agrees to pay any and all present or future stamp, court or documentary taxes and any other excise or property taxes or charges or similar levies which arise from any payment made under any Transaction Document or from the execution, delivery, performance, enforcement or registration of, or otherwise with respect to, any Transaction Document (hereinafter referred to as “Other Taxes”). The Borrower shall not be required to make payment under this Section 10.2(b)(ii) to the extent paid under Section 10.1.
(ii)    If the Borrower shall be required to deduct or pay any Taxes or Other Taxes from or in respect of any sum payable under any Transaction Document to any Indemnified Party, the Borrower shall also pay to such Indemnified Party at the time interest is paid, such additional amount that such Indemnified Party specifies is necessary to preserve the after-tax yield (after factoring in all taxes, including taxes imposed on or measured by net income) that such Indemnified Party would have received if such Taxes or Other Taxes had not been imposed. The Borrower shall not be required to make payment under this Section 10.2(iii) to the extent paid under Section 10.1, 10.2(b)(i) or 10.2(b)(ii).
(c)    In connection with the foregoing, the Borrower and the Servicer agree to cooperate with the Administrative Agent to take any action or provide any information (including any Required Data) reasonably requested by the Administrative Agent to mitigate any cost, expense or condition described above. 
(d)    The Servicer and the Borrower acknowledge that, in connection with the funding of the Loan, or any portion thereof, by a Conduit, the Administrative Agent may be required to obtain commercial paper ratings affirmation(s).  Each of the Servicer and the Borrower agrees that it will (i) cooperate with the Administrative Agent and any rating agency involved in the issuance of such rating, (ii) amend and/or supplement the terms of this Agreement and the other Transaction Documents that define, employ or relate to the term “Borrowing Base”, “Eligible Receivable,” “Loss Reserve,” “Dilution Reserve,” “Interest and Servicing Reserve,” “Servicing Fee Rate,” “Required Reserve” or “Required Reserve Factor Floor”, or any defined term utilized in the definitions of such terms, in each case, as required by such rating agency in connection with the issuance of such rating (as so amended or supplemented, the “Revised Documents”), and (iii) take all actions required to ensure that (A) it is in compliance with all material provisions, representation, warranties and covenants of the Revised Documents applicable to it, (B) no Unmatured Event of Default, Event of Default, or any event that, with the giving of notice or the lapse of time, or both, would constitute a Unmatured Event of Default or Event of Default exists under the Revised Documents and (C) all other requirements under the Revised Documents relating to the funding of the Loan or the ownership of any Receivable have been complied with.  The Borrower shall pay in immediately available funds to the Administrative Agent, all costs and expenses in connection with this Section 10.2, including, without limitation, the initial fees payable to such rating agency or agencies in connection with providing such rating and all ongoing fees payable to the rating agency or agencies for their continued monitoring of such rating.
Section 10.3.    Other Costs and Expenses.  Subject to Section 7.1(d), Borrower shall pay to the Agents and the Conduits on demand all costs and out-of-pocket expenses in connection with the preparation, execution, delivery and administration of this Agreement, the transactions contemplated hereby and the other documents to be delivered hereunder, including without limitation, the reasonable fees and out-of-pocket expenses of legal counsel for the Agents and the Conduits (which such counsel may be employees of the Agents or the Conduits) with respect thereto and with respect to advising the Agents and the Conduits as to their respective rights and remedies under this Agreement.  Borrower shall pay to the Agents on demand any and all costs and expenses of the Agents and the Lenders, if any, including reasonable counsel fees and expenses actually incurred in connection with the enforcement of this Agreement and the other documents delivered hereunder and in connection with any restructuring or workout of this Agreement or such documents, or the administration of this Agreement following an Event of Default.  Notwithstanding anything to the contrary contained herein, the parties hereto agree that in no event shall the Borrower be obligated to pay the fees and expenses of more than one legal counsel in respect of the Lenders, which counsel shall be counsel for the Administrative Agent. 
ARTICLE XI.     
THE AGENTS
Section 11.1.    Authorization and Action.
(e)    Each Unaffiliated Committed Lender and each Committed Lender in any Conduit Group hereby designates the Person designated herein as Co-Agent for such Unaffiliated Committed Lender or Conduit Group, as applicable, as agent for such Person  hereunder and authorizes such Person to take such actions as agent on its behalf and to exercise such powers as are delegated to the Co-Agent for such Person by the terms of this Agreement together with such powers as are reasonably incidental thereto.  Each Secured Party hereby irrevocably designates and appoints Coöperatieve Centrale Raiffeisen-Boerenleenbank B.A., “Rabobank Nederland”, New York Branch as Administrative Agent hereunder and under the Transaction Documents to which the Administrative Agent is a party, and each Lender and each Co-Agent that becomes a party to this Agreement hereafter ratifies such designation and appointment and authorizes the Administrative Agent to take such action on its behalf under the provisions of the Transaction Documents and to exercise such powers and perform such duties as are expressly delegated to the Administrative Agent by the terms of the Transaction Documents, together with such other powers as are reasonably incidental thereto.  Notwithstanding any provision to the contrary elsewhere in this Agreement, none of the Agents or the Letter of Credit Issuer shall have any duties or responsibilities, except those expressly set forth in the Transaction Documents to which it is a party, or any fiduciary relationship with any Lender, and no implied covenants, functions, responsibilities, duties, obligations or liabilities on the part of such Agent shall be read into any Transaction Document or otherwise exist against such Agent.  In addition, the Administrative Agent is hereby authorized by each Lender, the Letter of Credit Issuer and each Co-Agent to consent to any amendments or restatements to the Certificate of Incorporation of Borrower to the extent such amendments or restatements are not prohibited by Section 7.1(i)(xxix).
(f)    The provisions of this Article XI are solely for the benefit of the Agents, the Letter of Credit Issuer and the Lenders, and none of the Loan Parties shall have any rights as a third-party beneficiary or otherwise under any of the provisions of this Article XI, except that this Article XI shall not affect any obligations which any of the Agents or Lenders may have to any of the Loan Parties under the other provisions of this Agreement.
(g)    In performing its functions and duties hereunder, (i) each Co-Agent shall act solely as agent for its related Committed Lender or the Lenders in its Conduit Group, as applicable, and does not assume nor shall be deemed to have assumed any obligation or relationship of trust or agency with or for any of the Loan Parties or any other Lenders or any of their respective successors or assigns, and (ii) the Administrative Agent shall act solely as the agent of the Secured Parties and does not assume nor shall be deemed to have assumed any obligation or relationship of trust or agency with or for any of the Loan Parties or any of their respective successors and assigns.
Section 11.2.    Delegation of Duties.  Each of the Agents may execute any of its duties under any Liquidity Agreement to which it is a party and each Transaction Document by or through agents or attorneys-in-fact and shall be entitled to advice of counsel concerning all matters pertaining to such duties.  The Letter of Credit Issuer may execute any of its duties under each Transaction Document to which it is a party by or through agents or attorneys-in-fact and shall be entitled to advice of counsel concerning all matters pertaining to such duties.  None of the Agents or the Letter of Credit Issuer shall be responsible for the negligence or misconduct of any agents or attorneys-in-fact selected by it with reasonable care.
Section 11.3.    Exculpatory Provisions.  None of the Agents or the Letter of Credit Issuer or any of their directors, officers, agents or employees shall be (i) liable for any action lawfully taken or omitted to be taken by it or them under or in connection with this Agreement or any other Transaction Document (except for its, their or such Person’s own gross negligence or willful misconduct), or (ii) responsible in any manner to any of the Lenders or other Agents for any recitals, statements, representations or warranties made by any Loan Party contained in this Agreement, any other Transaction Document or any certificate, report, statement or other document referred to or provided for in, or received under or in connection with, this Agreement, or any other Transaction Document or for the value, validity, effectiveness, genuineness, enforceability or sufficiency of this Agreement, or any other Transaction Document or any other document furnished in connection herewith or therewith, or for any failure of any Loan Party to perform its obligations hereunder or thereunder, or for the satisfaction of any condition specified in Article VI, or for the perfection, priority, condition, value or sufficiency of any collateral pledged in connection herewith.  None of the Agents or the Letter of Credit Issuer shall be under any obligation to any other Agent or any Lender to ascertain or to inquire as to the observance or performance of any of the agreements or covenants contained in, or conditions of, this Agreement or any other Transaction Document, or to inspect the properties, books or records of the Loan Parties.  None of the Agents or the Letter of Credit Issuer shall be deemed to have knowledge of any Event of Default or Unmatured Event of Default unless such Agent has received notice from Borrower, another Agent or a Lender.
Section 11.4.    Reliance by Agents.
(a)    Each of the Agents and the Letter of Credit Issuer shall in all cases be entitled to rely, and shall be fully protected in relying, upon any document or conversation believed by it to be genuine and correct and to have been signed, sent or made by the proper Person or Persons and upon advice and statements of legal counsel (including, without limitation, counsel to Borrower), independent accountants and other experts selected by such Agent or Letter of Credit Issuer.  Each of the Agents and the Letter of Credit Issuer shall in all cases be fully justified in failing or refusing to take any action under this Agreement or any other Transaction Document unless it shall first receive such advice or concurrence of such of the Lenders or Committed Lenders in its Conduit Group as it deems appropriate and it shall first be indemnified to its satisfaction by the Committed Lenders in its Conduit Group against any and all liability, cost and expense which may be incurred by it by reason of taking or continuing to take any such action; provided that unless and until an Agent or the Letter of Credit Issuer shall have received such advice, such Agent or the Letter of Credit Issuer may take or refrain from taking any action, as such Agent shall deem advisable and in the best interests of the Lenders.
(b)    The Administrative Agent shall in all cases be fully protected in acting, or in refraining from acting, in accordance with a request of the Required Committed Lenders or all of the Lenders, as applicable, and such request and any action taken or failure to act pursuant thereto shall be binding upon all the Lenders.
(c)    Any action taken by any of the Agents or the Letter of Credit Issuer in accordance with Section 11.4 shall be binding upon all of the Agents, the Letter of Credit Issuer and the Lenders, as applicable.
Section 11.5.    Non-Reliance on Other Agents and Other Lenders.  Each Lender expressly acknowledges that none of the Agents, the Letter of Credit Issuer or other Lenders, nor any of their respective officers, directors, employees, agents, attorneys-in-fact or affiliates, has made any representations or warranties to it and that no act by any Agent, the Letter of Credit Issuer or other Lender hereafter taken, including, without limitation, any review of the affairs of any Loan Party, shall be deemed to constitute any representation or warranty by such Agent or such other Lender.  Each Lender represents and warrants to each Agent and that the Letter of Credit Issuer that it has made and will make, independently and without reliance upon any Agent, the Letter of Credit Issuer or any other Lender and based on such documents and information as it has deemed appropriate, its own appraisal of and investigation into the business, operations, property, prospects, financial and other conditions and creditworthiness of Borrower and made its own decision to enter into its Liquidity Agreement (if applicable), the Transaction Documents and all other documents related thereto.
Section 11.6.    Reimbursement and Indemnification.  Each of the Committed Lenders agree to reimburse and indemnify (a) its applicable Co-Agent, (b) the Letter of Credit Issuer and (c) the Administrative Agent and its officers, directors, employees, representatives and agents ratably in accordance with their respective Commitments, to the extent not paid or reimbursed by the Loan Parties (i) for any amounts for which such Agent, acting in its capacity as Agent, or the Letter of Credit Issuer is entitled to reimbursement by the Loan Parties hereunder and (ii) (A) with respect to such Agent, for any other expenses incurred by such Agent, in its capacity as Agent and acting on behalf of the Lenders, in connection with the administration and enforcement of its Liquidity Agreements and the Transaction Documents and (B) with respect to the Letter of Credit Issuer, for any other expenses incurred in its capacity as Letter of Credit Issuer, in connection with the administration and enforcement of the Transaction Documents.
Section 11.7.    Agents in their Individual Capacities.  Each of the Agents and its Affiliates may make loans to, accept deposits from and generally engage in any kind of business with Borrower or any Affiliate of Borrower as though such Agent were not an Agent hereunder.  With respect to the making of Loans pursuant to this Agreement, each of the Agents shall have the same rights and powers under any Liquidity Agreement to which it is a party and the Transaction Documents in its individual capacity as any Lender and may exercise the same as though it were not an Agent, and the terms “Committed Lender,” “Lender,” “Committed Lenders” and “Lenders” shall include each of the Agents in its individual capacity.
Section 11.8.    Conflict Waivers.  Each Co-Agent acts, or may in the future act:  (i) as administrative agent for such Co-Agent’s Conduit, (ii) as issuing and paying agent for such Conduit’s Commercial Paper, (iii) to provide credit or liquidity enhancement for the timely payment for such Conduit’s Commercial Paper and (iv) to provide other services from time to time for such Conduit (collectively, the “Co-Agent Roles”).  Without limiting the generality of Sections 11.1 and 11.8, each of the other Agents and the Lenders hereby acknowledges and consents to any and all Co-Agent Roles and agrees that in connection with any Co-Agent Role, a Co-Agent may take, or refrain from taking, any action which it, in its discretion, deems appropriate, including, without limitation, in its role as administrative agent for its Conduit, the giving of notice to the Committed Lenders in its Conduit Group of a mandatory purchase pursuant to the applicable Liquidity Agreement for such Conduit Group, and hereby acknowledges that neither the applicable Co-Agent nor any of its Affiliates has any fiduciary duties hereunder to any Lender (other than its Conduit) arising out of any Co-Agent Roles.
Section 11.9.    UCC and PPSA Filings.  Each of the Secured Parties hereby expressly recognizes and agrees that the Administrative Agent may be listed as the assignee or secured party of record on the various UCC and PPSA  filings required to be made under the Transaction Documents in order to perfect their respective interests in the Collateral, that such listing shall be for administrative convenience only in creating a record or nominee holder to take certain actions hereunder on behalf of the Secured Parties and that such listing will not affect in any way the status of the Secured Parties as the true parties in interest with respect to the Collateral.  In addition, such listing shall impose no duties on the Administrative Agent other than those expressly and specifically undertaken in accordance with this Article XI.
Section 11.10.    Successor Administrative Agent and Letter of Credit Issuer.  The Administrative Agent or the Letter of Credit Issuer, upon five (5) days’ notice to the Loan Parties, the other Agents and the Lenders, may voluntarily resign and may be removed at any time, with or without cause, by Committed Lenders holding in the aggregate at least sixty-six and two-thirds percent (66 2/3%) of the Aggregate Commitment and the Borrower.  If the Administrative Agent (other than Rabobank) or the Letter of Credit Issuer (other than Rabobank) shall voluntarily resign or be removed as Agent or Letter of Credit Issuer under this Agreement, then the Required Committed Lenders during such five-day period shall appoint, with the consent of Borrower from among the remaining Committed Lenders, a successor Administrative Agent or a successor Letter of Credit Issuer, whereupon such successor Administrative Agent or such successor Letter of Credit Issuer shall succeed to the rights, powers and duties of the Administrative Agent or the Letter of Credit Issuer, respectively.  The term “Administrative Agent” shall mean such successor agent, effective upon its appointment, and the former Administrative Agent’s rights, powers and duties as Administrative Agent shall be terminated, without any other or further act or deed on the part of such former Administrative Agent or any of the parties to this Agreement.  The term “Letter of Credit Issuer” shall mean such successor Letter of Credit Issuer, effective upon its appointment, and the former Letter of Credit Issuer’s rights, powers and duties as Letter of Credit Issuer shall be terminated, without any other or further act or deed on the part of such former Letter of Credit Issuer or any of the parties to this Agreement. Upon resignation or replacement of any Agent in accordance with this Section 11.10, the retiring Administrative Agent shall execute such UCC-3 assignments and amendments, and assignments and amendments of any Liquidity Agreement to which it is a party and the Transaction Documents, as may be necessary to give effect to its replacement by a successor Administrative Agent.  After any retiring Administrative Agent’s resignation hereunder as Administrative Agent or retiring Letter of Credit Issuer’s resignation hereunder as Letter of Credit Issuer, the provisions of this Article XI and Article X shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Administrative Agent or Letter of Credit Issuer, respectively, under this Agreement.  In addition, the resigning Letter of Credit Issuer shall retain all rights and obligations of the Letter of Credit Issuer hereunder with respect to all Letters of Credit outstanding as of the effective date of the resignation and all Letter of Credit Liability with respect thereto (including the right to require the Lenders to fund payment of any amount drawn under a Letter of Credit issued by it pursuant to Section 1.7 and the right to have any such Letter of Credit Liability Cash Collateralized as provided herein).
ARTICLE XII.     
ASSIGNMENTS; PARTICIPATIONS
Section 12.1.    Assignments.
(a)    Each of the Agents, the Letter of Credit Issuer, the Loan Parties and the Committed Lenders hereby agrees and consents to the complete or partial assignment by each Conduit of all or any portion of its rights under, interest in, title to and obligations under this Agreement to the Committed Lenders in its Conduit Group pursuant to its Liquidity Agreement.
(b)    Any Lender may at any time and from time to time assign to one or more Eligible Assignees (each, a “Purchasing Lender”) all or any part of its rights and obligations under this Agreement pursuant to an assignment agreement substantially in the form set forth in Exhibit V hereto (an “Assignment Agreement”) executed by such Purchasing Lender and such selling Lender; provided, however, that any assignment of a Lender’s rights and obligations hereunder shall include a pro rata assignment of its rights and obligations under the applicable Liquidity Agreement (if any).  The consent of the applicable Conduit shall be required prior to the effectiveness of any such assignment by a Lender in such Conduit’s Conduit Group.  Each assignee of a Lender must (i) be (x) an Eligible Assignee or (y) an assignee with respect to which Borrower and the Letter of Credit Issuer has provided prior written consent (such consent not to be unreasonably withheld or delayed) and (ii) agree to deliver to the applicable Co-Agent, as the case may be, promptly following any request therefor by such Person, an enforceability opinion in form and substance satisfactory to such Person.  Upon delivery of an executed Assignment Agreement to the applicable Co-Agent, such selling Lender shall be released from its obligations hereunder and, if applicable, under its Liquidity Agreement to the extent of such assignment.  Thereafter the Purchasing Lender shall for all purposes be a Lender party to this Agreement and, if applicable, its Conduit Group’s Liquidity Agreement and shall have all the rights and obligations of a Lender hereunder and thereunder to the same extent as if it were an original party hereto and thereto and no further consent or action by Borrower, the Lenders or the Agents shall be required.  
(c)     (i)    Notwithstanding anything to the contrary contained herein, each of the Committed Lenders agrees that in the event that it shall become a Defaulting Lender, then until such time as such Committed Lender is no longer a Defaulting Lender, to the extent permitted by applicable law, such Defaulting Lender’s right to vote in respect of any amendment, consent or waiver of the terms of this Agreement or any other Transaction Document or to direct any action or inaction of the Administrative Agent or to be taken into account in the calculation of the Required Committed Lenders shall be suspended at all times that such Committed Lender remains a Defaulting Lender; provided, however, that, except as otherwise set forth in this Section 12.1(c), the foregoing suspension shall not empower Lenders that are not Defaulting Lenders to increase a Defaulting Lender’s Commitment, decrease the rate of interest or fees applicable to, or extend the maturity date of such Defaulting Lender’s Advances or other Obligations owing to such Lender, in each case, without such Lender’s consent.  No Commitment of any Committed Lender shall be increased or otherwise affected, and except as otherwise expressly provided in this Section 12.1(c), performance by the Borrower of its obligations hereunder and under the other Transaction Documents shall not be excused or otherwise modified, as a result of the operation of this Section 12.1(c).
(i)    To the extent that any Committed Lender is a Defaulting Lender with respect to an Advance, the Borrower may deliver a notice to the Lenders specifying the date of such Advance, the identity of the Defaulting Lender and the portion of such Advance that the Defaulting Lender failed to fund, which notice shall be deemed to be an additional Borrowing Notice in respect of such unfunded portion of such Advance, and each Committed Lender (or its related Conduit, if applicable, and acting in its sole discretion) shall, to the extent of its remaining unfunded Commitment and subject to the continued fulfillment of all applicable conditions precedent set forth herein with respect to such Advance, fund its Percentage (recomputed by excluding the Commitment of Defaulting Lenders from the Aggregate Commitment) of such unfunded portion of such Advance not later than 2:30 p.m. (New York City time) on the Business Day following the date of such notice.  To the extent that any Committed Lender is a Defaulting Lender on any date that the Letter of Credit Liability is greater than zero, each Committed Lender shall, automatically and without further action of any kind upon such date, acquire an increased participation interest in the Letters of Credit outstanding, along with all accompanying rights and obligations described in Section 1.7, equal to the lessor of (x) its Percentage (recomputed by excluding the Commitment of Defaulting Lenders from the Aggregate Commitment) of such Defaulting Lender’s Percentage of the Letter of Credit Liability and (y) its remaining unfunded Commitment.
(ii)    Until the Defaulting Lender Excess of a Defaulting Lender has been reduced to zero, any payment of the principal of any Loan to a Defaulting Lender shall, unless the Required Committed Lenders agree otherwise, be applied first (1) ratably, to the reduction of the Loans or L/C Participation Funding(s) funding any defaulted portion of Advances or L/C Participation Funding(s) pursuant to Section 12.1(c)(ii) and then (2) ratably to reduce the Loans of each of the Lenders that are not Defaulting Lenders in accordance with the principal amount (if any) thereof.  Subject to the preceding sentence, any amount paid by or on behalf of the Borrower for the account of a Defaulting Lender under this Agreement or any other Transaction Document will not be paid or distributed to such Defaulting Lender, but will instead be applied to the making of payments from time to time in the following order of priority until such Defaulting Lender has ceased to be a Defaulting Lender as provided below: first, to the funding of any portion of any Advance or L/C Participation Funding(s) in respect of which such Defaulting Lender has failed to fund as required by this Agreement, as determined by the Administrative Agent; second, held in a segregated subaccount of the Collection Account as cash collateral for future funding obligations of the Defaulting Lender in respect of Advances or L/C Participation Funding(s) under this Agreement; and third, after the termination of the Commitments and payment in full of all Obligations, to such Defaulting Lender or as a court of competent jurisdiction may otherwise direct.
(iii)    During any period that a Committed Lender is a Defaulting Lender, the Borrower shall not accrue or be required to pay, and such Defaulting Lender shall not be entitled to receive, the Unused Fee (as defined in the Fee Letter) otherwise payable to such Defaulting Lender under this Agreement at any time, or with respect to any period, that such Committed Lender is a Defaulting Lender.
(iv)    During any period that a Committed Lender is a Defaulting Lender, the Borrower may, by giving written notice thereof to the Administrative Agent and such Defaulting Lender, require such Defaulting Lender, at the cost and expense of the Borrower, to assign and delegate, without recourse (in accordance with and subject to the restrictions contained in, and consents required by, this Article XII), (i) all and not less than all of its interests, rights and obligations under this Agreement and the Transaction Documents to an assignee or assignees that shall assume such obligations (which assignee may be another Lender, if such other Lender accepts such assignment) in whole or (ii) all of its interests, rights and obligations under this Agreement and the Transaction Documents with respect to all prospective Commitments, including any unfunded Commitment as of the date of such assignment.  No party hereto shall have any obligation whatsoever to initiate any such complete or partial replacement or to assist in finding an assignee.  In connection with any such complete or partial assignment, such Defaulting Lender shall promptly execute all documents reasonably requested to effect such assignment, including an appropriate Assignment Agreement.  No such assignment shall be effective unless and until, in addition to the other conditions thereto set forth herein, (A) to the extent that the assignee is assuming all of the interests, rights and obligations of the Defaulting Lender, the parties to the assignment shall make such additional payments in an aggregate amount sufficient, upon distribution thereof as appropriate (which may be outright payment, purchases by the assignee of participations, or other compensating actions, including funding, with the consent of the Borrower and the Administrative Agent, the applicable Percentage of Advances previously requested but not funded by the Defaulting Lender, to each of which the applicable assignee and assignor hereby irrevocably consent), to (x) pay and satisfy in full all payment liabilities then owed by such Defaulting Lender to the Borrower or any Lender hereunder (and interest accrued thereon), and (y) acquire (and fund as appropriate) the Loans made by such Defaulting Lender or members of such Defaulting Lender Group, as applicable, (B) to the extent that the assignee is assuming all of the interests, rights and obligations of the Defaulting Lender, such Defaulting Lender or members of such Defaulting Lender Group, as applicable, shall have received payment of an amount equal to all of its Loans outstanding, accrued interest thereon, accrued fees (subject to Section 12.1(c)(iv)) and all other amounts, including any Breakage Costs, payable to it and its Affected Entities hereunder and the other Transaction Documents through (but excluding) the date of such assignment from the assignee or the Borrower, and (C) such assignment does not conflict with applicable law.  Notwithstanding the foregoing, in the event that any assignment of rights and obligations of any Defaulting Lender hereunder shall become effective under applicable law without compliance with the provisions of this paragraph, then the assignee of such interest shall be deemed to be a Defaulting Lender for all purposes of this Agreement until such compliance occurs.
(v)    If the Borrower, Servicer, and the Administrative Agent agree in writing in their discretion that a Committed Lender that is a Defaulting Lender should no longer be deemed to be a Defaulting Lender, the Administrative Agent will so notify the Lenders and the Co-Agents, whereupon as of the effective date specified in such notice and subject to any conditions set forth therein, such Committed Lender will, to the extent applicable, purchase such portion of outstanding Advances of the other Lenders and make such other adjustments as the Administrative Agent may reasonably determine to be necessary to cause the interest of the Lenders in the Aggregate Principal to be on a pro rata basis in accordance with their respective Percentages, whereupon such Lender will cease to be a Defaulting Lender; provided that no adjustments will be made retroactively with respect to fees accrued or payments made by or on behalf of the Borrower or forfeited pursuant to Section 12.1(c)(iv), while such Committed Lender was a Defaulting Lender; and provided further that, except to the extent otherwise expressly agreed by the affected parties, no cure by a Committed Lender under this subsection of its status as a Defaulting Lender will constitute a waiver or release of any claim or any party hereunder arising from such Committed Lender having been a Defaulting Lender.
(vi)    The rights and remedies of the Borrower, any Agent or the other Lenders against a Defaulting Lender under this Section 12.1(c) are in addition to any other rights and remedies the Borrower, the Agents and the other Lender may have against such Defaulting Lender under this Agreement, any of the other Transaction Documents, applicable law or otherwise.
(vii)    Any Committed Lender that fails to timely fund a Loan shall be obligated to promptly (but in any event not later than 10:00 a.m. (New York City time) on the Business Day after the date of the related Advance) notify the Borrower and the Administrative Agent if any such failure is the result of an administrative error or omission by such Committed Lender or force majeure, computer malfunction, interruption of communication facilities, labor difficulties or other causes, in each case to the extent beyond such Committed Lender’s reasonable control.  If (i) the Administrative Agent had been notified by the Borrower or the affected Committed Lender that a Committed Lender has failed to timely fund a Loan, (ii) a Responsible Officer of the Administrative Agent has actual knowledge or has written notice that such Committed Lender is the subject of an Event of Bankruptcy or has publicly announced that it does not intend to comply with its funding obligations under this Agreement or (iii) the Administrative Agent had been notified by the affected Committed Lender that a Committed Lender has failed timely to deliver the written confirmation contemplated by clause (a)(iii) of the definition of “Defaulting Lender”, the Administrative Agent shall promptly provide notice to the Borrower and the Co-Agents of such occurrence.
(d)    No Loan Party may assign any of its rights or obligations under this Agreement without the prior written consent of each of the Agents and each of the Lenders and without satisfying the Rating Agency Condition, if applicable.
Section 12.2.    Participations.  Any Committed Lender may, in the ordinary course of its business at any time sell to one or more Persons (each, a “Participant”) participating interests in its Pro Rata Share of its Conduit Group’s Percentage of Aggregate Commitment, its Loans, its Letters of Credit, its Liquidity Commitment (if applicable) or any other interest of such Committed Lender hereunder or, if applicable, under its Liquidity Agreement.  Notwithstanding any such sale by a Committed Lender of a participating interest to a Participant, such Committed Lender’s rights and obligations under this Agreement and, if applicable, such Liquidity Agreement shall remain unchanged, such Committed Lender shall remain solely responsible for the performance of its obligations hereunder and, if applicable, under its Liquidity Agreement, and the Loan Parties, the Lenders and the Agents shall continue to deal solely and directly with such Committed Lender in connection with such Committed Lender’s rights and obligations under this Agreement and, if applicable, its Liquidity Agreement.  Each Committed Lender agrees that any agreement between such Committed Lender and any such Participant in respect of such participating interest shall not restrict such Committed Lender’s right to agree to any amendment, supplement, waiver or modification to this Agreement, except for any amendment, supplement, waiver or modification described in Section 14.1(b)(i).
Section 12.3.    Register.  The Administrative Agent (as agent for the Borrower) shall maintain at its office referred to in Section 14.2 a copy of each Assignment Agreement delivered to and accepted by it and register (the “Register”) for the recordation of the names and addresses of the Lenders and the Pro Rata Share of, outstanding principal amount of all Advances owing to and Interest of, each Lender from time to time, which Register shall be available for inspection by the Borrower at any reasonable time and from time to time upon reasonable prior notice.  No assignment under this Article XII shall be effective until the entries described in the preceding sentence have been made in the Register.  The entries in the Register shall be conclusive and binding for all purposes, absent manifest error, and the Borrower, the Servicer, the Lenders, the Co-Agents, the Letter of Credit Issuer and the Administrative Agent may treat each Person whose name is recorded in the Register as a Lender hereunder for all purposes of this Agreement.
Section 12.4.    Federal Reserve.  Notwithstanding any other provision of this Agreement to the contrary, any Lender may at any time pledge or grant a security interest in all or any portion of its rights (including, without limitation, any Loan and any rights to payment of principal or interest thereon) under this Agreement to secure obligations of such Lender to a Federal Reserve Bank, without notice to or consent of Borrower, Servicer or any Agent; provided that no such pledge or grant of a security interest shall release such Lender from any of its obligations hereunder, or substitute any such pledgee or grantee for such Lender as a party hereto.
ARTICLE XIII.     
SECURITY INTEREST
Section 13.1.    Grant of Security Interest.  To secure the due and punctual payment of the Obligations, whether now or hereafter existing, due or to become due, direct or indirect, or absolute or contingent, including, without limitation, all Indemnified Amounts, in each case pro rata according to the respective amounts thereof, Borrower hereby grants to the Administrative Agent, for the benefit of the Secured Parties, a security interest in, all of Borrower’s right, title and interest, whether now owned and existing or hereafter arising in and to all of the Receivables, the Related Security, the Collections, and all proceeds of the foregoing (collectively, the “Collateral”).  Borrower hereby authorizes the Administrative Agent to file a financing statement naming Borrower as debtor or seller that describes the collateral as “all assets of the debtor whether now existing or hereafter arising” or words of similar effect.
Section 13.2.    Termination after Final Payout Date.  Each of the Secured Parties hereby authorizes the Administrative Agent, and the Administrative Agent hereby agrees, promptly after the Final Payout Date to execute and deliver to Borrower such UCC termination statements as may be necessary to terminate the Administrative Agent’s security interest in and lien upon the Collateral, all at Borrower’s expense.  Upon the Final Payout Date, all right, title and interest of the Administrative Agent and the other Secured Parties in and to the Collateral shall terminate.
ARTICLE XIV.     
MISCELLANEOUS
Section 14.1.    Waivers and Amendments.
(d)    No failure or delay on the part of any Agent or any Lender in exercising any power, right or remedy under this Agreement shall operate as a waiver thereof, nor shall any single or partial exercise of any such power, right or remedy preclude any other further exercise thereof or the exercise of any other power, right or remedy.  The rights and remedies herein provided shall be cumulative and nonexclusive of any rights or remedies provided by law.  Any waiver of this Agreement shall be effective only in the specific instance and for the specific purpose for which given.
(e)    No provision of this Agreement may be amended, supplemented, modified or waived except in writing in accordance with the provisions of this Section 14.1(b).  The Loan Parties, the Required Committed Lenders and the Administrative Agent may enter into written modifications or waivers of any provisions of this Agreement; provided, however, that no such modification or waiver shall:
(i)    without the consent of each affected Lender, (A) extend the Scheduled Termination Date or the date of any payment or deposit of Collections by Borrower or the Servicer, (B) reduce the rate or extend the time of payment of Interest or any CP Costs (or any component of Interest or CP Costs), (C) reduce any fee payable to any Agent for the benefit of the Lenders, (D) except pursuant to Article XII hereof, change the amount of the principal of any Lender, any Committed Lender’s Pro Rata Share or any Committed Lender’s Commitment, (E) amend, modify or waive any provision of the definition of Required Committed Lenders or this Section 14.1(b), (F) consent to or permit the assignment or transfer by Borrower of any of its rights and obligations under this Agreement, (G) change the definition of “Borrowing Base,” “Eligible Receivable,” “Loss Reserve,” “Dilution Reserve,” “Interest and Servicing Reserve,” “Required Reserve,” “Required Reserve Factor Floor,” “Servicing Fee Rate,”  or (H) amend or modify any defined term (or any defined term used directly or indirectly in such defined term) used in clauses (A) through (G) above in a manner that would circumvent the intention of the restrictions set forth in such clauses; or
(ii)    without the written consent of any affected Agent, amend, modify or waive any provision of this Agreement if the effect thereof is to affect the rights or duties of such Agent,
and any material amendment, waiver or other modification of this Agreement shall require satisfaction of the Rating Agency Condition, to the extent the Rating Agency Condition is required of any Conduit.  Notwithstanding the foregoing, (i) without the consent of the Committed Lenders, but with the consent of Borrower, any Co-Agent may direct the Administrative Agent to amend this Agreement solely to add additional Persons as Committed Lenders in respect of the related Conduit Group hereunder and (ii) the Agents, the Required Committed Lenders and the Conduits may enter into amendments to modify any of the terms or provisions of Article XI, Article XII, Section 14.13 or any other provision of this Agreement without the consent of Borrower; provided that such amendment has no negative impact upon Borrower.  Any modification or waiver made in accordance with this Section 14.1 shall apply to each of the Lenders equally and shall be binding upon Borrower, the Lenders and the Agents.
Section 14.2.    Notices.  Except as provided in this Section 14.2, all communications and notices provided for hereunder shall be in writing (including bank wire, telecopy or electronic facsimile transmission or similar writing) and shall be given to the other parties hereto at their respective addresses or telecopy numbers set forth on the signature pages hereof or at such other address or telecopy number as such Person may hereafter specify for the purpose of notice to each of the other parties hereto.  Each such notice or other communication shall be effective (i) if given by telecopy, upon the receipt thereof, (ii) if given by mail, three (3) Business Days after the time such communication is deposited in the mail with first class postage prepaid or (iii) if given by any other means, when received at the address specified in this Section 14.2; provided, however, that any notice (including any Borrowing Notice or Reduction Notice) from any Loan Party to any Agent or any Lender shall be effective only upon receipt of such notice by such Agent or Lender.  
Section 14.3.    Ratable Payments.  If (a) any Lender, whether by setoff or otherwise, has payment made to it with respect to any portion of the Obligations owing to such Lender (other than payments received pursuant to Section 10.2 or 10.3) in a greater proportion than that received by any other Lender in such Lender’s Conduit Group entitled to receive a ratable share of such Obligations, such Lender agrees, promptly upon demand, to purchase for cash without recourse or warranty a portion of such Obligations held by the other Lenders in such Lender’s Conduit Group so that after such purchase each Lender in such Conduit Group will hold its Pro Rata Share of such Obligations and (b) any Conduit Group, whether by set off or otherwise, has payment made to such Conduit Group (other than payments received pursuant to Section 10.2 or 10.3) in a greater proportion than that received by any other Conduit Group entitled to receive a ratable share of such Obligations, the Lenders in such Conduit Group agree, promptly upon demand, to purchase for cash without recourse or warranty a portion of such Obligations held by the other Conduit Groups so that after such purchase each Lender in such Conduit Group, taken together, will hold its Conduit Group’s Percentage of such Obligations; provided that in the case of the preceding clauses (a) and (b), if all or any portion of such excess amount is thereafter recovered from such Lender or Conduit Group, as applicable, such purchase shall be rescinded and the purchase price restored to the extent of such recovery, but without interest.
Section 14.4.    Protection of Administrative Agent’s Security Interest.
(a)    Borrower agrees that from time to time, at its expense, it will promptly execute and deliver all instruments and documents, and take all actions, that may be necessary or desirable, or that any of the Agents may request, to perfect, protect or more fully evidence the Administrative Agent’s security interest in the Collateral, or to enable the Agents or the Lenders to exercise and enforce their rights and remedies hereunder.  At any time after the occurrence of an Event of Default, the Administrative Agent may, or the Administrative Agent may direct Borrower or the Servicer to, notify the Obligors of Receivables, at Borrower’s expense, of the ownership or security interests of the Lenders under this Agreement and may also direct that payments of all amounts due or that become due under any or all Receivables be made directly to the Administrative Agent or its designee.  Borrower or the Servicer (as applicable) shall, at any Lender’s request, withhold the identity of such Lender in any such notification.
(b)    If any Loan Party fails to perform any of its obligations hereunder, the Administrative Agent or any Lender may (but shall not be required to) perform, or cause performance of, such obligations, and the Administrative Agent’s or such Lender’s costs and expenses incurred in connection therewith shall be payable by Borrower as provided in Section 10.3.  Each Loan Party irrevocably authorizes the Administrative Agent at any time and from time to time in the sole discretion of the Administrative Agent, and appoints the Administrative Agent as its attorney-in-fact, to act on behalf of such Loan Party (i) to execute on behalf of Borrower as debtor and to file financing statements necessary or desirable in the Administrative Agent’s sole discretion to perfect and to maintain the perfection and priority of the interest of the Lenders in the Receivables and (ii) to file a carbon, photographic or other reproduction of this Agreement or any financing statement with respect to the Receivables as a financing statement in such offices as the Administrative Agent in its sole discretion deems necessary or desirable to perfect and to maintain the perfection and priority of the Administrative Agent’s security interest in the Collateral, for the benefit of the Secured Parties.  This appointment is coupled with an interest and is irrevocable.
Section 14.5.    Confidentiality.
(a)    Each Loan Party and each Lender shall maintain and shall cause each of its employees and officers to maintain the confidentiality of the Fee Letter, the L/C Fee Letter and the other confidential or proprietary information with respect to the Agents and the Conduits and their respective businesses obtained by it or them in connection with the structuring, negotiating and execution of the transactions contemplated herein, except that such Loan Party and such Lender and its officers and employees may disclose such information to such Loan Party’s and such Lender’s external accountants and attorneys and as required by any applicable law or order of any judicial or administrative proceeding.
(b)    Each of the Lenders and each of the Agents shall maintain and shall cause each of its officers, directors, employees, investors, potential investors, credit enhancers, outside accountants, attorneys and other advisors to maintain the confidentiality of any nonpublic information with respect to the Originators and the Loan Parties, except that any of the foregoing may disclose such information (i) to any party to this Agreement, (ii) to any provider of a surety, guaranty or credit or liquidity enhancement to any Conduit, (iii) to the outside accountants, attorneys and other advisors of any Person described in clause (i) or (ii) above, (iv) to any prospective or actual assignee or participant of any of the Agents or any Lender, (v) to any rating agency who rates the Commercial Paper, to any Commercial Paper dealer, (vi) to any other entity organized for the purpose of purchasing, or making loans secured by, financial assets for which any Co-Agent (or one of its Affiliates) acts as the administrative agent and to any officers, directors, employees, outside accountants and attorneys of each of the foregoing; provided that each Person described in the foregoing clause (ii), (iii), (iv), (v) or (vi) is informed of the confidential nature of such information and, in the case of a Person described in clause (iv), agrees in writing to maintain the confidentiality of such information in accordance with this Section 14.5(b); and (vii) as required pursuant to any law, rule, regulation, direction, request or order of any judicial, administrative or regulatory authority or proceedings (whether or not having the force or effect of law).  Notwithstanding the foregoing, (x) each Conduit and its officers, directors, employees, investors, potential investors, credit enhancers, outside accountants, attorneys and other advisors shall be permitted to disclose Receivables performance information and details concerning the structure of the facility contemplated hereby in summary form and in a manner not identifying the Originators, Borrower, the Servicer, the Performance Guarantor, or the Obligors to prospective investors in Commercial Paper issued by such Conduit, and (y) the Conduits, the Agents and the Lenders shall have no obligation of confidentiality in respect of any information which may be generally available to the public or becomes available to the public through no fault of theirs or their respective Affiliates.
(c)    Notwithstanding any other express or implied agreement to the contrary, the parties hereto hereby agree and acknowledge that each of them and each of their employees, representatives, and other agents may disclose to any and all persons, without limitation of any kind, the tax treatment and tax structure of the transaction and all materials of any kind (including opinions or other tax analyses) that are provided to any of them relating to such tax treatment and tax structure, except to the extent that confidentiality is reasonably necessary to comply with U.S. federal or state securities laws.  For purposes of this Section 14.5(c), the terms “tax treatment” and “tax structure” have the meanings specified in Treasury Regulation section 1.6011-4(c).
Section 14.6.    Bankruptcy Petition.  Borrower, the Servicer, the Agents and each Committed Lender hereby covenants and agrees that, prior to the date that is one year and one day after the payment in full of all outstanding senior indebtedness of any Conduit, it will not institute against, or join any other Person in instituting against, such Conduit any bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings or other similar proceeding under the laws of the United States or any state of the United States.
Section 14.7.    Limitation of Liability.  Except with respect to any claim arising out of the willful misconduct or gross negligence of any Conduit, the Agents or any Committed Lender, no claim may be made by any Loan Party or any other Person against any Conduit, the Agents or any Committed Lender or their respective Affiliates, directors, officers, employees, attorneys or agents for any special, indirect, consequential or punitive damages in respect of any claim for breach of contract or any other theory of liability arising out of or related to the transactions contemplated by this Agreement, or any act, omission or event occurring in connection therewith; and each Loan Party hereby waives, releases, and agrees not to sue upon any claim for any such damages, whether or not accrued and whether or not known or suspected to exist in its favor.
The obligations of each Conduit under this Agreement shall be payable solely out of the funds of such Conduit available for such purpose and shall be solely the corporate obligations of such Conduit.  No recourse shall be had for the payment of any amount owing in respect of this Agreement or for the payment of any fee hereunder or for any other obligation or claim arising out of or based upon this Agreement against any Agent, any Affiliate of any of the foregoing, or any stockholder, employee, officer, director, incorporator or beneficial owner of any of the foregoing.

Section 14.8.    CHOICE OF LAW.  THIS AGREEMENT SHALL BE GOVERNED AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS OF LAWS THEREOF (EXCEPT IN THE CASE OF THE OTHER TRANSACTION DOCUMENTS, TO THE EXTENT OTHERWISE EXPRESSLY STATED THEREIN) AND EXCEPT TO THE EXTENT THAT THE PERFECTION OF THE OWNERSHIP INTEREST OF BORROWER OR THE SECURITY INTEREST OF THE ADMINISTRATIVE AGENT, FOR THE BENEFIT OF THE SECURED PARTIES, IN ANY OF THE COLLATERAL IS GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE STATE OF NEW YORK.
Section 14.9.    CONSENT TO JURISDICTION.  EACH PARTY TO THIS AGREEMENT HEREBY IRREVOCABLY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF ANY UNITED STATES FEDERAL OR NEW YORK STATE COURT SITTING IN NEW YORK, NEW YORK, IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY DOCUMENT EXECUTED BY SUCH PERSON PURSUANT TO THIS AGREEMENT, AND EACH SUCH PARTY HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN ANY SUCH COURT AND IRREVOCABLY WAIVES ANY OBJECTION IT MAY NOW OR HEREAFTER HAVE AS TO THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN SUCH A COURT OR THAT SUCH COURT IS AN INCONVENIENT FORUM. NOTHING HEREIN SHALL LIMIT THE RIGHT OF ANY AGENT OR ANY LENDER TO BRING PROCEEDINGS AGAINST ANY LOAN PARTY IN THE COURTS OF ANY OTHER JURISDICTION. ANY JUDICIAL PROCEEDING BY ANY LOAN PARTY AGAINST ANY AGENT OR ANY LENDER OR ANY AFFILIATE OF ANY AGENT OR ANY LENDER INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH THIS AGREEMENT OR ANY DOCUMENT EXECUTED BY SUCH LOAN PARTY PURSUANT TO THIS AGREEMENT SHALL BE BROUGHT ONLY IN A COURT IN NEW YORK, NEW YORK.
Section 14.10.    WAIVER OF JURY TRIAL.  EACH PARTY HERETO HEREBY WAIVES TRIAL BY JURY IN ANY JUDICIAL PROCEEDING INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER (WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH THIS AGREEMENT, ANY DOCUMENT EXECUTED BY ANY LOAN PARTY PURSUANT TO THIS AGREEMENT OR THE RELATIONSHIP ESTABLISHED HEREUNDER OR THEREUNDER.
Section 14.11.    Integration; Binding Effect; Survival of Terms.
(a)    This Agreement and each other Transaction Document contain the final and complete integration of all prior expressions by the parties hereto with respect to the subject matter hereof and shall constitute the entire agreement among the parties hereto with respect to the subject matter hereof superseding all prior oral or written understandings.
(b)    This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns (including any trustee in bankruptcy).  This Agreement shall create and constitute the continuing obligations of the parties hereto in accordance with its terms and shall remain in full force and effect until terminated in accordance with its terms; provided, however, that the rights and remedies with respect to (i) any breach of any representation and warranty made by any Loan Party pursuant to Article V, (ii) the indemnification and payment provisions of Article X, and Sections 14.5 and 14.6 shall be continuing and shall survive any termination of this Agreement.
Section 14.12.    Counterparts; Severability; Section References.  This Agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which when taken together shall constitute one and the same Agreement.  Any provisions of this Agreement which are prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.  Unless otherwise expressly indicated, all references herein to “Article,” “Section,” “Schedule” or “Exhibit” shall mean articles and sections of, and schedules and exhibits to, this Agreement.
Section 14.13.    Intercreditor Agreement.  The parties acknowledge and agree that, notwithstanding anything contained herein to the contrary, the rights and remedies of the Lenders with respect to the enforcement of this Agreement and the rights and obligations of the Secured Parties with respect to the application of the Collateral are subject to the provisions of the Intercreditor Agreement.
<signature pages follow>

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed and delivered by their duly authorized officers as of the date hereof.
SMITHFIELD RECEIVABLES FUNDING LLC, AS BORROWER

By:  SFFC, Inc., its managing member

By:  /s/ Jeffrey A. Porter                
Name:  Jeffrey A. Porter
Title:    President

		
	Address:  
	3411 Silverside Rd, 103 Baynard Bldg

Wilmington, DE 19810
Attention: Jeffrey Porter  
Telecopy No:   302-477-1300 Ext. 103
Facsimile No: 302-477-1332

With a copy to:    
c/o Smithfield Foods, Inc.
200 Commerce Street
Smithfield, VA 23430,
Attention: Timothy Dykstra 
Telecopy No: 757-365-3070

SMITHFIELD FOODS, INC., AS SERVICER

By: /s/ Timothy Dykstra                
Name:  Timothy Dykstra
Title:    Vice President

		
	Address:
	Smithfield Foods, Inc.

200 Commerce Street
Smithfield, VA 23430,
Attention: Robert Manly  
Telecopy No: 757-365-3025
and Ken Sullivan  
Telecopy No: 757-365-3070

COÖPERATIEVE CENTRALE RAIFFEISEN-BOERENLEENBANK B.A., “RABOBANK NEDERLAND”, NEW YORK BRANCH, AS ADMINISTRATIVE AGENT, AS LETTER OF CREDIT ISSUER AND AS A COMMITTED LENDER

By: /s/ Christopher Lew            
Name:  Christopher Lew
Title:    Vice President

By: /s/ Dana Hartman                
Name:  Dana Hartman
Title:    Executive Director

		
	Address:
	Securitization - Transaction Management 
Rabobank International 
245 Park Avenue 
New York, NY 10167 
Phone:        (212) 808-6806 
Fax:        (914) 304-9324

 

NIEUW AMSTERDAM RECEIVABLES CORPORATION, 
AS A CONDUIT

By: /s/ Damian Perez    
Name: Damian Perez 
Title:   Vice President

Title:  
Address:    Nieuw Amsterdam Receivables Corp.
c/o Global Securitization Services, LLC
68 South Service Road, Suite 120
Melville, NY  11747
Attention: JR Angelo
Phone:     (631) 930-7202
Fax:         (212) 302-8767
Email:        jrangelo@gssnyc.com; ddeangelis@gssnyc.com

EXHIBIT I

DEFINITIONS

As used in the Agreement and the Exhibits and Schedules thereto, capitalized terms have the meanings set forth in this Exhibit I (such meanings to be equally applicable to the singular and plural forms thereof).  Any references in the Agreement or this Exhibit I to any Person includes such Persons successors and permitted assigns.  The words “hereof,” “herein” and “hereunder” and words of similar import refer to this Agreement.  The term “including” means “including without limitation”.       References to any agreement refer to that agreement as from time to time amended or restated.

As used in this Agreement, the following terms shall have the following meanings (such meanings to be equally applicable to both the singular and plural forms of the terms defined):
“ABL Representative” has the meaning provided in the Receivables Sale Agreement.
“Adjusted Dilution Ratio” means, at any time, the rolling average of the Dilution Ratio for the 12 Calculation Periods then most recently ended.
“Adjusted Federal Funds Rate” means, for each Settlement Period, the weighted daily average of (a) a rate per annum equal to the Federal Funds Rate on each day of such Settlement Period, plus (b) the Market Spread  per annum on each day of such Settlement Period.  For purposes of determining the Adjusted Federal Funds Rate for any day, changes in the Federal Funds Rate shall be effective on the date of each such change.
“Adjusted Federal Funds Rate Loan” means a Loan which bears interest at the Adjusted Federal Funds Rate.
“Administrative Agent” has the meaning provided in the preamble to this Agreement. 
“Advance” means a borrowing hereunder consisting of the aggregate amount of the several Loans made on the same Borrowing Date.
“Adverse Claim” has the meaning provided in the Receivables Sale Agreement.
 “Affected Entity” means (i) any Funding Source, (ii) any agent, administrator or manager of a Conduit, or (iii) any bank holding company in respect of any of the foregoing.
“Affiliate” means, with respect to any Person, any other Person directly or indirectly controlling, controlled by, or under direct or indirect common control with, such Person or any Subsidiary of such Person.  A Person shall be deemed to control another Person if (a) the controlling Person owns 10-50% of any class of voting securities of the controlled Person only if it also possesses, directly or indirectly, the power to direct or cause the direction of the management or policies of the controlled Person, whether through ownership of stock, by contract or otherwise, or (b) if the controlling Person owns more than 50% of any class of voting securities of the controlled Person.
“Agents” has the meaning provided in the preamble to this Agreement.
“Aggregate Commitment” means, on any date of determination, the aggregate amount of the Committed Lenders’ Commitments to make Loans and the L/C Credit Extensions hereunder.  As of June 9, 2011, the Aggregate Commitment is $275,000,000.
“Aggregate Principal” means, on any date of determination, the sum of (i) the aggregate outstanding principal amount of all Advances (other than in respect of Loans relating to Letters of Credit) outstanding on such date and (ii) the Letter of Credit Liability on such date.
“Aggregate Reduction” has the meaning provided in Section 1.3.
“Agreement” means this Second Amended and Restated Credit and Security Agreement, as it may be amended or modified and in effect from time to time.
“Allocation Limit” has the meaning provided in Section 1.1(a).
“Alternate Base Rate” means for any day, the rate per annum equal to the higher as of such day of (i) the Prime Rate, or (ii) one-half of one percent (0.50%) above the Federal Funds Rate.  For purposes of determining the Alternate Base Rate for any day, changes in the Prime Rate or the Federal Funds Rate shall be effective on the date of each such change.  In addition, the Alternate Base Rate shall be rounded, if necessary, to the next higher 1/16 of 1%.
“Alternate Base Rate Loan” means a Loan which bears interest at the Alternate Base Rate or the Default Rate.
“Applicable Percentage” has the meaning provided in the Fee Letter.
“Approved Currency” means Dollars, Canadian Dollars and Yen, and any other currency that is the lawful currency of an Approved Obligor Jurisdiction that is approved in writing by the Administrative Agent. 
“Approved Obligor Jurisdiction” means any country which is a member of the Organization for Economic Cooperation and Development, excluding (a) the province of Quebec in the country of Canada or (b) any country whose Governmental Authority (i) shall have admitted in writing its inability to pay its debts as the same become due, (ii) shall have declared a moratorium on the payment of its debts or the debts of any Governmental Authority of such country or (iii) shall have ceased to be a member of the International Monetary Fund or ceased to be eligible to use the resources of the International Monetary Fund or (c) any country with respect to which the U.S. shall have imposed economic sanctions.

“Assignment Agreement” has the meaning provided in Section 12.1(b).
“Auto Extension Letter of Credit” has the meaning specified in Section 1.7(b)(ii).
“Authorized Officer” means, with respect to any Person, its president, corporate controller, treasurer or chief financial officer.
 “Bankruptcy Code” means the Bankruptcy Code of 1978, as amended and in effect from time to time (11 U.S.C. § 101 et seq.) and any successor statute thereto.
“Basel III” means (a) the agreements on capital requirements, a leverage ratio and liquidity standards contained in “Basel III: A global regulatory framework for more resilient banks and banking systems”, “Basel III: International framework for liquidity risk measurement, standards and monitoring” and “Guidance for national authorities operating the countercyclical capital buffer” published by the Basel Committee on Banking Supervision in December 2010, (b) the rules for global systemically important banks contained in “Global systemically important banks: assessment methodology and the additional loss absorbency requirement – Rules text” published by the Committee on Banking Supervision in November 2011, and (c) any further guidance or standards published by the Basel Committee on Banking Supervision relating to “Basel III”.
“Borrower” has the meaning provided in the preamble to this Agreement.
“Borrowing Base” means, on any date of determination, the Net Pool Balance as of the last day of the period covered by the most recent Monthly Report, minus the Required Reserve as of the last day of the period covered by the most recent Monthly Report, and minus Deemed Collections that have occurred since the most recent Cut-Off Date to the extent that such Deemed Collections exceed the Dilution Reserve.
“Borrowing Date” means a Business Day on which an Advance is made hereunder.
“Borrowing Limit” has the meaning provided in Section 1.1(a)(i).
“Borrowing Notice” has the meaning provided in Section 1.2.
“Broken Funding Costs” means for any CP Rate Loan or LIBO Rate Loan which:  (a) in the case of a CP Rate Loan, has its principal reduced without compliance by Borrower with the notice requirements hereunder, (b) in the case of a CP Rate Loan or a LIBO Rate Loan, does not become subject to an Aggregate Reduction following the delivery of any Reduction Notice, (c) in the case of a CP Rate Loan, is assigned under the applicable Liquidity Agreement or (d) in the case of a LIBO Rate Loan, is terminated or reduced prior to the last day of its Interest Period, whether voluntarily or due to the occurrence of the Commitment Termination Date, an amount equal to the excess, if any, of (i) the CP Costs or Interest (as applicable) that would have accrued during the remainder of the Interest Periods or the tranche periods for Commercial Paper determined by the Administrative Agent to relate to such Loan (as applicable) subsequent to the date of such reduction, assignment or termination (or in respect of clause (b) above, the date such Aggregate Reduction was designated to occur pursuant to the Reduction Notice) of the principal of such Loan if such reduction, assignment or termination had not occurred or such Reduction Notice had not been delivered, over (ii) the sum of (x) to the extent all or a portion of such principal is allocated to another Loan, the amount of CP Costs or Interest actually accrued during the remainder of such period on such principal for the new Loan, and (y) to the extent such principal is not allocated to another Loan, the income, if any, actually received during the remainder of such period by the holder of such Loan from investing the portion of such principal not so allocated.  In the event that the amount referred to in clause (ii) exceeds the amount referred to in clause (i), the relevant Lender or Lenders agree to pay to Borrower the amount of such excess.
“Business Day” means a day of the year on which banks are not required or authorized by law to close in New York, New York, Toronto, Ontario or The Depositary Trust Company of New York is open for business and, if the applicable Business Day relates to any determination of a LIBO Rate, on which dealings are carried on in the London interbank market.
“Calculation Period” means each fiscal calendar month of Smithfield or portion thereof which elapses during the term of the Agreement.  The first Calculation Period shall commence on the date of the initial Advance hereunder and the final Calculation Period shall terminate on the Final Payout Date.
“Canadian Dollars” and the sign “C$” means the lawful currency of Canada. 
“Canadian Originator” has the meaning provided in the Receivables Sale Agreement.
“Cash Collateralize” has the meaning specified in Section 1.7(g)(i).
“Change of Control” has the meaning provided in the Receivables Sale Agreement.
“Closing Date” means June 9, 2011.
“Co-Agent” means with respect to each Lender, the agent appointed to act on behalf of such Lender in the applicable Lender Supplement.
“Collateral” has the meaning provided in Section 13.1.
“Collection Account” has the meaning provided in the Receivables Sale Agreement.
“Collection Account Agreement” has the meaning provided in the Receivables Sale Agreement.
“Collection Bank” has the meaning provided in the Receivables Sale Agreement.
 “Collection Notice” means a notice from the Administrative Agent to a Collection Bank in the form attached to each Collection Account Agreement.
“Collections” has the meaning provided in the Receivables Sale Agreement.
“Commencement Date” has the meaning provided in the Receivables Sale Agreement.
“Commercial Paper” means promissory notes of any Conduit issued by such Conduit, in each case, in the commercial paper market.
“Commitment” means, for each Committed Lender, the commitment of such Committed Lender to make (i) in the case of an Unaffiliated Committed Lender, its Percentage of Loans to Borrower hereunder or (ii) in the case of a Committed Lender in a Conduit Group, its Pro Rata Share of such Conduit Group’s Percentage of Loans to Borrower hereunder in the event the applicable Conduit elects not to fund any Advance, in either case, in an aggregate principal amount at any one time outstanding not to exceed the amount set forth opposite such Committed Lender’s name on Schedule A to this Agreement.
“Commitment Termination Date” means the earliest to occur of (i) the day on which any of the conditions precedent set forth in Section 6.2 (other than Section 6.2(d)(ii)(B)) are not satisfied, (ii) the Business Day immediately prior to the occurrence of an Event of Default described in Section 9.1(j), (iii) the Business Day specified in a written notice from the Administrative Agent following the occurrence of any other Event of Default, and (iv) the date which is ten (10) Business Days after the Administrative Agent’s receipt of written notice from the Borrower that it wishes to terminate the facility evidenced by this Agreement.
“Committed Lenders” means (i) each Unaffiliated Committed Lender and (ii) with respect to each Conduit Group, the banks or other financial institutions and their respective successors and permitted assigns under each Conduit Group’s Liquidity Agreement.
“Conduit” means any Lender that is designated as the Conduit in the Lender Supplement or in the Assignment Agreement pursuant to which it became a party to this Agreement, and any assignee of such Lender to the extent of the portion of such Percentage assumed by such assignee pursuant to its respective Assignment Agreement.
“Conduit Group” means, collectively, (i) a Conduit or Conduits, as the case may be, (ii) the Committed Lenders with respect to such Conduit or Conduits and (iii) the applicable Co-Agent for such Conduit or Conduits.
“Contingent Obligation” of a Person means any agreement, undertaking or arrangement by which such Person assumes, guarantees, endorses, contingently agrees to purchase or provide funds for the payment of, or otherwise becomes or is contingently liable upon, the obligation or liability of any other Person, or agrees to maintain the net worth or working capital or other financial condition of any other Person, or otherwise assures any creditor of such other Person against loss, including, without limitation, any comfort letter, operating agreement, take-or-pay contract or application for a letter of credit.
“Contract” has the meaning provided in the Receivables Sale Agreement.
“CP Costs” means:
(a)    for a Pool Funded Conduit, for each day, the sum of, without duplication, (i) discount or interest accrued on such Conduit’s Pooled Commercial Paper at the applicable CP Rate on such day, plus (ii) any and all accrued commissions in respect of its placement agents and its Commercial Paper dealers, and issuing and paying agent fees incurred, in respect of such Conduit’s Pooled Commercial Paper for such day, plus (iii) other costs associated with funding small or odd-lot amounts with respect to all receivable purchase or financing facilities which are funded by such Conduit’s Pooled Commercial Paper for such day, minus (iv) any accrual of income net of expenses received by or on behalf of such Conduit on such day from investment of collections received under all receivable purchase or financing facilities funded substantially with such Conduit’s Pooled Commercial Paper, minus (v) any payment received on such day net of expenses in respect of such Conduit’s Broken Funding Costs related to the prepayment of any investment of such Conduit pursuant to the terms of any receivable purchase or financing facilities funded substantially with its Pooled Commercial Paper.  In addition to the foregoing costs, if Borrower (or the Servicer, on Borrower’s behalf) shall request any Advance during any period of time determined by a Co-Agent in its sole discretion to result in incrementally higher CP Costs applicable to its Conduit’s Loan included in such Advance, the principal associated with any such Loan of such Conduit shall, during such period, be deemed to be funded by such Conduit in a special pool (which may include capital associated with other receivable purchase or financing facilities) for purposes of determining such additional CP Costs applicable only to such special pool and charged each day during such period against such principal; and
(b)    for a Conduit that is not a Pool Funded Conduit, for each day, the sum of (x) discount or interest accrued on its Related Commercial Paper at the applicable CP Rate on such day, plus (y) any and all accrued commissions and fees of placement agents, dealers and issuing and paying agents incurred in respect of such Related Commercial Paper for such day, plus (z) other costs associated with funding small or odd-lot amounts with respect to all receivable purchase facilities which are funded by Pooled Commercial Paper for such day.
“CP Rate” means, for any CP Tranche Period of any Conduit,
(a)    for any CP Rate Loans funded by a Pool Funded Conduit, a rate per annum that, when applied to the outstanding principal balance of such CP Rate Loans for the actual number of days elapsed in such CP Tranche Period, would result in an amount of accrued interest equivalent to such Conduit’s CP Costs for such CP Tranche Period; and
(b)    for any CP Rate Loans funded by a Conduit that is not a Pool Funded Conduit, a rate per annum equal to the sum of (i) the rate or, if more than one rate, the weighted average of the rates, determined by converting to an interest-bearing equivalent rate per annum the discount rate (or rates) at which such Conduit’s Related Commercial Paper outstanding during such CP Tranche Period has been or may be sold by any placement agent or commercial paper dealer selected by such Conduit’s Co-Agent, plus (ii) the commissions and charges charged by such placement agent or commercial paper dealer with respect to such Related Commercial Paper, expressed as a percentage of the face amount thereof and converted to an interest-bearing equivalent rate per annum.
“CP Rate Loan” means, for each Loan of a Conduit prior to the time, if any, when (i) it is refinanced with a Liquidity Funding pursuant to the Liquidity Agreement, or (ii) the occurrence of an Event of Default and the commencement of the accrual of Interest thereon at the Default Rate.
“CP Tranche Period” means with respect to any Loan of any Conduit that is not funded with Pooled Commercial Paper, a period of days from 1 Business Day up to the number of days (not to exceed 60 days) necessary to extend such period to include the next Settlement Date, commencing on a Business Day, which period is either (i) requested by Borrower and agreed to by such Conduit or such Conduit’s Co-Agent or (ii) in the absence of such request and agreement, selected by such Conduit or such Conduit’s Co-Agent (it being understood that the goal shall be to select a period which ends on or as close to the next Settlement Date as possible).
“Credit and Collection Policy” has the meaning provided in the Receivables Sale Agreement. 
“Credit Insurance Policy” means an export credit insurance policy in favor of the Borrower covering risk of default and insolvency of export customers.
“Cut-Off Date” means the last day of a Calculation Period.
“Days Sales Outstanding” means, as of any day, an amount equal to the product of (x) 91, multiplied by (y) the amount obtained by dividing (i) the aggregate outstanding balance of Receivables as of the most recent Cut-Off Date, by (ii) the aggregate amount of Receivables created during the three (3) Calculation Periods including and immediately preceding such Cut-Off Date.
“Debt” has the meaning provided in the Receivables Sale Agreement.
“Deemed Collections” means Collections deemed received by Borrower under Section 1.4(a).
“Default Horizon Ratio” means, as of any Cut-Off Date, the ratio (expressed as a decimal) computed by dividing (i) the aggregate Outstanding Balance of Receivables created during the three (3) Calculation Periods ending on such Cut-Off Date, by (ii) the Outstanding Balance of all Eligible Receivables as of such Cut-Off Date.
“Default Rate” means a rate per annum equal to the sum of (i) the Prime Rate plus (ii) 2.00%, changing when and as the Prime Rate changes; provided, however, that such Default Rate shall not at any time exceed the maximum rate permitted by applicable law.
“Default Ratio” means, as of any Cut-Off Date, the ratio (expressed as a percentage) computed by dividing (x) the total amount of Receivables which became Defaulted Receivables during the Calculation Period that includes such Cut-Off Date, by (y) the aggregate Outstanding Balance of Receivables created during the Calculation Period occurring three (3) months prior to the Calculation Period ending on such Cut-Off Date.
“Defaulted Receivable” means a Receivable: (i) as to which the Obligor thereof has suffered an Event of Bankruptcy; (ii) which, consistent with the Credit and Collection Policy, would be written off Borrower’s books as uncollectible; or (iii) as to which any payment, or part thereof, remains unpaid for 91 days or more from the original invoice date for such payment.
“Defaulting Lender” means (a) any Committed Lender that (i) has failed to perform any of its funding obligations hereunder within one Business Day of the date required to be funded by it hereunder (other than failures to fund solely as a result of (A) a bona fide dispute as to whether the conditions to borrowing were satisfied on the relevant Advance date, but only for such time as such Committed Lender is continuing to engage in good faith discussions regarding the determination or resolution of such dispute, (B) a failure to disburse due to an administrative error or omission by such Committed Lender, or (C) a failure to disburse due to force majeure, computer malfunctions, interruption or communication facilities, labor difficulties or other causes, in each case to the extent beyond such Committed Lender’s reasonable control), (ii) has notified the Borrower or the Administrative Agent that it does not intend to comply with its funding obligations under this Agreement, or (iii) has failed to confirm in writing that it intends to comply with its funding obligation under this Agreement, by the date requested by the Administrative Agent in writing following the Administrative Agent’s determination that it has a reasonable basis to believe that such Committed Lender will not comply with its funding obligations under this Agreement, (b) any Committed Lender that is the subject of an Event of Bankruptcy or (c) any assignee of a Defaulting Lender under applicable law as contemplated in the last sentence of Section 12.1(c)(v).
“Defaulting Lender Excess” means, with respect to any Defaulting Lender at any time, the excess, if any, at such time of (i) an amount equal to such Defaulting Lender’s Percentage multiplied by the Aggregate Principal (calculated as if any other Defaulting Lenders had funded all of their respective Loans) over (ii) the aggregate principal amount of all Loans made by such Defaulting Lender.
“Defaulting Lender Group” means any Conduit Group that includes a Defaulting Lender.
“Delinquency Ratio” means, at any time, a percentage equal to (i) the aggregate Outstanding Balance of all Receivables that were Delinquent Receivables at such time divided by (ii) the aggregate Outstanding Balance of all Eligible Receivables at such time.
“Delinquent Receivable” means a Receivable, (i) as to which any payment, or part thereof, remains unpaid for 61 days or more from the original invoice date for such payment and (ii) which is not a Defaulted Receivable.
“Dilution” means the amount of any reduction or cancellation of the Outstanding Balance of a Receivable as described in Section 1.4(a).
“Dilution Horizon Ratio” means, as of any Cut-Off Date, a ratio (expressed as a decimal), computed by dividing (i) the aggregate sales generated by the Originators during the Calculation Period ending on such Cut-Off Date, by (ii) the aggregate Outstanding Balance of all Eligible Receivables as of such Cut-Off Date.
“Dilution Ratio” means, as of any Cut-Off Date, a ratio (expressed as a percentage), computed by dividing (i) the total amount of decreases in Outstanding Balances due to Dilutions (other than cash discounts), which included returns, adjustments, rebates, discounts or retropricing during the Calculation Period ending on such Cut-Off Date, by (ii) the aggregate Outstanding Balance of Receivables created during the Calculation Period ending on such Cut-Off Date.
“Dilution Reserve” means, for any Calculation Period, the product (expressed as a percentage) of:
(a)    the sum of (i) 2.00 times the Adjusted Dilution Ratio as of the immediately preceding Cut-Off Date, plus (ii) the Dilution Volatility Component as of the immediately preceding Cut-Off Date, times
(b)    the Dilution Horizon Ratio as of the immediately preceding Cut-Off Date.
“Dilution Volatility Component” means the product (expressed as a percentage) of (i) the difference between (a) the highest Dilution Ratio over the past 12 Calculation Periods and (b) the Adjusted Dilution Ratio, and (ii) a fraction, the numerator of which is equal to the amount calculated in (i)(a) of this definition and the denominator of which is equal to the amount calculated in (i)(b) of this definition.
“Dollars” and the sign “$” means lawful currency of the United States of America.

“Effective Date” has the meaning provided in the Receivables Sale Agreement.
“Eligible Assignee” means a commercial bank having a combined capital and surplus of at least $250,000,000 with a rating of its (or its parent holding company’s) short-term securities equal to or higher than (i) A-1 by S&P and (ii) P-1 by Moody’s.
“Eligible Government Receivable” means an Eligible Receivable that is a Government Receivable.
“Eligible Receivable” means, at any time, a Receivable:
(a)    the Obligor of which (i) is not an Affiliate of any of the parties hereto, (ii) is not an individual, (iii) is not a government or a governmental subdivision or agency if the addition of such Receivable shall cause the Government Receivable Excess to be greater than zero, (iv) is not insolvent or has not entered into any insolvency proceedings, (v) is a resident of an Approved Obligor Jurisdiction and (vi) is not a Quebec Receivable,
(b)    (i) which by its terms is due and payable not greater than 30 days from the original invoice date thereof and (ii) which is not a Delinquent Receivable,
(c)    which is not owing from an Obligor (together with any affiliated Obligors) as to which more than 50% of the aggregate Outstanding Balance of all Receivables owing from such Obligor (together with any affiliated Obligors) are Delinquent Receivables,
(d)    which is an “account” under the PPSA or within the meaning of Article 9 of the UCC of all applicable jurisdictions,
(e)    which is denominated and payable only in an Approved Currency,
(f)    which arises under a Contract which, together with such Receivable, is in full force and effect and constitutes the legal, valid and binding obligation of the related Obligor enforceable against such Obligor in accordance with its terms subject to no offset, counterclaim or other defense,
(g)    which arises under a Contract which (A) (i) does not require the Obligor under such Contract to consent to the transfer, sale, pledge or assignment of the rights and duties of the applicable Originator or any of its assignees under such Contract or (ii) for which consent to the transfer, sale, pledge or assignment of the rights and duties of the applicable Originator or any of its assignees under such Contract has been obtained from the Obligor under such Contract and (B) does not contain a confidentiality provision that purports to restrict the ability of any Lender to exercise its rights under this Agreement, including, without limitation, its right to review the Contract,
(i)    which arises under a Contract that contains an obligation to pay a specified sum of money, contingent only upon the sale of goods or the provision of services by the applicable Originator,
(j)    which, together with the Contract related thereto, does not contravene any law, rule or regulation applicable thereto (including, without limitation, any law, rule and regulation relating to truth in lending, fair credit billing, fair credit reporting, equal credit opportunity, fair debt collection practices and privacy) and with respect to which no part of the Contract related thereto is in violation of any such law, rule or regulation,
(k)    which satisfies all applicable requirements of the Credit and Collection Policy,
(l)    which was generated in the ordinary course of the applicable Originator’s business,
(m)    which (i) arises solely from the sale of goods or the provision of services to the related Obligor by the applicable Originator, and not by any other Person (in whole or in part) and (ii) does not constitute sales tax, finance charges, service charges or similar charges (other than GST or VAT) (it being understood that only the portion of such Receivable so constituted shall not be eligible),
(n)    which is not subject to any dispute, counterclaim, right of rescission, set-off, counterclaim or any other defense (including defenses arising out of violations of usury laws) of the applicable Obligor against the applicable Originator or any other Adverse Claim, and the Obligor thereon holds no right as against such Originator to cause such Originator to repurchase the goods or merchandise the sale of which shall have given rise to such Receivable (except with respect to sale discounts effected pursuant to the Contract, or defective goods returned in accordance with the terms of the Contract),
(o)    as to which the applicable Originator has satisfied and fully performed all obligations on its part with respect to such Receivable required to be fulfilled by it, and no further action is required to be performed by any Person with respect thereto other than payment thereon by the applicable Obligor,
(p)    as to which each of the representations and warranties contained in Sections 5.1(i), (j), (r), (s), (t) and (u) is true and correct,
(q)    all right, title and interest to and in which has been validly transferred by the applicable Originator directly to Borrower under and in accordance with the Receivables Sale Agreement, and Borrower has good and marketable title thereto free and clear of any Adverse Claim, and
(r)    which is not originated on a “billed but not shipped,” “bill and hold,”  “guaranteed sale,” “sale and return,” “sale on approval,” “progress billed,” “consignment” or similar basis;
provided, that, so long as the long term unsecured senior debt ratings assigned to Smithfield by S&P and Moody’s are at least “B+” and “B1”, respectively, a Receivable that relates to In-Transit Collateral shall be deemed to satisfy any clause of this definition of “Eligible Receivable” to the extent that such clause is reasonably expected to be satisfied at the time such In-Transit Collateral is delivered to the related Obligor.
“Equity Interests” has the meaning provided in the Receivables Sale Agreement.
“ERISA” has the meaning provided in the Receivables Sale Agreement.
“ERISA Affiliate” has the meaning provided in the Receivables Sale Agreement.
“ERISA Event” means (a) any Reportable Event; (b) the existence with respect to any Plan of a non-exempt Prohibited Transaction; (c) any failure by any Plan to satisfy the minimum funding standards (within the meaning of Sections 412 or 430 of the Tax Code or Section 302 of ERISA) applicable to such Plan, whether or not waived; (d) the filing pursuant to Section 412 of the Tax Code or Section 303 of ERISA of an application for a waiver of the minimum funding standard with respect to any Plan, the failure to make by its due date a required installment under Section 430(j) of the Tax Code with respect to any Plan, or the failure by any Loan Party or any of its ERISA Affiliates to make any required contribution to a Multiemployer Plan; (e) the incurrence by any Loan Party or any of its ERISA Affiliates of any liability under Title IV of ERISA with respect to the termination of any Plan, including but not limited to the imposition of any lien in favor of the PBGC or any Plan; (f) a determination that any Plan is, or is expected to be, in "at risk" status (within the meaning of Section 430 of the Tax Code or Title IV of ERISA); (g) the receipt by any Loan Party or any of its ERISA Affiliates from the PBGC or a plan administrator of any notice relating to an intention to terminate any Plan or Plans or to appoint a trustee to administer any Plan; (h) the incurrence by any Loan Party or any of its ERISA Affiliates of any liability with respect to the withdrawal or partial withdrawal from any Plan or Multiemployer Plan; or (i) the receipt by any Loan Party or any ERISA Affiliate of any notice, or the receipt by any Multiemployer Plan from any Loan Party or any ERISA Affiliate of any notice, concerning the imposition of Withdrawal Liability or a determination that a Multiemployer Plan is, or is expected to be, insolvent (within the meaning of Section 4245 of ERISA), Reorganization, or in endangered or critical status (within the meaning of Section 432 of the Tax Code or Section 305 or Title IV of ERISA).
 “Event of Bankruptcy” shall be deemed to have occurred with respect to a Person if either:
(a)    a case or other proceeding shall be commenced, without the application or consent of such Person, in any court, seeking the liquidation, reorganization, debt arrangement, dissolution, winding up, or composition or readjustment of debts of such Person, the appointment of a trustee, receiver, custodian, liquidator, assignee, sequestrator or the like for such Person or all or substantially all of its assets, or any similar action with respect to such Person under any law relating to bankruptcy, insolvency, reorganization, winding up or composition or adjustment of debts, and such case or proceeding shall continue undismissed, or unstayed and in effect, for a period of 60 consecutive days; or an order for relief in respect of such Person shall be entered in an involuntary case under the federal bankruptcy laws or other similar laws now or hereafter in effect; or
(b)    such Person shall commence a voluntary case or other proceeding under any applicable bankruptcy, insolvency, reorganization, debt arrangement, dissolution or other similar law now or hereafter in effect, or shall consent to the appointment of or taking possession by a receiver, liquidator, assignee, trustee (other than a trustee under a deed of trust, indenture or similar instrument), custodian, sequestrator (or other similar official) for, such Person or for any substantial part of its property, or shall make any general assignment for the benefit of creditors, or shall be adjudicated insolvent, or admit in writing its inability to pay its debts generally as they become due, or, if a corporation or similar entity, its board of directors shall vote to implement any of the foregoing.
“Event of Default” has the meaning specified in Article IX.
“Excluded Originator” has the meaning provided in the Receivables Sale Agreement.
“Excluded Receivable” has the meaning provided in the Receivables Sale Agreement.
“Excluded Taxes” has the meaning provided in Section 10.1(c).
“Executive Officer” has the meaning provided in the Receivables Sale Agreement.
“Facility Account” means Borrower’s account no. 4427176102.
“Facility Termination Date” means the earliest to occur of (i) the Scheduled Termination Date and (ii) the Commitment Termination Date.
“Federal Funds Rate” means, for any period, a fluctuating interest rate per annum for each day during such period equal to (a) the weighted average of the rates on overnight federal funds transactions with members of the Federal Reserve System arranged by federal funds brokers, as published for such day (or, if such day is not a Business Day, for the preceding Business Day) by the Federal Reserve Bank of New York in the Composite Closing Quotations for U.S. Government Securities; or (b) if such rate is not so published for any day which is a Business Day, the average of the quotations at approximately 11:30 a.m. (New York City time) for such day on such transactions received by the Administrative Agent from three federal funds brokers of recognized standing selected by it.
“Fee Letter” means that certain Fee Letter dated as of June 9, 2011 among Performance Guarantor, the Borrower and the Agents, as it may be amended or modified and in effect from time to time.  
“Final Payout Date” means the date on which all Obligations have been paid in full and the Aggregate Commitment has been terminated.
“Finance Charges” has the meaning provided in the Receivables Sale Agreement.
“Foreign Lender” means any Lender that is organized under the laws of a jurisdiction other than that in which Borrower is located.  For purposes of this definition, the United States of America, each State thereof and the District of Columbia shall be deemed to constitute a single jurisdiction.
“Foreign Receivable” means any Eligible Receivable, the Obligor of which is organized under the laws of, or has its chief executive office in, any jurisdiction other than the United States (or any political subdivision thereof).
“Foreign Receivable Excess” means, as of any date of determination, the amount, if any, by which the aggregate Outstanding Balance of all Foreign Receivables exceeds the then applicable Foreign Receivable Limit; provided however, that in no event shall the aggregate Outstanding Balance of all Foreign Receivables owed by Obligors located in any one jurisdiction (other than the United States) exceed 3.0% of the aggregate Outstanding Balance of all Eligible Receivables.
“Foreign Receivable Limit” means, as of any date of determination (a) prior to an Insurance Policy Ratings Trigger Event, an amount equal to the lesser of (i) 15.0% of the aggregate Outstanding Balance of all Eligible Receivables and (ii) the sum of (x) 5.0% of the aggregate Outstanding Balance of all Eligible Receivables and (y) the maximum amount (in Dollars) of coverage available under the Credit Insurance Policy; or (b) after an Insurance Policy Ratings Trigger Event, an amount equal to 5.0% the aggregate Outstanding Balance of all Eligible Receivables.
“Funding Agreement” means (i) this Agreement, (ii) the Liquidity Agreement and (iii) any other agreement or instrument executed by any Funding Source with or for the benefit of a Conduit.
“Funding Source” means (i) each Committed Lender and (ii) any insurance company, bank or other funding entity providing liquidity, credit enhancement or back-up purchase support or facilities to a Conduit.
“FX Reserve Amount” means, as of any date of determination, an amount equal to the product of (x) the applicable FX Reserve Percentage as of such date and (y) the aggregate Outstanding Balance of all Foreign Receivables denominated in an Approved Currency (other than Dollars) as of such date.
“FX Reserve Percentage” means 10.0%; provided that the FX Reserve Percentage may, upon at least one Business Day’s written notice (together with an explanation therefor) by the Administrative Agent to the Borrower and the Servicer, be increased by the Administrative Agent at any time and in its discretion in accordance with its then current credit guidelines; provided, further, that the FX Reserve Percentage may, upon at least one Business Day’s written notice (together with an explanation therefor) by the Administrative Agent to the Borrower and the Servicer, be decreased by the Administrative Agent at any time with the consent or at the request of the Required Committed Lenders.
“GAAP” means generally accepted accounting principles in effect in the United States of America as of the date of this Agreement.
“Governmental Authority” means any nation or government, any state or other political subdivision thereof and any entity exercising executive, legislative, judicial, taxing, regulatory or administrative functions of or pertaining to government (including any supra-national bodies such as the European Union or the European Central Bank).
“Government Receivable” means any Receivable, the Obligor of which is a government or governmental subdivision or agency of the United States (or any political subdivision thereof).
“Government Receivable Excess” means (i) prior to a Ratings Trigger Event, the amount, if any, by which the aggregate Outstanding Balance of all Government Receivables exceeds 2.5% of the Outstanding Balance of all Eligible Receivables or (ii) after a Ratings Trigger Event, the amount, if any, by which the aggregate Outstanding Balance of all Government Receivables exceeds 0.0% of the Outstanding Balance of all Eligible Receivables.
“GST” means all goods and services tax payable under Part IX of the Excise Tax Act (Canada) and harmonized sales tax in any participating province payable under the Excise Tax Act (Canada), as such statutes may be amended, supplemented or replaced from time to time.  
“Honor Date” has the meaning specified in Section 1.7(c).
“In-Transit Collateral” means, as of any date of determination, any inventory of an Originator (other than Smithfield Farmland Sales Corp.) that (i) is in the process of being transported by such Originator to an Obligor pursuant to a Contract that is then expected to be delivered within five (5) or fewer calendar days, (ii) is covered by insurance in accordance with the applicable Originator’s normal business practices, and (iii) upon its receipt and acceptance by such Obligor, will give rise to an amount payable by such Obligor to such Originator under such Contract.   
“In-Transit Receivable” means any Eligible Receivable relating to In-Transit Collateral.  For the avoidance of doubt, an In-Transit Receivable shall no longer be deemed to be an Eligible Receivable on the date that any related inventory that at one time satisfied the definition of “In-Transit Collateral” fails to satisfy the definition of “In-Transit Collateral” except solely as a result of the delivery and acceptance of such inventory by the related Obligor.

“In-Transit Receivable Excess” means, as of any date of determination, the amount, if any, by which the aggregate Outstanding Balance of all In-Transit Receivables exceeds 20.0% of the Outstanding Balance of all Eligible Receivables.

“Indemnified Amounts” has the meaning specified in Section 10.1.

“Indemnified Party” has the meaning specified in Section 10.1.

“Indemnified Taxes” means Taxes other than Excluded Taxes.

“Independent Director” means a director of Borrower who (A) is not at the time of initial appointment or at any time during the continuation of his or her appointment as an Independent Director and has not been at any time during the five (5) years preceding such appointment:  (i) an equity holder, director (other than an Independent Director), officer, employee, member, manager, attorney or partner of Borrower or any of its Affiliates; (ii) a customer, supplier or other Person who derives more than 1% of its purchases or revenues from its activities with Borrower or any of its Affiliates; (iii) a Person or other entity controlling or under common control with any such equity holder, partner, member, customer, supplier or other Person; (iv) a member of the immediate family of any such equity holder, director, officer, employee, member, manager, partner, customer, supplier or other person; or (v) a trustee in bankruptcy for Borrower or any of its Affiliates and (B) has, (i) prior experience as an Independent Director for a corporation or limited liability company whose charter documents required the unanimous consent of all “independent directors” thereof before such corporation or limited liability company could consent to the institution of bankruptcy or insolvency proceedings against it or could file a petition seeking relief under any applicable federal or state law relating to bankruptcy and (ii) at least three years of employment experience and who is provided by CT Corporation, Corporation Service Company, Global Securitization Services, LLC, National Registered Agents, Inc., Wilmington Trust Company, Lord Securities Corporation or, if none of those companies is then providing professional “independent directors”, another nationally recognized company reasonably approved by the Administrative Agent.  As used herein, the term “control” means the possession, directly or indirectly, of the power to direct or cause the direction of management, policies or activities of a person or entity, whether through ownership of voting securities, by contract or otherwise.

“Initial Contributed Assets” has the meaning provided in the Receivables Sale Agreement.    

 “Initial Purchased Assets” has the meaning provided in the Receivables Sale Agreement.
“Insurance Policy Ratings Trigger Event” means, (a) the long term unsecured senior debt of Euler Hermes North America Insurance Company or its ultimate parent company (or any other insurance company that issues a Credit Insurance Policy) ceases to be rated at least A and A2 by S&P or Moody’s, respectively, or (b) the Credit Insurance Policy ceases to be in full force and effect.

“Intercreditor Agreement” means that certain Amended and Restated Intercreditor Agreement, dated as of June 9, 2011, among Rabobank, as administrative agent for the ABL Secured Parties (as defined therein), Rabobank, as Administrative Agent, the Borrower and each of the Loan Parties (as defined therein) party hereto, as the same has been modified pursuant to that certain letter agreement dated August 31, 2012 and that certain First Amendment to Amended and Restated Intercreditor Agreement dated as of January 31, 2013.

“Interest” means for each respective Interest Period relating to Loans of the Committed Lenders, an amount equal to the product of the applicable Interest Rate for each Loan multiplied by the principal of such Loan for each day elapsed during such Interest Period, annualized (a) in the case of an Interest Period for the LIBOR Rate, on a 360-day basis and (b) in the case of an Interest Period for the Alternate Base Rate or the Adjusted Federal Funds Rate, on a 365-day (or 366-day, when appropriate) basis.

“Interest Period” means, with respect to any Loan held by a Committed Lender:
(a)    if Interest for such Loan is calculated on the basis of the LIBO Rate, a period of one, two, three or six months, or such other period as may be mutually agreeable to the applicable Co-Agent and Borrower, commencing on a Business Day selected by Borrower or such Co-Agent pursuant to this Agreement.  Such Interest Period shall end on the day in the applicable succeeding calendar month which corresponds numerically to the beginning day of such Interest Period; provided, however, that if there is no such numerically corresponding day in such succeeding month, such Interest Period shall end on the last Business Day of such succeeding month; or
(b)    if Interest for such Loan is calculated on the basis of the Alternate Base Rate or the Adjusted Federal Funds Rate, a period commencing on a Business Day selected by Borrower and agreed to by the applicable Co-Agent; provided that no such period shall exceed one month.
If any Interest Period would end on a day which is not a Business Day, such Interest Period shall end on the next succeeding Business Day; provided, however, that in the case of Interest Periods corresponding to the LIBO Rate, if such next succeeding Business Day falls in a new month, such Interest Period shall end on the immediately preceding Business Day.  In the case of any Interest Period for any Loan which commences before the Commitment Termination Date and would otherwise end on a date occurring after the Commitment Termination Date, such Interest Period shall end on the Commitment Termination Date.  The duration of each Interest Period which commences after the Commitment Termination Date shall be of such duration as selected by the applicable Co-Agent.
“Interest Rate” means, with respect to each Loan of the Committed Lenders, the LIBO Rate, the Adjusted Federal Funds Rate, the Alternate Base Rate or the Default Rate, as applicable.
“Interest and Servicing Reserve” means, for any Calculation Period, the product of (I) two (2) times (II) the sum (expressed as a percentage) of (i) the product of (a) a fraction the numerator of which is the average Specified Days Sales Outstanding for the most recent three (3) Calculation Periods and the denominator of which is 360 and (b) the Alternate Base Rate as of the immediately preceding Cut-Off Date plus the Applicable Percentage as of such Cut-Off Date and (ii) the product of (a) the Servicing Fee Rate times (b) a fraction the numerator of which is the average Specified Days Sales Outstanding for the most recent three (3) Calculation Periods and the denominator of which is 360.
“ISP” means, with respect to any Letter of Credit, the “International Standby Practices 1998” published by the Institute of International Banking Law & Practice (or such later version thereof as may be in effect at the time of issuance).

“L/C Credit Extension” means, with respect to any Letter of Credit, the issuance thereof or extension of the expiry date thereof, or the increase of the amount thereof.
“L/C Fee Letter” means that certain Fee Letter dated as of June 9, 2011 among Letter of Credit Issuer and the Borrower, as it may be amended or modified and in effect from time to time.  
“L/C Funding” means a drawing under any Letter of Credit to the extent such drawing has not been reimbursed by the Borrower or refinanced through an Advance.
“L/C Participation Funding” means, with respect to each Lender, such Lender’s funding of its participation in any L/C Funding pursuant to Section 1.7(c)(iii) hereof; provided, that any payment by a Lender under Section 1.7(g) to Cash Collateralize any Letter of Credit shall be deemed to be a L/C Participation Funding.
“Lender” means each Conduit, each Committed Lender and the Letter of Credit Issuer.
“Lender Supplement” means, with respect to any Lender, the information set forth in Schedule C to this Agreement in respect of such Lender, as it may be amended or otherwise modified from time to time by such Lender or the Lenders named therein.
“Letter of Credit” means a standby letter of credit issued in Dollars by the Letter of Credit Issuer pursuant to Section 1.7 either as originally issued or as the same may, from time to time, be amended or otherwise modified or extended.
“Letter of Credit Application” means an application and agreement for standby letter of credit by and between the Borrower and the Letter of Credit Issuer in a form acceptable to the Letter of Credit Issuer (and customarily used by it in similar circumstances) and conformed to the terms of this Agreement, either as originally executed or as it may from time to time be supplemented, modified, amended, renewed, or extended; provided, however, to the extent that the terms of such Letter of Credit Application are inconsistent with the terms of this Agreement, the terms of this Agreement shall control.
“Letter of Credit Expiration Date” means the day that is the earlier of (i) the thirty (30) days prior to the Scheduled Termination Date then in effect (or, if such day is not a Business Day, the next preceding Business Day) or (ii) the Commitment Termination Date.
“Letter of Credit Fees” has the meaning specified in Section 1.8.
“Letter of Credit Issuer” means Rabobank in its capacity as issuer of Letters of Credit hereunder, or any successor issuer of Letters of Credit hereunder.
“Letter of Credit Liability” means, at any time, the aggregate undrawn face amount of all outstanding Letters of Credit at such time plus the amount of L/C Fundings then outstanding at such time.  For all purposes of this Agreement, if on any date of determination a Letter of Credit has expired by its terms but any amount may still be drawn thereunder by reason of the operation of Rule 3.14 of the ISP, such Letter of Credit shall be deemed to be “outstanding” in the amount so remaining available to be drawn.  For purposes of computing the amount available to be drawn under any Letter of Credit, the amount of such Letter of Credit shall be deemed to mean the maximum face amount in Dollars of such Letter of Credit after giving effect to all increases thereof contemplated by such Letter of Credit, whether or not such maximum face amount is in effect at such time.

“LIBO Rate” means, for any Interest Period, the rate per annum determined on the basis of the offered rate for deposits in U.S. dollars of amounts equal or comparable to the principal amount of the related Loan offered for a term comparable to such Interest Period, which rates appear on a Bloomberg L.P. terminal, displayed under the address “US0001M <Index> Q <Go>“ effective as of 11:00 A.M., London time, two Business Days prior to the first day of such Interest Period; provided that if no such offered rates appear on such page, the LIBO Rate for such Interest Period will be the arithmetic average (rounded upwards, if necessary, to the next higher 1/100th of 1%) of rates quoted by not less than two major banks in New York, New York, selected by the Administrative Agent, at approximately 10:00 a.m.(New York City time), two Business Days prior to the first day of such Interest Period, for deposits in U.S. dollars offered by leading European banks for a period comparable to such Interest Period in an amount comparable to the principal amount of such Loan, divided by one minus the maximum aggregate reserve requirement (including all basic, supplemental, marginal or other reserves) which is imposed against the Administrative Agent in respect of Eurocurrency liabilities, as defined in Regulation D of the Board of Governors of the Federal Reserve System as in effect from time to time (expressed as a decimal), applicable to such Interest Period.  The LIBO Rate shall be rounded, if necessary, to the next higher 1/16 of 1%.
“LIBO Rate Loan” means a Loan which bears interest at the LIBO Rate.
“Liquidity Agreement” means the liquidity asset purchase agreement between the Conduit of any Conduit Group and the Committed Lenders of such Conduit Group.
“Liquidity Commitment” means, as to each Committed Lender in any Conduit Group, its commitment to such Conduit Group’s Conduit under the Liquidity Agreements, (which shall equal 102% of such Conduit Group’s Percentage of the Aggregate Commitment hereunder).
“Liquidity Funding” means (a) a purchase made by any Committed Lender pursuant to its Liquidity Commitment of all or any portion of, or any undivided interest in, an applicable Conduit’s Loans, or (b) any Loan made by a Committed Lender in lieu of such Conduit pursuant to Section 1.1.
“Loan” means any loan made by a Lender to Borrower pursuant to this Agreement (including, without limitation, any Liquidity Funding).  Each Loan shall either be a CP Rate Loan, an Alternate Base Rate Loan, and Adjusted Federal Funds Rate Loan or a LIBO Rate Loan, selected in accordance with the terms of this Agreement.
“Loan Parties” has the meaning provided in the preamble to this Agreement.
“Lock-Box” has the meaning provided in the Receivables Sale Agreement.
“Loss Reserve” means, for any Calculation Period, the product (expressed as a percentage) of (a) 2.00, times (b) the highest three-month rolling average Default Ratio during the 12 Calculation Periods ending on the immediately preceding Cut-Off Date, times (c) the Default Horizon Ratio as of the immediately preceding Cut-Off Date.
“Market Spread” means, on any date of determination, the positive difference between the Federal Funds Rate on such date of determination, and the 1-month LIBO Rate effective as of 11:00 A.M., London time, on such date of determination (and not as in effect two Business Days prior thereto).
“Material Adverse Effect” means (i) any material adverse effect on the business, assets, operations, property or condition, financial or otherwise of the Performance Guarantor and its Restricted Subsidiaries, taken as a whole, (ii) any material adverse effect on the abilities of the Loan Parties, taken as a whole, to perform their obligations under the Transaction Documents to which they are a party, (iii) any material adverse effect on the legality, validity or enforceability of the Agreement or any other Transaction Document, (iv) any material adverse effect on the Administrative Agent’s interest (on behalf of itself and the Secured Parties) in the Receivables generally or in any significant portion of the Receivables, the Related Security or Collections with respect thereto, (v) any material adverse effect on the collectability of the Receivables generally or of any material portion of the Receivables and (vi) material adverse effect on the rights of or benefits available to the Administrative Agent, the Letter of Credit Issuer, Co-Agents or the Lenders.
“Monthly Report” means a report, in substantially the form of Exhibit VI hereto (appropriately completed), furnished by the Servicer to the Administrative Agent pursuant to Section 8.5.
“Monthly Reporting Date” means, with respect to any fiscal month of Borrower ending after the Commencement Date, the eighteenth (18th) Business Day following the end of such fiscal month.
“Moody’s” means Moody’s Investors Service, Inc. and any successors thereto.
“Multiemployer Plan” means a multiemployer benefit plan as defined in Section 4001(a)(3) of ERISA. 
“Net Pool Balance” means, at any time, the aggregate Outstanding Balance of all Eligible Receivables at such time reduced by the sum of (i) the aggregate amount by which the Outstanding Balance of all Eligible Receivables of each Obligor and its Affiliates exceeds the Obligor Concentration Limit for such Obligor, (ii) the Foreign Receivable Excess, (iii) the PASA Reserve Amount, (iv) the Volume Rebate Accrual Amount, (v) the In-Transit Receivable Excess and (vi) the FX Reserve Amount.
“Non-Extension Notice Date” has the meaning specified in Section 1.7(b)(ii).
“Non-Material Subsidiary” has the meaning provided in the Parent Credit Agreement.
“Obligations” means, at any time, any and all obligations of either of the Loan Parties to any of the Secured Parties arising under or in connection with the Transaction Documents, whether now existing or hereafter arising, due or accrued, absolute or contingent, including, without limitation, obligations in respect of Aggregate Principal, CP Costs, Interest, fees under the Fee Letter, L/C Fee Letter, Broken Funding Costs and Indemnified Amounts.
“Obligor” has the meaning provided in the Receivables Sale Agreement.
“Obligor Concentration Limit” means, at any time, in relation to the aggregate Outstanding Balance of Receivables owed by any single Obligor and its Affiliates (if any), the applicable concentration limit set forth below for Obligors who have short term unsecured debt ratings currently assigned to them by S&P and Moody’s (or in the absence thereof, the long term unsecured senior debt ratings set forth below):
	
			
	

Short Term Rating
(S&P/Moody’s)
	Long Term Rating
(S&P/Moody’s)
	Maximum
Allowable % of Eligible Receivables

	A-1/P-1 or higher
	AA- to A+/ Aa3 to A1 or higher
	13.00%

	A-2/P-2
	A to BBB  / A2 to Baa2
	6.50%

	A-3 or lower / P-3 or lower
(Non-Investment Grade)
	BBB- or lower / Baa3 or lower
(Non-Investment Grade)
	3.00%

; provided, however, that (a) if any Obligor has a split short term rating by S&P and Moody’s or a split long term rating by S&P and Moody’s, the applicable short term rating or long term rating, as applicable, will be the lower of the two, (b) if any Obligor is not rated by either S&P or Moody’s, the applicable Obligor Concentration Limit shall be the one set forth in the last line of the table above, and (c) subject to satisfaction of the Rating Agency Condition and/or an increase in the percentage set forth in clause (a)(i) of the definition of “Required Reserve”, upon Borrower’s request from time to time, the Administrative Agent may agree to a higher percentage of Eligible Receivables for a particular Obligor and its Affiliates (each such higher percentage, a “Special Concentration Limit”), it being understood that any Special Concentration Limit may be cancelled by the Administrative Agent upon not less than five (5) Business Days’ written notice to the Loan Parties.  Notwithstanding anything to the contrary contained herein, but subject to clause (c) of the immediately preceding proviso, a Special Concentration Limit of (i) 10.00% shall apply with respect to Receivables owed by The Kroger Co., provided that The Kroger Co. maintains a short term of rating A-2 or higher by S&P and P-2 or higher by Moody’s and a long term rating of BBB or higher by S&P and Baa2 or higher by Moody’s, as applicable, and (ii) 6.50% shall apply with respect to Receivables owed by U.S. Foodservice Inc., provided that U.S. Foodservice Inc. maintains a long term rating of B- or higher by S&P and B3 or higher by Moody’s and the Performance Guarantor maintains a long term rating of B+ or higher by S&P and B1 or higher by Moody’s.
“OFAC” means the U.S. Department of the Treasury’s Office of Foreign Assets Control.
“Originator” has the meaning provided in the Receivables Sale Agreement, and such term excludes, for the purposes of this Agreement, any Excluded Originator.
“Outstanding Balance” has the meaning provided in the Receivables Sale Agreement.
 “Parent Credit Agreement” means that certain Credit Agreement, dated as of June 9, 2011, by and among Smithfield, Rabobank and the guarantors and lenders party thereto from time to time, as the same may be amended from time to time in accordance with the terms thereof.
“Participant” has the meaning provided in Section 12.2.
“PASA” means the Packers and Stockyards Act of 1921, as amended.
“PASA Reserve Amount” means (a) prior to a Ratings Trigger Event, (i) 0.50 times (ii) the amount of all outstanding trade payables of Smithfield and its Subsidiaries, which are entitled to the benefits of the trust created under the Packers and Stockyards Act of 1921, as amended; or (b) after a Ratings Trigger Event, the amount of all outstanding trade payables of Smithfield and its Subsidiaries, which are entitled to the benefits of the trust created under the Packers and Stockyards Act of 1921, as amended.
“Payment Account” means, with respect to each Co-Agent, the account designated by such Co-Agent for receipt of payments hereunder and identified on the Lender Supplement.
“PBGC” has the meaning provided in the Receivables Sale Agreement.
“Percentage” means for (i) each Conduit Group, the ratio (expressed as a percentage) of the aggregate Commitments of the Committed Lenders in such Conduit Group to the Aggregate Commitment and (ii) each Unaffiliated Committed Lender, the ratio (expressed as a percentage) of its Commitment to the Aggregate Commitment.
“Performance Guarantor” means Smithfield.
“Performance Undertaking” means that certain Third Amended and Restated Performance Undertaking, dated as of the date hereof, by Performance Guarantor in favor of Borrower, substantially in the form of Exhibit VII, as the same may be amended, restated or otherwise modified from time to time.
“Person” means an individual, partnership, corporation (including a business trust), limited liability company, joint stock company, trust, unincorporated association, joint venture or other entity, or a government or any political subdivision or agency thereof.
“Plan” means any employee pension benefit plan (other than a Multiemployer Plan) subject to the provisions of Title IV of ERISA or Section 412 of the Tax Code or Section 302 of ERISA, and in respect of which any Loan Party or any ERISA Affiliate is (or, if such plan were terminated, would under Section 4062 or Section 4069 of ERISA be deemed to be) an “employer” as defined in Section 3(5) of ERISA.
“Pooled Commercial Paper” means, for each of the Pool Funded Conduits, the Commercial Paper of such Pool Funded Conduit subject to any particular pooling arrangement by such Conduit, but excluding Related Commercial Paper issued by any Pool Funded Conduit for a tenor and in an amount specifically requested by any Person with any agreement effected by such Pool Funded Conduit.
“Pool Funded Conduits” means, at any time, the Conduits that have notified the Loan Parties that they will be pool-funding their Loans.
“PPSA” means, in respect of each province and territory of Canada (other than the Province of Quebec), the Personal Property Security Act as from time to time in effect in such province or territory.  
“Prime Rate” means for each Lender, the rate of interest per annum publicly announced from time to time by its Co-Agent as its prime commercial lending rate or base rate in effect at its principal office for loans in the United States of America, with each change in the Prime Rate being effective on the date such change is publicly announced as effective (it being understood and agreed that the Prime Rate is a reference rate used by such Co-Agent in determining interest rates on certain loans and is not intended to be the lowest rate of interest charged on any extension of credit by any Agent or Lender to any debtor).
“Prohibited Transaction” has the meaning assigned to such term in Section 406 of ERISA and Section 4975(f)(3) of the Tax Code.  
“Pro Rata Share” means, with respect to each Conduit Group on any date of determination, the ratio which the Liquidity Commitment of a Committed Lender in such Conduit Group bears to the sum of the Liquidity Commitments of all Committed Lenders in such Conduit Group.
“Proposed Reduction Date” has the meaning provided in Section 1.3.
“Purchasing Lender” has the meaning provided in Section 12.1(b).
“Quebec Receivable” means any Receivable originated by the Canadian Originator in respect of which: (a) the relevant Obligor is located in the Province of Quebec; or (b) payments under the relevant contract are required to be paid or are paid to a location or an account located in the Province of Quebec.  
“Rabobank” has the meaning provided in the preamble to this Agreement.
“Rating Agency Condition” means, if applicable, that a Conduit has received written notice from S&P or Moody’s or any other rating agency then rating such Conduit’s Commercial Paper that the execution and delivery of, or an amendment, a change or a waiver of, this Agreement or the Receivables Sale Agreement will not result in a withdrawal or downgrade of the then current ratings on such Conduit’s Commercial Paper or, if applicable, the conditions required for post-closing review as described in a letter or letters from S&P or Moody’s or such other rating agency.
“Ratings Trigger Event” means, as of any date of determination, the lowering with regard to the Performance Guarantor of (i) S&P’s Corporate Credit Rating to below B-, or (ii) Moody’s Long Term Corporate Family Rating to below B3.
“Receivable” has the meaning provided in the Receivables Sale Agreement, and such term excludes, for the purposes of this Agreement, any Excluded Receivable.
“Receivables Sale Agreement” means that certain Second Amended and Restated Receivables Sale Agreement, dated as of the date hereof, among Smithfield, SFFC, the Originators and the Borrower, as the same may be amended, restated or otherwise modified from time to time.
“Records” has the meaning provided in the Receivables Sale Agreement.
“Reduction Notice” has the meaning provided in Section 1.3.
“Register” has the meaning provided in Section 12.3.
“Regulatory Change” means any change after the date of this Agreement in United States (federal, state or municipal) or foreign laws, regulations (including Regulation D) or accounting principles or the adoption or making after such date of any interpretations, directives or requests of or under any United States (federal, state or municipal) or foreign laws, regulations (whether or not having the force of law) or accounting principles by any court, governmental or monetary authority, or accounting board or authority (whether or not part of government) charged with the establishment, interpretation or administration thereof.  For the avoidance of doubt, any change in accounting standards or the issuance of any other pronouncement, release or interpretation (or revisions to the foregoing) that causes or requires the consolidation of all or a portion of the assets and liabilities of a Conduit or Borrower with the assets and liabilities of any Agent, any Committed Lender or any other Affected Entity shall constitute a Regulatory Change.
“Related Commercial Paper” means, for any period with respect to either Conduit, any Commercial Paper of such Conduit issued or deemed issued for purposes of financing or maintaining any Loan by such Conduit (including any discount, yield, or interest thereon) outstanding on any day during such period.
“Related Security” means, with respect to any Receivable:  (i) all of Borrower’s interest in the Related Security (under and as defined in the Receivables Sale Agreement), (ii) all of Borrower’s right, title and interest in, to and under the Receivables Sale Agreement in respect of such Receivable, (iii) all of Borrower’s right, title and interest in, to and under the Performance Undertaking, and (iv) all proceeds of any of the foregoing.
“Reorganization” means, with respect to any Multiemployer Plan, the condition that such plan is in reorganization within the meaning of Section 4241 of ERISA.
“Reportable Event” means any "reportable event," as defined in Section 4043 of ERISA or the regulations issued thereunder, other than those events as to which the 30-day notice period referred to in Section 4043(c) of ERISA has been waived, with respect to a Plan (other than a Plan maintained by an ERISA Affiliate that is considered an ERISA Affiliate only pursuant to subsection (m) or (o) of Section 414 of the Tax Code).
    
“Request for Letter of Credit” means any request substantially in the form of Exhibit VIII, containing the information specified therein, executed and delivered by the Borrower.

“Required Committed Lenders” means Committed Lenders holding in the aggregate more than fifty percent (50%) of the Aggregate Commitment
 “Required Data” means ongoing information regarding the Collateral required to be provided by the Borrower or the Servicer to the Administrative Agent at the request of the Administrative Agent, including in connection with any Lender’s regulatory capital requirements. 
“Required Notice Period” means two (2) Business Days.
“Required Reserve” means, on any day during a Calculation Period, the product of (a) the sum of (i) the greater of (x) the Required Reserve Factor Floor and (y) the sum of the Loss Reserve and the Dilution Reserve and (ii) the Interest and Servicing Reserve times (b) the Net Pool Balance as of the Cut-Off Date immediately preceding such Calculation Period.
“Required Reserve Factor Floor” means, for any Calculation Period, the sum (expressed as a percentage) of (a) 13% plus (b) the product of the Adjusted Dilution Ratio and the Dilution Horizon Ratio, in each case, as of the immediately preceding Cut-Off Date.
“Restricted Junior Payment” means (i) any dividend or other distribution, direct or indirect, on account of any shares of any class of capital stock of Borrower now or hereafter outstanding, except a dividend payable solely in shares of that class of stock or in any junior class of stock of Borrower, (ii) any redemption, retirement, sinking fund or similar payment, purchase or other acquisition for value, direct or indirect, of any shares of any class of capital stock of Borrower now or hereafter outstanding, (iii) any payment or prepayment of principal of, premium, if any, or interest, fees or other charges on or with respect to, and any redemption, purchase, retirement, defeasance, sinking fund or similar payment and any claim for rescission with respect to the Subordinated Loans (as defined in the Receivables Sale Agreement), (iv) any payment made to redeem, purchase, repurchase or retire, or to obtain the surrender of, any outstanding warrants, options or other rights to acquire shares of any class of capital stock of Borrower now or hereafter outstanding, and (v) any payment of management fees by Borrower (except for reasonable management fees to any Originator or its Affiliates in reimbursement of actual management services performed).
“Restricted Subsidiary” has the meaning provided in the Receivables Sale Agreement.
“S&P” means Standard and Poor’s Ratings Services, a Standard and Poor’s Financial Services LLC business and any successor thereto.
“Scheduled Termination Date”  means May 1, 2016.
“Secured Parties” means the Indemnified Parties.
“Servicer” means at any time the Person domiciled in the United States (which may be the Administrative Agent) then authorized pursuant to Article VIII to service, administer and collect Receivables.
“Servicing Fee” means, for each day in a Calculation Period:
(a)    an amount equal to (i) the Servicing Fee Rate (or, at any time while Smithfield or one of its Affiliates is the Servicer, such lesser percentage as may be agreed between Borrower and the Servicer on an arms’ length basis based on then prevailing market terms for similar services), times (ii) the Outstanding Balance of all Receivables at the close of business on the Cut-Off Date immediately preceding such Calculation Period, times (iii) 1/360; or
(b)    on and after the Servicer’s reasonable request made at any time when Smithfield or one of its Affiliates is no longer acting as Servicer hereunder, an alternative amount specified by the successor Servicer not exceeding (i) 110% of such Servicer’s reasonable costs and expenses of performing its obligations under this Agreement during the preceding Calculation Period, divided by (ii) the number of days in the current Calculation Period.
“Servicing Fee Rate” means 1.0% per annum.
“Settlement Date” means (A) with respect to all Loans, the second (2nd) Business Day after each Monthly Reporting Date, and (B) in addition, with respect to Loans of the Committed Lenders, the last day of the relevant Interest Period.
“Settlement Period” means the immediately preceding Calculation Period (or portion thereof).
“SFFC” means SFFC, Inc., a Delaware corporation.
“Smithfield” has the meaning provided in the preamble to this Agreement.
“Specified Days Sales Outstanding” means, as of any day, an amount equal to the sum of (I) the product of (x) 91, times (y) the amount obtained by dividing (i) the aggregate Outstanding Balance of Receivables as of the most recent Cut-Off Date, by (ii) the aggregate amount of Receivables created during the three (3) Calculation Periods including and immediately preceding such Cut-Off Date, times (z) 0.85, and (II) the product of (x) 120, times (y) the amount obtained by dividing (i) the aggregate Outstanding Balance of Receivables as of the most recent Cut-Off Date, by (ii) the aggregate amount of Receivables created during the three(3) Calculation Periods including and immediately preceding such Cut-Off Date, times (z) 0.15.
 “Subordinated Lender” has the meaning provided in the Receivables Sale Agreement.
“Subordinated Loan” has the meaning provided in the Receivables Sale Agreement.
“Subsidiary” of a Person means (i) any corporation more than 50% of the outstanding securities having ordinary voting power of which shall at the time be owned or controlled, directly or indirectly, by such Person or by one or more of its Subsidiaries or by such Person and one or more of its Subsidiaries, or (ii) any partnership, association, limited liability company, joint venture or similar business organization more than 50% of the ownership interests having ordinary voting power of which shall at the time be so owned or controlled.
“Tax Code” means the Internal Revenue Code of 1986, as the same may be amended from time to time.
“Taxes” means any and all present or future taxes, levies, imposts, duties, deductions, withholdings, assessments, fees or other charges imposed by any Governmental Authority, including any interest, additions to tax or penalties applicable thereto.
“Termination Date” has the meaning provided in the Receivables Sale Agreement.
“Terminating Tranche” has the meaning provided in Section 4.3(b).
“Transaction Documents” means, collectively, this Agreement, each Borrowing Notice, the Receivables Sale Agreement, each Collection Account Agreement, the Performance Undertaking, any Letter of Credit, the Fee Letter, the L/C Fee Letter, the Intercreditor Agreement, each Subordinated Note (as defined in the Receivables Sale Agreement) and all other instruments, documents and agreements executed and delivered in connection herewith.
“UCC” means the Uniform Commercial Code as from time to time in effect in the specified jurisdiction.
“Unaffiliated Committed Lender” means each Committed Lender that is not related to a Conduit Group.
“Unmatured Event of Default” means an event which, with the passage of time or the giving of notice, or both, would constitute an Event of Default.
“Unreimbursed Amount” has the meaning specified in Section 1.7(c).
“Unrestricted Subsidiary” has the meaning provided in the Receivables Sale Agreement.
“Volume Rebate” means, with respect to any Receivable, a rebate or refund as described in Section 1.4(a)(iii).
“Volume Rebate Accrual Amount” means, on any date of determination, the aggregate amount of all Volume Rebates that have accrued as of or on such date of determination.
“Withdrawal Liability” means liability to a Multiemployer Plan as a result of a complete or partial withdrawal from such Multiemployer Plan, as such terms are defined in Part I of Subtitle E of Title IV of ERISA.
“Yen” and the sign “¥” means the lawful currency of Japan.
“Yield” means, the amounts described in Section 2.1.
All accounting terms not specifically defined herein shall be construed in accordance with GAAP.  All terms used in Article 9 of the UCC in the State of New York, and not specifically defined herein, are used herein as defined in such Article 9.
 

EXHIBIT II-A

FORM OF BORROWING NOTICE

---

SMITHFIELD RECEIVABLES FUNDING LLC

BORROWING NOTICE
dated ______________, 20__
for Borrowing on ________________, 20__

[Applicable Co-Agent]

Attention:  [________________]

Ladies and Gentlemen:

Reference is made to the Second Amended and Restated Credit and Security Agreement dated as of April 28, 2014 (as amended, supplemented or otherwise modified from time to time, the “Credit Agreement”) among Smithfield Receivables Funding LLC (“Borrower”), Smithfield Foods, Inc., as initial Servicer, the Lenders and Co-Agents from time to time party thereto and Coöperatieve Centrale Raiffeisen-Boerenleenbank B.A., “Rabobank Nederland”, New York Branch, as Administrative Agent and Letter of Credit Issuer.  Capitalized terms defined in the Credit Agreement are used herein with the same meanings.
1.    The [Servicer, on behalf of] Borrower hereby certifies, represents and warrants to the Agents and the Lenders that on and as of the Borrowing Date (as hereinafter defined):
(a)    all applicable conditions precedent set forth in Article VI of the Credit Agreement have been satisfied;
(b)    each of its representations and warranties contained in Section 5.1 of the Credit Agreement will be true and correct, in all material respects, as if made on and as of the Borrowing Date;
(c)    no event will have occurred and is continuing, or would result from the requested Purchase, that constitutes an Event of Default or Unmatured Event of Default;
(d)    the Facility Termination Date has not occurred; and
(e)    after giving effect to the Loans comprising the Advance requested below, the Aggregate Principal will not exceed the Borrowing Limit.
2.    The [Servicer, on behalf of] Borrower hereby requests that the Lenders make an Advance on ___________, 20__ (the “Borrowing Date”) as follows:
(a)    Aggregate Amount of Advance:  $_____________
		
	(i)
	[Conduit Group]’s Percentage of Advance:  $[___________________]

		
	(ii)
	[Unaffiliated Committed Lender]’s Percentage of Advance:  $[___________________]

(b)    To the extent any portion of an Advance is funded by Committed Lenders, [Servicer on behalf of] Borrower requests that the applicable Committed Lender(s) make [an Alternate Base Rate Loan] [an Adjusted Federal Funds Rate Loan] [that converts into] a LIBO Rate Loan with an Interest Period of _____ months on the third Business Day after the Borrowing Date).
3.  Please disburse the proceeds of the Loans as follows:
		
	(i)
	[Conduit Group]:  [Apply $________ to payment of principal and interest of existing Loans due on the Borrowing Date].  [Apply $______ to payment of fees due on the Borrowing Date]. [Wire transfer $________ to account no. ________ at ___________ Bank, in [city, state], ABA No. __________, Reference:  ________].

		
	(ii)
	[Unaffiliated Committed Lender]:  [Apply $________ to payment of principal and interest of existing Loans due on the Borrowing Date].  [Apply $______ to payment of fees due on the Borrowing Date]. [Wire transfer $________ to account no. ________ at ___________ Bank, in [city, state], ABA No. __________, Reference:  ________].

IN WITNESS WHEREOF, the [Servicer, on behalf of] Borrower has caused this Borrowing Notice to be executed and delivered as of this ____ day of ___________, _____.
[SMITHFIELD FOODS, INC., as Servicer, on behalf of:] [SMITHFIELD RECEIVABLES FUNDING LLC], as Borrower

By:                        
Name:
Title:
 

EXHIBIT II-B

FORM OF REDUCTION NOTICE

---

SMITHFIELD RECEIVABLES FUNDING LLC

REDUCTION NOTICE
dated ______________, 20__
for reduction to occur on ________________, 20__

[Applicable Co-Agent]
Attention:  [________________]
Ladies and Gentlemen:

Reference is made to the Second Amended and Restated Credit and Security Agreement dated as of April 28, 2014 (as amended, supplemented or otherwise modified from time to time, the “Credit Agreement”) among Smithfield Receivables Funding LLC (“Borrower”), Smithfield Foods, Inc., as initial Servicer, the Lenders and Co-Agents from time to time party thereto and Coöperatieve Centrale Raiffeisen-Boerenleenbank B.A., “Rabobank Nederland”, New York Branch, as Administrative Agent and Letter of Credit Issuer.  Capitalized terms defined in the Credit Agreement are used herein with the same meanings.
You are hereby irrevocably notified that Borrower wishes to make an Aggregate Reduction in the amount of $_____________ on ___________, 20__ (the “Proposed Reduction Date”).
[______________]’s Percentage of such Aggregate Reduction will be  $[_______________.]
The undersigned agrees and acknowledges that any payments to the Agents or the Lenders must be made by 12:00 p.m. (New York City time).
IN WITNESS WHEREOF, the [Servicer, on behalf of] Borrower has caused this Reduction Notice to be executed and delivered as of the date set forth above.
[SMITHFIELD FOODS, INC., as Servicer, on behalf of:] [SMITHFIELD RECEIVABLES FUNDING LLC], as Borrower

By:                        
Name:
Title:

EXHIBIT III-A

PLACES OF BUSINESS OF THE LOAN PARTIES AND PERFORMANCE GUARANTOR; LOCATIONS OF RECORDS; FEDERAL EMPLOYER IDENTIFICATION NUMBER(S)

SMITHFIELD RECEIVABLES FUNDING LLC
Place of Business:  Delaware
Locations of Records:  3411 Silverside Rd, 103 Baynard Bldg, Wilmington, DE 19810
Federal Employer Identification Number: 
Legal, Trade and Assumed Names:  None
Organizational Identification Number: 

SMITHFIELD FOODS, INC.
Place of Business:  Virginia
Locations of Records:  200 Commerce Street, Smithfield, Virginia 23430
Federal Employer Identification Number: 
Legal, Trade and Assumed Names:  None.
Organizational Identification Number: 

EXHIBIT IV
FORM OF COMPLIANCE CERTIFICATE

		
	To:
	Coöperatieve Centrale Raiffeisen-Boerenleenbank B.A., “Rabobank Nederland”, New York Branch, as Administrative Agent

This Compliance Certificate is furnished pursuant to that certain Second Amended and Restated Credit and Security Agreement dated as of April 28, 2014 (as amended, supplemented or otherwise modified from time to time, the “Credit Agreement”) among Smithfield Receivables Funding LLC (“Borrower”), Smithfield Foods, Inc. (the “Servicer”), the Lenders and Co-Agents from time to time party thereto and Coöperatieve Centrale Raiffeisen-Boerenleenbank B.A., “Rabobank Nederland”, New York Branch, as Administrative Agent and Letter of Credit Issuer.
THE UNDERSIGNED HEREBY CERTIFIES THAT:
1.    I am the duly elected _________________ of Borrower.
2.    I have reviewed the terms of the Credit Agreement and I have made, or have caused to be made under my supervision, a detailed review of the transactions and conditions of Performance Guarantor and its Subsidiaries during the accounting period covered by the attached financial statements.
3.    The examinations described in paragraph 2 did not disclose, and I have no knowledge of, the existence of any condition or event which constitutes an Event of Default or Unmatured Event of Default, as each such term is defined under the Credit Agreement, during or at the end of the accounting period covered by the attached financial statements or as of the date of this Certificate[, except as set forth in paragraph 4 below].
[4.    Described below are the exceptions, if any, to paragraph 3 by listing, in detail, the nature of the condition or event, the period during which it has existed and the action which Borrower has taken, is taking, or proposes to take with respect to each such condition or event:  ____________________]
The foregoing certifications are made and delivered as of ______________, 20__.

By:                    
Name:
Title:

EXHIBIT V
FORM OF ASSIGNMENT AGREEMENT
THIS ASSIGNMENT AGREEMENT (this “Assignment Agreement”) is entered into as of the ___ day of ____________, ____, by and between _____________________ (“Assignor”) and __________________ (“Assignee”).

PRELIMINARY STATEMENTS

A.    This Assignment Agreement is being executed and delivered in accordance with Section 12.1(b) of that certain Second Amended and Restated Credit and Security Agreement dated as of April 28, 2014 (as amended, supplemented or otherwise modified from time to time, the “Credit Agreement”) among Smithfield Receivables Funding LLC, as Borrower, Smithfield Foods, Inc., as initial Servicer, the Lenders and Co-Agents from time to time party thereto and Coöperatieve Centrale Raiffeisen-Boerenleenbank B.A., “Rabobank Nederland”, New York Branch, as Administrative Agent and Letter of Credit Issuer, and that applicable Liquidity Agreement.  Capitalized terms used and not otherwise defined herein are used with the meanings set forth or incorporated by reference in the Credit Agreement.
B.    Assignor is a Committed Lender party to the Credit Agreement [and the Liquidity Agreement dated as of ________ by and among _____________ (the “Liquidity Agreement”)], and Assignee wishes to become a Committed Lender thereunder; and
C.    Assignor is selling and assigning to Assignee an undivided ____________% (the “Transferred Percentage”) interest in all of Assignor’s rights and obligations under the Transaction Documents [and the Liquidity Agreement], including, without limitation, Assignor’s Commitment[, Assignor’s Liquidity Commitment] and (if applicable) Assignor’s Loans as set forth herein.
AGREEMENT

The parties hereto hereby agree as follows:
1.    The sale, transfer and assignment effected by this Assignment Agreement shall become effective (the “Effective Date”) two (2) Business Days (or such other date selected by the Administrative Agent in its sole discretion) following the date on which a notice substantially in the form of Schedule II to this Assignment Agreement (“Effective Notice”) is delivered by the applicable Co-Agent to the Conduit in the Assignor’s Conduit Group, Assignor and Assignee.  From and after the Effective Date, Assignee shall be a Committed Lender party to the Credit Agreement for all purposes thereof as if Assignee were an original party thereto and Assignee agrees to be bound by all of the terms and provisions contained therein.
2.    If Assignor has no outstanding principal under the Credit Agreement [or its Liquidity Agreement], on the Effective Date, Assignor shall be deemed to have hereby transferred and assigned to Assignee, without recourse, representation or warranty (except as provided in paragraph 6 below), and the Assignee shall be deemed to have hereby irrevocably taken, received and assumed from Assignor, the Transferred Percentage of Assignor’s Commitment [and Liquidity Commitment] and all rights and obligations associated therewith under the terms of the Credit Agreement [and its Liquidity Agreement], including, without limitation, the Transferred Percentage of Assignor’s future funding obligations under the Credit Agreement [and its Liquidity Agreement].
3.    If Assignor has any outstanding principal under the Credit Agreement [and its Liquidity Agreement], at or before 12:00 noon, local time of Assignor, on the Effective Date Assignee shall pay to Assignor, in immediately available funds, an amount equal to the sum of (i) the Transferred Percentage of the outstanding principal of Assignor’s Loans [and, without duplication, Assignor’s Percentage Interests (as defined in the Liquidity Agreement)] (such amount, being hereinafter referred to as the “Assignee’s Principal”); (ii) all accrued but unpaid (whether or not then due) Interest attributable to Assignee’s Principal; and (iii) accruing but unpaid fees and other costs and expenses payable in respect of Assignee’s Principal for the period commencing upon each date such unpaid amounts commence accruing, to and including the Effective Date (the “Assignee’s Acquisition Cost”); whereupon, Assignor shall be deemed to have sold, transferred and assigned to Assignee, without recourse, representation or warranty (except as provided in paragraph 6 below), and Assignee shall be deemed to have hereby irrevocably taken, received and assumed from Assignor, the Transferred Percentage of Assignor’s Commitment, Liquidity Commitment, Loans (if applicable) [and Percentage Interests (if applicable)] and all related rights and obligations under the Transaction Documents [and its Liquidity Agreement], including, without limitation, the Transferred Percentage of Assignor’s future funding obligations under the Credit Agreement [and its Liquidity Agreement].
4.    Concurrently with the execution and delivery hereof, Assignor will provide to Assignee copies of all documents requested by Assignee which were delivered to Assignor pursuant to the Credit Agreement [or its Liquidity Agreement].
5.    Each of the parties to this Assignment Agreement agrees that at any time and from time to time upon the written request of any other party, it will execute and deliver such further documents and do such further acts and things as such other party may reasonably request in order to effect the purposes of this Assignment Agreement.
6.    By executing and delivering this Assignment Agreement, Assignor and Assignee confirm to and agree with each other, the Agents and the Committed Lenders as follows:  (a) other than the representation and warranty that it has not created any Adverse Claim upon any interest being transferred hereunder, Assignor makes no representation or warranty and assumes no responsibility with respect to any statements, warranties or representations made by any other Person in or in connection with any of the Transaction Documents [or its Liquidity Agreement] or the execution, legality, validity, enforceability, genuineness, sufficiency or value of Assignee, the Credit Agreement[, its Liquidity Agreement] or any other instrument or document furnished pursuant thereto or the perfection, priority, condition, value or sufficiency of any Collateral; (b) Assignor makes no representation or warranty and assumes no responsibility with respect to the financial condition of Borrower, any Obligor, any Affiliate of Borrower or the performance or observance by Borrower, any Obligor, any Affiliate of Borrower of any of their respective obligations under the Transaction Documents or any other instrument or document furnished pursuant thereto or in connection therewith; (c) Assignee confirms that it has received a copy of each of the Transaction Documents [and the Liquidity Agreement], and other documents and information as it has requested and deemed appropriate to make its own credit analysis and decision to enter into this Assignment Agreement; (d) Assignee will, independently and without reliance upon the Agents, Conduits, Borrower or any other Committed Lender or Lender 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 Transaction Documents [and the Liquidity Agreement]; (e) Assignee appoints and authorizes the Administrative Agent to take such action as agent on its behalf and to exercise such powers under the Transaction Documents [and the Liquidity Agreement] as are delegated to the Administrative Agent by the terms thereof, together with such powers as are reasonably incidental thereto; and (f) Assignee agrees that it will perform in accordance with their terms all of the obligations which, by the terms of [its Liquidity Agreement,] the Credit Agreement and the other Transaction Documents, are required to be performed by it as a Committed Lender or, when applicable, as a Lender.
7.    Each party hereto represents and warrants to and agrees with the Administrative Agent that it is aware of and will comply with the provisions of the Credit Agreement, including, without limitation, Sections 14.5 and 14.6 thereof.
8.    Schedule I hereto sets forth the revised Commitment and Liquidity Commitment of Assignor and the Commitment and Liquidity Commitment of Assignee, as well as administrative information with respect to Assignee.
9.    THIS ASSIGNMENT AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
10.    Assignee hereby covenants and agrees that, prior to the date which is one year and one day after the payment in full of all senior indebtedness for borrowed money of the Conduit in the Assignor’s Conduit Group, it will not institute against, or join any other Person in instituting against, such Conduit any bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings or other similar proceeding under the laws of the United States or any state of the United States.
IN WITNESS WHEREOF, the parties hereto have caused this Assignment Agreement to be executed by their respective duly authorized officers of the date hereof.
[ASSIGNOR]

By:  _________________________
Title:

[ASSIGNEE]

By:  __________________________
Title:
 

SCHEDULE I TO ASSIGNMENT AGREEMENT

LIST OF LENDING OFFICES, ADDRESSES
FOR NOTICES AND COMMITMENT AMOUNTS

Date:  _____________, ______

Transferred Percentage:    ____________%

	
							
	 
	A-1
	A-2
	B-1
	B-2
	C-1
	C-2

	Assignor
	Commitment (prior to giving effect to the Assignment Agreement)
	Commitment (after giving effect to the Assignment Agreement)
	Outstanding principal (if any)
	Ratable Share of Outstanding principal
	Liquidity Commitment (prior to giving effect to the Assignment Agreement)
	Liquidity Commitment (after giving effect to the Assignment Agreement)

	 
	 
	 
	 
	 
	 
	 

	
							
	 
	A-1
	A-2
	B-1
	B-2
	C-1
	C-2

	Assignee
	Commitment (prior to giving effect to the Assignment Agreement)
	Commitment (after giving effect to the Assignment Agreement)
	Outstanding principal (if any)
	Ratable Share of Outstanding principal
	Liquidity Commitment (prior to giving effect to the Assignment Agreement)
	Liquidity Commitment (after giving effect to the Assignment Agreement)

	 
	 
	 
	 
	 
	 
	 

Address for Notices
            
            
Attention:
Phone:
Fax:

SCHEDULE II TO ASSIGNMENT AGREEMENT

EFFECTIVE NOTICE

		
	TO:
	            , Assignor 
             
            

		
	TO:
	            , Assignor 
             
            

The undersigned, as Administrative Agent under the Second Amended and Restated Credit and Security Agreement dated as of April 28, 2014 (as amended, supplemented or otherwise modified from time to time, the “Credit Agreement”) among Smithfield Receivables Funding LLC (“Borrower”), Smithfield Foods, Inc., as initial Servicer, the Lenders and Co-Agents from time to time party thereto and Coöperatieve Centrale Raiffeisen-Boerenleenbank B.A., “Rabobank Nederland”, New York Branch, as Administrative Agent and Letter of Credit Issuer, hereby acknowledges receipt of executed counterparts of a completed Assignment Agreement dated as of ____________, 20__ between __________________, as Assignor, and __________________, as Assignee.  Terms defined in such Assignment Agreement are used herein as therein defined.
1.    Pursuant to such Assignment Agreement, you are advised that the Effective Date will be ______________, ____.
2.    Each of the undersigned hereby consents to the Assignment Agreement as required by Section 12.1(b) of the Credit Agreement.
[3.  Pursuant to such Assignment Agreement, the Assignee is required to pay $____________ to Assignor at or before 12:00 noon (local time of Assignor) on the Effective Date in immediately available funds.]
Very truly yours,

COÖPERATIEVE CENTRALE RAIFFEISEN-BOERENLEENBANK B.A., “RABOBANK NEDERLAND”, NEW YORK BRANCH, as Administrative Agent 

By:                         
Title:                        

[INSERT APPLICABLE CONDUIT’S NAME]

By:                         
Title:                        

EXHIBIT VI
FORM OF MONTHLY REPORT
See attached.
 

EXHIBIT VII
FORM OF PERFORMANCE UNDERTAKING
THIS THIRD AMENDED AND RESTATED PERFORMANCE UNDERTAKING (this “Undertaking”), dated as of April 28, 2014, is executed by Smithfield Foods, Inc., a Virginia corporation (the “Performance Guarantor”), in favor of Smithfield Receivables Funding LLC, a Delaware limited liability company (the “Recipient”).
RECITALS

1.    Smithfield of Canada, Ltd., a company incorporated under the laws of Canada, Smithfield Farmland Sales Corp., a Delaware corporation, Smithfield Global Products, Inc., a Delaware corporation, John Morrell & Co., a Delaware corporation, Patrick Cudahy, LLC, a Delaware limited liability company, Premium Pet Health, LLC, a Delaware limited liability company, Smithfield Specialty Foods Group, LLC, a Delaware limited liability company, and Armour-Eckrich Meats LLC, a Delaware limited liability company (collectively, unless excluded as an Excluded Originator pursuant to the Sale Agreement, the “Originators”), the Performance Guarantor and the Recipient have entered into a Second Amended and Restated Receivables Sale Agreement, dated as of April 28, 2014 (as amended, restated or otherwise modified from time to time, the “Sale Agreement”), pursuant to which the Originators, subject to the terms and conditions contained therein, are transferring all of their respective right, title and interest in certain of their accounts receivable to Performance Guarantor, which Performance Guarantor is then contributing to SFFC and SFFC to Recipient, and each of the Originators is selling all of their respective right, title and interest in and to their remaining accounts receivable and other Receivables to Recipient.
2.    Performance Guarantor owns, directly or indirectly, one hundred percent (100%) of the capital stock or limited liability company interests, as applicable, of each of the Originators, SFFC, and Recipient, and each of the Originators, SFFC and Performance Guarantor is expected to receive substantial direct and indirect benefits from their sale or contribution of receivables to Recipient, as applicable, pursuant to the Sale Agreement (which benefits are hereby acknowledged).
3.    As an inducement for Recipient to acquire each Originator’s accounts receivable and other Receivables pursuant to the Sale Agreement, Performance Guarantor has agreed to guaranty the due and punctual performance by Originators of their obligations under the Sale Agreement, subject to the terms and conditions of this Undertaking.
4.    Performance Guarantor wishes to guaranty the due and punctual performance by Originators of the obligations described in clause 3 above as provided herein.
AGREEMENT

NOW, THEREFORE, Performance Guarantor hereby agrees as follows:
Section 1.  Definitions.  Capitalized terms used herein and not defined herein shall have the respective meanings assigned thereto in the Sale Agreement or the Credit and Security Agreement (as hereinafter defined) and the rules of interpretation set forth in the Sale Agreement shall apply as if set forth herein.  In addition:
“Agreements” means the Sale Agreement and the Credit and Security Agreement, collectively.
“Credit and Security Agreement” means that certain Second Amended and Restated Credit and Security Agreement, dated as of April 28, 2014 by and among Recipient, as Borrower, Performance Guarantor, as Servicer, the Lenders and Co-Agents from time to time party thereto and Coöperatieve Centrale Raiffeisen-Boerenleenbank B.A., “Rabobank Nederland”, New York Branch, as Administrative Agent and Letter of Credit Issuer, as amended, restated or otherwise modified from time to time in accordance with the terms thereof.
“Guaranteed Obligations” means, collectively, all covenants, agreements, terms, conditions and indemnities to be performed and observed by any Originator under and pursuant to the Sale Agreement and each other document executed and delivered by any Originator pursuant to the Sale Agreement, including the due and punctual payment of all sums which are or may become due and owing by any Originator under the Sale Agreement, whether for fees, expenses (including reasonable counsel fees), indemnified amounts or otherwise, whether upon any termination or for any other reason; provided that, the “Guaranteed Obligations” shall expressly exclude any of the foregoing obligations to the extent that the failure by the relevant Originator to perform or pay such obligations results from any Receivable not being collected from or paid by, or otherwise being uncollectible from, the relevant Obligor on account of the insolvency, bankruptcy, creditworthiness or financial inability to pay of the applicable Obligor or the intentional non-payment of amounts due by the related Obligor in breach of its obligations in respect of such Receivable.
Section 2.    Guaranty of Performance of Guaranteed Obligations.  Performance Guarantor hereby guarantees to Recipient, the full and punctual payment and performance by each Originator of its respective Guaranteed Obligations.  This Undertaking is an absolute, unconditional and continuing guaranty of the full and punctual performance of all Guaranteed Obligations of each Originator under the Agreements and each other document executed and delivered by any Originator pursuant to the Agreements and is in no way conditioned upon any requirement that Recipient first attempt to collect any amounts owing by any Originator to Recipient, the Agents or the Lenders from any other Person or resort to any collateral security, any balance of any deposit account or credit on the books of Recipient, the Agents or any Lender in favor of any Originator or any other Person or other means of obtaining payment.  Should any Originator default in the payment or performance of any of its Guaranteed Obligations, Recipient may cause the immediate performance by Performance Guarantor of such Guaranteed Obligations and cause any such payment Guaranteed Obligations to become forthwith due and payable to Recipient, without demand or notice of any nature (other than as expressly provided herein), all of which are hereby expressly waived by Performance Guarantor.  Notwithstanding the foregoing, this Undertaking is a guarantee of payment and not of collection.
Section 3.    Performance Guarantor’s Further Agreements to Pay.  Performance Guarantor further agrees, as the principal obligor and not as a guarantor only, to pay to Recipient, forthwith upon demand in funds immediately available to Recipient, all reasonable costs and expenses (including court costs and reasonable legal expenses) incurred or expended by Recipient in connection with enforcing this Undertaking, together with interest on amounts recoverable under this Undertaking from the time when such amounts become due until payment, at a rate of interest (computed for the actual number of days elapsed based on a 360 day year) equal to the Default Rate.
Section 4.    Waivers by Performance Guarantor.  Performance Guarantor waives notice of acceptance of this Undertaking, notice of any action taken or omitted by Recipient in reliance on this Undertaking, and any requirement that Recipient be diligent or prompt in making demands under this Undertaking, giving notice of any Termination Event, Event of Default, other default or omission by any Originator or asserting any other rights of Recipient under this Undertaking.  Performance Guarantor warrants that it has adequate means to obtain from each Originator, on a continuing basis, information concerning the financial condition of such Originator, and that it is not relying on Recipient to provide such information, now or in the future.  Performance Guarantor also irrevocably waives all defenses (i) that at any time may be available in respect of the Obligations by virtue of any statute of limitations, valuation, stay, moratorium law or other similar law now or hereafter in effect or (ii) that arise under the law of suretyship, including impairment of collateral.  Recipient shall be at liberty, without giving notice to or obtaining the assent of Performance Guarantor and without relieving Performance Guarantor of any liability under this Undertaking, to deal with each Originator and with each other party who now is or after the date hereof becomes liable in any manner for any of the Guaranteed Obligations, in such manner as Recipient in its sole discretion deems fit, and to this end Performance Guarantor agrees that the validity and enforceability of this Undertaking, including the provisions of Section 7 hereof, shall not be impaired or affected by any of the following:  (a) any extension, modification or renewal of, or indulgence with respect to, or substitutions for, the Guaranteed Obligations or any part thereof or any agreement relating thereto at any time; (b) any failure or omission to enforce any right, power or remedy with respect to the Guaranteed Obligations or any part thereof or any agreement relating thereto, or any collateral securing the Guaranteed Obligations or any part thereof; (c) any waiver of any right, power or remedy or of any Termination Event, Event of Default, or default with respect to the Guaranteed Obligations or any part thereof or any agreement relating thereto; (d) any release, surrender, compromise, settlement, waiver, subordination or modification, with or without consideration, of any other obligation of any person or entity with respect to the Guaranteed Obligations or any part thereof; (e) the enforceability or validity of the Guaranteed Obligations or any part thereof or the genuineness, enforceability or validity of any agreement relating thereto or with respect to the Guaranteed Obligations or any part thereof; (f) the application of payments received from any source to the payment of any payment obligations of any Originator or any part thereof or amounts which are not covered by this Undertaking even though Recipient might lawfully have elected to apply such payments to any part or all of the payment obligations of such Originator or to amounts which are not covered by this Undertaking; (g) the existence of any claim, setoff or other rights which Performance Guarantor may have at any time against any Originator in connection herewith or any unrelated transaction; (h) any assignment or transfer of the Guaranteed Obligations or any part thereof; or (i) any failure on the part of any Originator to perform or comply with any term of the Agreements or any other document executed in connection therewith or delivered thereunder, all whether or not Performance Guarantor shall have had notice or knowledge of any act or omission referred to in the foregoing clauses (a) through (i) of this Section 4.
Section 5.    Unenforceability of Guaranteed Obligations Against Originators.  Notwithstanding (a) any change of ownership of any Originator or the insolvency, bankruptcy or any other change in the legal status of any Originator; (b) the change in or the imposition of any law, decree, regulation or other governmental act which does or might impair, delay or in any way affect the validity, enforceability or the payment when due of the Guaranteed Obligations; (c) the failure of any Originator or Performance Guarantor to maintain in full force, validity or effect or to obtain or renew when required all governmental and other approvals, licenses or consents required in connection with the Guaranteed Obligations or this Undertaking, or to take any other action required in connection with the performance of all obligations pursuant to the Guaranteed Obligations or this Undertaking; or (d) if any of the moneys included in the Guaranteed Obligations have become irrecoverable from any Originator for any other reason other than final payment in full of the payment Obligations in accordance with their terms, this Undertaking shall nevertheless be binding on Performance Guarantor.  This Undertaking shall be in addition to any other guaranty or other security for the Guaranteed Obligations, and it shall not be rendered unenforceable by the invalidity of any such other guaranty or security.  In the event that acceleration of the time for payment of any of the Guaranteed Obligations is stayed upon the insolvency, bankruptcy or reorganization of any Originator or for any other reason with respect to any Originator, all such amounts then due and owing with respect to the Guaranteed Obligations under the terms of the Agreements, or any other agreement evidencing, securing or otherwise executed in connection with the Guaranteed Obligations, shall be immediately due and payable by Performance Guarantor.
Section 6.    Representations and Warranties.  Performance Guarantor hereby represents and warrants to Recipient that:
(a)    Existence and Standing.  Performance Guarantor is a corporation duly organized, validly existing and in good standing under the laws of its state of incorporation.  Performance Guarantor is duly qualified to do business and is in good standing as a foreign corporation, and has and holds all corporate power and all governmental licenses, authorizations, consents and approvals required to carry on its business in each jurisdiction in which its business is conducted except where the failure to so qualify or so hold would not reasonably be expected to have a Material Adverse Effect.
(b)    Authorization, Execution and Delivery; Binding Effect.  The execution and delivery by Performance Guarantor of this Undertaking, and the performance of its obligations hereunder, are within its corporate powers and authority and have been duly authorized by all necessary corporate action on its part.  This Undertaking has been duly executed and delivered by Performance Guarantor.  This Undertaking constitutes the legal, valid and binding obligation of Performance Guarantor, enforceable against Performance Guarantor in accordance with its terms, except as such enforcement may be limited by applicable bankruptcy, insolvency, reorganization or other similar laws relating to or limiting creditors’ rights generally and by general principles of equity (regardless of whether enforcement is sought in a proceeding in equity or at law).
(c)    No Conflict; Government Consent.  The execution and delivery by Performance Guarantor of this Undertaking, and the performance by Performance Guarantor of its obligations hereunder, do not contravene or violate (i) its certificate or articles of incorporation or by-laws, (ii) any law, rule or regulation applicable to it, (iii) any restrictions under any agreement, contract or instrument to which it is a party or by which it or any of its property is bound, or (iv) any order, writ, judgment, award, injunction or decree binding on or affecting it or its property, except, in any case, where such contravention or violation would not reasonably be expected to have a Material Adverse Effect.  
(d)    Litigation and Contingent Obligations.  Except as disclosed in the filings made by Performance Guarantor with the Securities and Exchange Commission, there are no actions, suits or proceedings pending or, to the best of Performance Guarantor’s knowledge threatened against or affecting Performance Guarantor or any of its properties, in or before any court, arbitrator or other body, that could reasonably be expected to have a material adverse effect on (i) the business, properties, condition (financial or otherwise) or results of operations of Performance Guarantor and its Subsidiaries taken as a whole, (ii) the ability of Performance Guarantor to perform its obligations under this Undertaking, or (iii) the validity or enforceability of any of this Undertaking or the rights or remedies of Recipient hereunder.  
Section 7.    Subrogation; Subordination.  Notwithstanding anything to the contrary contained herein, until the Guaranteed Obligations are paid in full Performance Guarantor:  (a) will not enforce or otherwise exercise any right of subrogation to any of the rights of Recipient, the Agents or any Lender against any Originator, (b) hereby waives all rights of subrogation (whether contractual, under Section 509 of the United States Bankruptcy Code, at law or in equity or otherwise) to the claims of Recipient, the Agents and the Lenders against any Originator and all contractual, statutory or legal or equitable rights of contribution, reimbursement, indemnification and similar rights and “claims” (as that term is defined in the United States Bankruptcy Code) which Performance Guarantor might now have or hereafter acquire against any Originator that arise from the existence or performance of Performance Guarantor’s obligations hereunder, (c) will not claim any setoff, recoupment or counterclaim against any Originator in respect of any liability of Performance Guarantor to such Originator and (d) waives any benefit of and any right to participate in any collateral security which may be held by Recipient, the Agents or the Lenders.  The payment of any amounts due with respect to any indebtedness of any Originator now or hereafter owed to Performance Guarantor is hereby subordinated to the prior payment in full of all of the Guaranteed Obligations.  Performance Guarantor agrees that, after the occurrence of any default in the payment or performance of any of the Guaranteed Obligations, Performance Guarantor will not demand, sue for or otherwise attempt to collect any such indebtedness of any Originator to Performance Guarantor until all of the Guaranteed Obligations shall have been paid and performed in full; provided that so long as no such default has occurred and is continuing, any Originator shall be entitled to make payments and Performance Guarantor shall be entitled to receive payments in respect of any such subordinated indebtedness.  If, notwithstanding the foregoing sentence, Performance Guarantor shall collect, enforce or receive any amounts in respect of such indebtedness while any default in the payment or performance of any of the Guaranteed Obligations is continuing, such amounts shall be collected, enforced and received by Performance Guarantor as trustee for Recipient and be paid over to Recipient on account of the Guaranteed Obligations without affecting in any manner the liability of Performance Guarantor under the other provisions of this Undertaking.  The provisions of this Section 7 shall be supplemental to and not in derogation of any rights and remedies of Recipient under any separate subordination agreement which Recipient may at any time and from time to time enter into with Performance Guarantor.
Section 8.    Termination of Performance Undertaking.  Performance Guarantor’s obligations hereunder shall continue in full force and effect until all Obligations are finally paid and satisfied in full and the Credit and Security Agreement is terminated; provided that this Undertaking shall continue to be effective or shall be reinstated, as the case may be, if at any time payment or other satisfaction of any of the Guaranteed Obligations is rescinded or must otherwise be restored or returned upon the bankruptcy, insolvency, or reorganization of any Originator or otherwise, as though such payment had not been made or other satisfaction occurred, whether or not Recipient is in possession of this Undertaking.  No invalidity, irregularity or unenforceability by reason of the Bankruptcy Code or any insolvency or other similar law, or any law or order of any government or agency thereof purporting to reduce, amend or otherwise affect the Guaranteed Obligations shall impair, affect, be a defense to or claim against the obligations of Performance Guarantor under this Undertaking.
Section 9.    Effect of Bankruptcy.  This Performance Undertaking shall survive the insolvency of any Originator and the commencement of any case or proceeding by or against any Originator under the Bankruptcy Code or other federal, state or other applicable bankruptcy, insolvency or reorganization statutes.  No automatic stay under the Bankruptcy Code with respect to any Originator or other federal, state or other applicable bankruptcy, insolvency or reorganization statutes to which any Originator is subject shall postpone the obligations of Performance Guarantor under this Undertaking.
Section 10.    Setoff.  Regardless of the other means of obtaining payment of any of the Guaranteed Obligations, Recipient is hereby authorized at any time and from time to time, without notice to Performance Guarantor (any such notice being expressly waived by Performance Guarantor) and to the fullest extent permitted by law, to set off and apply any deposits and other sums against the obligations of Performance Guarantor under this Undertaking, whether or not Recipient shall have made any demand under this Undertaking and although such Obligations may be contingent or unmatured.
Section 11.    Taxes.  All payments to be made by Performance Guarantor hereunder shall be made free and clear of any deduction or withholding.  If Performance Guarantor is required by law to make any deduction or withholding on account of Tax or otherwise from any such payment, the sum due from it in respect of such payment shall be increased to the extent necessary to ensure that, after the making of such deduction or withholding (including any deductions or withholding applicable to additional amounts payable under this Section 11), Recipient receives a net sum equal to the sum which it would have received had no deduction or withholding been made.
Section 12.    Further Assurances.  Performance Guarantor agrees that it will from time to time, at the request of Recipient, provide information relating to the business and affairs of Performance Guarantor as Recipient may reasonably request.  Performance Guarantor also agrees to do all such things and execute all such documents as Recipient may reasonably consider necessary or desirable to give full effect to this Undertaking and to perfect and preserve the rights and powers of Recipient hereunder.
Section 13.    Successors and Assigns.  This Performance Undertaking shall be binding upon Performance Guarantor, its successors and permitted assigns, and shall inure to the benefit of and be enforceable by Recipient and its successors and assigns.  Performance Guarantor may not assign or transfer any of its obligations hereunder without the prior written consent of each of Recipient and each Agent. Without limiting the generality of the foregoing sentence, Recipient may assign, pledge or otherwise transfer this Undertaking in connection with any assignment by it of any Agreement or its rights or obligations thereunder expressly permitted under the Agreements to any other entity or other person, and such other entity or other person shall thereupon become vested, to the extent set forth in the agreement evidencing such assignment, transfer or participation, with all the rights in respect thereof granted to the Recipient herein.
Section 14.    Amendments and Waivers.  No amendment or waiver of any provision of this Undertaking nor consent to any departure by Performance Guarantor therefrom shall be effective unless the same shall be in writing and signed by Recipient, the Agents and Performance Guarantor.  No failure on the part of Recipient to exercise, and no delay in exercising, any right hereunder shall operate as a waiver thereof; nor shall any single or partial exercise of any right hereunder preclude any other or further exercise thereof or the exercise of any other right.
Section 15.    Notices.  All notices and other communications provided for hereunder shall be made in writing and shall be addressed as follows:  if to Performance Guarantor, at the address set forth beneath its signature hereto, and if to Recipient, at the addresses set forth beneath its signature hereto, or at such other addresses as each of Performance Guarantor or any Recipient may designate in writing to the other.  Each such notice or other communication shall be effective (1) if given by telecopy, upon the receipt thereof, (2) if given by mail, three (3) Business Days after the time such communication is deposited in the mail with first class postage prepaid or (3) if given by any other means, when received at the address specified in this Section 15.
Section 16.    GOVERNING LAW.  THIS UNDERTAKING SHALL BE GOVERNED AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS OF LAWS THEREOF.
Section 17.    CONSENT TO JURISDICTION.  EACH PARTY TO THIS UNDERTAKING HEREBY IRREVOCABLY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF ANY UNITED STATES FEDERAL OR NEW YORK STATE COURT SITTING IN NEW YORK, NEW YORK, IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS UNDERTAKING OR ANY DOCUMENT EXECUTED BY SUCH PERSON PURSUANT TO THIS UNDERTAKING, AND EACH SUCH PARTY HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN ANY SUCH COURT AND IRREVOCABLY WAIVES ANY OBJECTION IT MAY NOW OR HEREAFTER HAVE AS TO THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN SUCH A COURT OR THAT SUCH COURT IS AN INCONVENIENT FORUM. NOTHING HEREIN SHALL LIMIT THE RIGHT OF ANY AGENT OR ANY LENDER TO BRING PROCEEDINGS AGAINST ANY LOAN PARTY IN THE COURTS OF ANY OTHER JURISDICTION. ANY JUDICIAL PROCEEDING BY ANY LOAN PARTY AGAINST ANY AGENT OR ANY LENDER OR ANY AFFILIATE OF ANY AGENT OR ANY LENDER INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH THIS UNDERTAKING OR ANY DOCUMENT EXECUTED BY SUCH LOAN PARTY PURSUANT TO THIS UNDERTAKING SHALL BE BROUGHT ONLY IN A COURT IN NEW YORK, NEW YORK.
Section 18.    Bankruptcy Petition.  Performance Guarantor hereby covenants and agrees that, prior to the date that is one year and one day after the payment in full of all outstanding senior Debt of Recipient, it will not institute against, or join any other Person in instituting against, Recipient any bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings or other similar proceeding under the laws of the United States or any state of the United States.
Section 19.    Miscellaneous.  This Undertaking constitutes the entire agreement of Performance Guarantor with respect to the matters set forth herein. The rights and remedies herein provided are cumulative and not exclusive of any remedies provided by law or any other agreement, and this Undertaking shall be in addition to any other guaranty of or collateral security for any of the Guaranteed Obligations.  The provisions of this Undertaking are severable, and in any action or proceeding involving any state corporate law, or any state or federal bankruptcy, insolvency, reorganization or other law affecting the rights of creditors generally, if the obligations of Performance Guarantor hereunder would otherwise be held or determined to be avoidable, invalid or unenforceable on account of the amount of Performance Guarantor’s liability under this Undertaking, then, notwithstanding any other provision of this Undertaking to the contrary, the amount of such liability shall, without any further action by Performance Guarantor or Recipient, be automatically limited and reduced to the highest amount that is valid and enforceable as determined in such action or proceeding.  Any provisions of this Undertaking which are prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.  Unless otherwise specified, references herein to “Section” shall mean a reference to sections of this Undertaking.
IN WITNESS WHEREOF, Performance Guarantor has caused this Undertaking to be executed and delivered as of the date first above written.
SMITHFIELD FOODS, INC.

By:                         
Name:                         
Title:                         

Address for Notices:

		
	Address:
	Smithfield Foods, Inc.

200 Commerce Street
Smithfield, VA 23430,
Attention: Robert Manly  
Telecopy No: 757-365-3025
and Ken Sullivan  
Telecopy No: 757-365-3070
 

EXHIBIT VIII
FORM OF REQUEST FOR LETTER OF CREDIT

TO:     [RABOBANK]

Pursuant to Section 1.7, of the Second Amended and Restated Credit and Security Agreement, dated as of April 28, 2014 (as amended or otherwise modified from time to time, the “Agreement”) among Smithfield Receivables Funding LLC, a Delaware limited liability company (the “Borrower”), Smithfield Foods, Inc., a Virginia corporation, as initial servicer (the “Servicer”), the Lenders and Co-Agents from time to time party thereto and Coöperatieve Centrale Raiffeisen-Boerenleenbank B.A., “Rabobank Nederland”, New York Branch, as administrative agent (in such capacity, the “Administrative Agent”) and as letter of credit issuer (in such capacity, the “Letter of Credit Issuer”), the Borrower hereby requests a Letter of Credit to be issued on the following terms:

(a) Business Day on which the Letter of Credit is to be issued:

(b) Amount (in Dollars):

(c) Expiry Date:

(d) Name and address of beneficiary:

Attached hereto are the following:

(i) a copy of the proposed Letter of Credit; 

(ii) a Letter of Credit Application; and

(iii) a true and correct calculation of the Borrowing Limit.

With respect to the foregoing requested L/C Credit Extension, the Borrower hereby certifies as follows:

(A) immediately after giving effect to the requested L/C Credit Extension, the Aggregate Principal shall not exceed the Borrowing Limit; and

(B) as of the date hereof and the date of the L/C Credit Extension, (1) no Unmatured Event of Default or Event of Default shall have occurred and be continuing and (2) all of the representations and warranties made by each of the Borrower and the Servicer set forth in each Transaction Document to which it is a party are true and correct in all material respects on and as of the date hereof and the date of the L/C Credit Extension; and

(C) the conditions to the L/C Credit Extension set forth in Section 1.7(a)(ii) will be satisfied at the time of the L/C Credit Extension.

Capitalized terms used but not herein defined shall have the meanings given such terms
in the Agreement.

Dated: __________________, 201_

Smithfield Receivables Funding LLC 

By:
Title:

SCHEDULE A

COMMITMENTS OF COMMITTED LENDERS

	
		
	COMMITTED LENDER
	COMMITMENT

	 
	 

	Coöperatieve Centrale Raiffeisen-Boerenleenbank B.A., New York Branch
	$275,000,000

	 
	 

SCHEDULE B

DOCUMENTS TO BE DELIVERED TO THE ADMINISTRATIVE AGENT 
ON OR PRIOR TO EFFECTIVENESS OF THIS AGREEMENT

[Closing Document Checklist to be Inserted]

 

SCHEDULE C
LENDER SUPPLEMENT
	
			
	Lender Group:
	Coöperatieve Centrale Raiffeisen-Boerenleenbank B.A., “Rabobank Nederland”, New York Branch

	Co-Agent
	Coöperatieve Centrale Raiffeisen-Boerenleenbank B.A., “Rabobank Nederland”, New York Branch

	Address for Notices:
	Coöperatieve Centrale Raiffeisen-Boerenleenbank B.A., “Rabobank Nederland”, New York Branch 
c/o Securitization - Transaction Management 
Rabobank International 
245 Park Avenue 
New York, NY 10167 
Phone:      (212) 808-6806 
Fax:      (914) 304-9324

	Conduit(s):
	Nieuw Amsterdam Receivables Corporation

	Address for Notices and Investing Office:
	Coöperatieve Centrale Raiffeisen-Boerenleenbank B.A., “Rabobank Nederland”, New York Branch 
c/o Securitization - Transaction Management 
Rabobank International 
245 Park Avenue 
New York, NY 10167 
Phone:      (212) 808-6806 
Fax:      (914) 304-9324

With a copy to:

Nieuw Amsterdam Receivables Corp.
c/o Global Securitization Services, LLC
68 South Service Road, Suite 120
Melville, NY  11747
Attention: Bill Pierce
Phone: (631) 930-7226
Fax: (212) 302-8767
Email: nieuwam@gssnyc.com

	 
	 

	Committed Lender:
	Coöperatieve Centrale Raiffeisen-Boerenleenbank B.A., “Rabobank Nederland”, New York Branch

	 
	 

	Percentage:  

	100
	%

	 
	 

Schedule C-1
 

	
			
	Address for Notices and Investing Office:
	Coöperatieve Centrale Raiffeisen-Boerenleenbank B.A., “Rabobank Nederland”, New York Branch 
c/o Securitization - Transaction Management 
Rabobank International 
245 Park Avenue 
New York, NY 10167 
Phone:      (212) 808-6806 
Fax:      (914) 304-9324

	 
	 

	Address for correspondence to the Letter of Credit Issuer:
	c/o Rambo Support Services Inc.
10 Exchange Place 16th Floor
Jersey City, NY 07302
Attn: Bibi Mohammed

	 
	 

	Payment Account Wire Information:
	Nieuw Amsterdam Receivables Corporation

Structuring Fee Wiring Instructions:
Coöperatieve Centrale Raiffeisen-Boerenleenbank B.A., “Rabobank Nederland”, New York Branch 

	 
	 

	Letter of Credit Issuer Payment Instructions:
	

Schedule C-2Exhibit 10.1 Q2 2014

Exhibit 10.1

COMMERCIAL LINES
MASTER AGREEMENT
BY AND BETWEEN
ACP RE, LTD
AND
AMTRUST FINANCIAL SERVICES, INC.
DATED AS OF APRIL 8, 2014

TABLE OF CONTENTS

	
			
	ARTICLE I DEFINITIONS
	2
	

	ARTICLE II TRANSACTION CLOSING
	5
	

	ARTICLE III REPRESENTATIONS AND WARRANTIES OF ACP
	6
	

	ARTICLE IV REPRESENTATIONS AND WARRANTIES OF AMTRUST
	7
	

	ARTICLE V COVENANTS
	9
	

	ARTICLE VI RESERVED
	11
	

	ARTICLE VII CONDITIONS PRECEDENT
	11
	

	ARTICLE VIII INDEMNIFICATION
	13
	

	ARTICLE IX TERMINATION PRIOR TO CLOSING
	14
	

	ARTICLE X GENERAL PROVISIONS
	14
	

EXHIBITS
Exhibit A            LPT Agreement
Exhibit B            Administrative Services Agreement
Exhibit C            Commercial Lines MGA Agreement
Exhibit D            Commercial Lines Reinsurance Agreement
Exhibit E            Stop-Loss Agreement
Exhibit F            Investment Agreement
Exhibit G            Commercial Lines Bill of Sale
Exhibit H            Tower Companies

DISCLOSURE SCHEDULE
		
	Section
	Description

		
	Section 3.3
	Noncontravention; Consents

		
	Section 4.3
	Noncontravention; Consents

		
	Section 7.1(d)
	Consents

COMMERCIAL LINES MASTER AGREEMENT
This COMMERCIAL LINES MASTER AGREEMENT, is made as of April 8, 2014 (this "Agreement"), by and between ACP Re Ltd ("ACP"), a Bermuda exempted company, and AmTrust Financial Services, Inc. ("AmTrust"), a Delaware corporation.
WHEREAS, ACP, AmTrust and National General Holdings Corporation, a Delaware corporation ("National General") are entering into a series of agreements by which ACP has agreed to acquire Tower Group International, Ltd. ("Tower"), a Bermuda insurance holding company, which transacts commercial and personal lines insurance business in the United States through the Companies which are parties to this Agreement, and, in connection therewith, AmTrust and National General have agreed to administer the run-off of Tower’s legacy business, provide stop-loss coverage to ACP with respect thereto, and, prospectively, manage and reinsure all business to be written by the Companies after the Effective Time;
WHEREAS, ACP, pursuant to that certain Merger Agreement among ACP, Merger Sub and Tower dated as of January 3, 2014 (the "Merger Agreement") is acquiring Tower and its Subsidiaries through the merger of Merger Sub with and into Tower with Tower surviving such merger (the "Merger");
WHEREAS, AmTrust and National General have agreed to provide financing to ACP in connection with the Merger and to manage and reinsure, respectively, the Tower Companies' Commercial Lines Business and Personal Lines Business as set forth in the agreements provided for in this Agreement;
WHEREAS, AmTrust will provide financing to ACP in an aggregate principal amount of up to $125,000,000, which will pay a market interest rate and have a term of no less than seven years, pursuant to an instrument to be negotiated in good faith by ACP and AmTrust (the "Instrument");
WHEREAS, in connection with the transactions described above, CP Re and the Tower Companies will enter into that certain Loss Portfolio Transfer Agreement in substantially the form attached hereto as Exhibit A (the "LPT Agreement"), pursuant to which CP Re will assume all insurance liabilities and unearned premium liability (to the extent not previously assumed by Affiliates of AmTrust or National General) of the Tower Companies;
WHEREAS, the parties will enter into the Commercial Lines Administrative Services Agreement, in substantially the form attached as Exhibit B (the "Administrative Services Agreement"), pursuant to which AmTrust or one or more of its Affiliates will manage and administer the runoff of claims and policies arising out of the Commercial Lines Business written by the Tower Companies prior to the Effective Time; 
WHEREAS, the parties will enter into the Commercial Lines Managing General Agent Agreement, in substantially the form attached as Exhibit C (the "Commercial Lines MGA Agreement"), pursuant to which AmTrust or one or more of its Affiliates will manage and administer the Commercial Lines Business written by the Tower Companies following the Effective Time; 
WHEREAS, the parties will enter into the 100% Quota Share Reinsurance Agreement, in substantially the form attached as Exhibit D (the "Commercial Lines Reinsurance Agreement"), pursuant to which AmTrust or one or more of its Affiliates will reinsure business written by the Tower Companies pursuant to the Commercial Lines MGA Agreement; 
WHEREAS, AmTrust and National General, as reinsurers, and CP Re, as reinsured, will enter into the $250 million Aggregate Stop Loss Reinsurance Agreement in substantially the form attached as Exhibit E (the "Stop-Loss Agreement");

WHEREAS, AmTrust, National General and ACP Re will enter into a Stop-Loss Retrocession Agreement to be negotiated in good faith by AmTrust, National General and ACP Re (the "Retrocession Agreement"), pursuant to which ACP Re will reinsure 100% of the business reinsured pursuant to the Stop-Loss Agreement; 
WHEREAS, AmTrust, through its Affiliate, AII Insurance Management, Ltd., and ACP will enter into the Investment Management Agreement in substantially the form attached as Exhibit F (the "Investment Agreement"), by which AII Insurance Management, Ltd., will provide investment management services to the Tower Companies; 
WHEREAS, in connection with the transactions contemplated herby and pursuant to the Commercial Lines Bill of Sale in substantially the form attached hereto as Exhibit G, AmTrust will purchase from ACP or its applicable Subsidiary, directly or indirectly, the Purchased Assets (as defined therein), on the terms and subject to the conditions set forth therein; and
WHEREAS, the transactions described in the foregoing recitals are collectively referred to herein as the "Transactions."
NOW, THEREFORE, in consideration of the mutual representations, warranties, covenants and agreements contained in this Agreement, and of the mutual benefits to be derived from this Agreement, the parties agree as follows:   
ARTICLE I
DEFINITIONS
Section 1.1    Definitions.  For purposes of this Agreement, the following terms shall have the respective meanings set forth below:
"ACP" has the meaning set forth in the introductory paragraph of this Agreement.
"Administrative Services Agreement" has the meaning set forth in the Recitals. 
"Affiliate" of any Person means another Person that directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with, such first Person.  For purposes of this definition, "control" (including its correlative meanings "controlled by" and "under common control with") shall mean possession, directly or indirectly, of the power to direct or cause the direction of management or policies (whether through ownership or securities or partnership or other ownership interests, by contract or otherwise).
"Agreement" has the meaning set forth in the introductory paragraph of this Agreement.
"AmTrust" has the meaning set forth in the introductory paragraph of this Agreement.
"Applicable Law" means any domestic or foreign federal, state or local statute, law, ordinance or code, or any written rules, regulations or administrative interpretations issued by any Governmental Entity pursuant to any of the foregoing, and any order, writ, injunction, directive, judgment or decree of a court of competent jurisdiction applicable to the parties hereto. 

-2-

"Applicable Rate" means the prime rate of interest reported from time to time in The Wall Street Journal.
"Business Day" means any day other than a Saturday, Sunday or other day on which banking institutions in New York are required or authorized by law or executive order to be closed.
"Commercial Lines Business" means all insurance contracts, policies, certificates, binders, slips, covers or other agreements of insurance, including all supplements, riders, endorsements, renewals and extensions (other than Personal Lines Business) issued by a Tower Company.
"Commercial Lines Bill of Sale" means the Commercial Lines Bill of Sale and General Assignment and Assumption Agreement dated as of the Transaction Closing Date among ACP, Affiliates of Tower acquired by ACP and AmTrust in the form annexed as Exhibit C.
"Commercial Lines Reinsurance Agreement" has the meaning set forth in the Recitals.
"Commercial Lines MGA Agreement" has the meaning set forth in the Recitals.
"CP Re" means CastlePoint Reinsurance Company, Ltd.
"Disclosure Schedule" means the Disclosure Schedule delivered in connection with, and constituting a part of, this Agreement.
"Effective Time" has the meaning set forth in Section 2.1.
"Governmental Entity" has the meaning set forth in Section 3.3.
"Indemnified Party" has the meaning set forth in Section 8.2(a).
"Indemnifying Party" has the meaning set forth in Section 8.2(a).Instrument" has the meaning set forth in the Recitals. 
"Insurance Regulators" means all Governmental Entities regulating the business of insurance under Applicable Laws.
"Investment Agreement" has the meaning set forth in the Recitals. 
"Liens" means pledges, restrictions, claims, liens, charges, encumbrances and security interests of any kind.
"Losses" means any and all liabilities, claims, obligations, losses, costs, disbursements, penalties, fines, expenses (including reasonable attorneys', accountants' and other out-of-pocket professional fees and expenses incurred in the investigation, collection, prosecution or defense or any claims, whether or not involving any third party) and damages, but excluding lost profits or any punitive, exemplary, consequential or similar damages (other than lost profits or any punitive, exemplary, consequential or similar damages actually paid to a third party in a Third Party Claim).
"LPT Agreement" has the meaning set forth in the Recitals. 
"Merger Agreement" has the meaning set forth in the Recitals.

-3-

"Merger Sub" means London Acquisition Company Limited, a Bermuda exempted company.
"National General" has the meaning set forth in the Recitals.
"Permitted Liens" means (a) Liens for Taxes or assessments and similar charges, which either are (i) not delinquent or (ii) being contested in good faith and by any appropriate action or proceeding, and adequate reserves (as determined in accordance with SAP) have been established on the relevant Company's books with respect thereto, (b) Liens to secure, landlords, sublandlords, licensors, sublicensors or licensees under real estate leases, licenses or other rental or lease agreements, (c) deposits or pledges made in connection with, or to secure payment of, utilities or similar services, workers' compensation, unemployment insurance, pension or other social security, governmental insurance and governmental benefits mandated under Applicable Laws, or to secure the performance of tenders, statutory obligations, surety and appeal bonds, bids, leases, government contracts, performance and return of money bonds and similar obligations, (d) mechanics', materialmen's or contractors' Liens or any similar statutory Lien for amounts not yet due and payable and incurred in the ordinary course of business, (e) zoning, entitlement, building and other similar restrictions which are not violated by the current conduct of the Commercial Lines Business, (f) purchase money Liens in any property acquired by the Tower Companies in the ordinary course of business and (g) easements, covenants, rights of way or other encumbrances or restrictions, if any, that do not impair the use of the assets to which they relate.
"Person" means an individual, corporation, partnership (limited or general), joint venture, limited liability company, association, trust, unincorporated organization or other entity.
"Personal Lines Business" has the meaning set forth in the Personal Lines Master Agreement.
"Personal Lines Master Agreement" means that certain Personal Lines Master Agreement, dated as of the date hereof, by and between ACP Re and National General.
"Regulatory Approvals" means all approvals, consents and authorizations of the transactions contemplated by this Agreement required under applicable state insurance or insurance holding company laws, including without limitation all approvals, consents and authorizations required by the New York Department of Financial Services, the Illinois Department of Insurance, the Massachusetts Division of Insurance, the Florida Office of Insurance Regulation, the New Jersey Department of Banking and Insurance, the Maine Bureau of Insurance and any other state insurance regulator whose approval is required to consummate any of the transactions contemplated by this Agreement.
"Retrocession Agreement" has the meaning set forth in the Recitals. 
"SAP" means, with respect to any Tower Company, the applicable statutory accounting principles (or local equivalents in the applicable jurisdiction) prescribed by the applicable Insurance Regulator under Applicable Law.
"Stop-Loss Agreement" has the meaning set forth in the Recitals. 
"Subsidiary" of any Person means another Person 50% or more of the total combined voting power of all classes of capital stock or other voting interests of which, or 50% or more of the equity securities of which, is owned directly or indirectly by such first Person.

-4-

"Taxes" means all federal, state, local and foreign taxes of any kind, including those on or measured by or referred to as income, gross receipts, sales, use, ad valorem, franchise, profits, value added, property or windfall profits taxes, or similar fees, assessments or charges of any kind whatsoever (whether payable directly or by withholding and whether or not requiring the filing of a tax return), together with any interest and any penalties, additions to tax or additional amounts imposed thereon by any Taxing Authority, domestic or foreign.
"Taxing Authority" means any Governmental Entity or other Person responsible for and having jurisdiction over, the administration of Taxes.
"Third-Party Claim" has the meaning set forth in Section 8.2(a).
"Tower" has the meaning set forth in the Recitals.
"Tower Companies" means the companies set forth on Exhibit H hereto. 
"Transaction Closing" has the meaning set forth in Section 2.1.
"Transaction Closing Date" has the meaning set forth in Section 2.1.
"Transaction Documents" means this Agreement, the Administrative Services Agreement, the Commercial Lines Bill of Sale, the Commercial Lines MGA Agreement, the Commercial Lines Reinsurance Agreement, the Instrument, the LPT Agreement, the Retrocession Agreement, the Investment Agreement, the Stop-Loss Agreement and the Investment Agreement.
"Transactions" has the meaning set forth in the Recitals.
  
ARTICLE II 
TRANSACTION CLOSING
Section 2.1    Closing.  Unless this Agreement shall have been terminated pursuant to Section 9.1, and subject to the satisfaction or waiver of each of the conditions set forth in Article VII, the closing of the transactions contemplated hereby (the "Transaction Closing") shall take place at 10:00 a.m. on the "Closing Date" (as defined in the Merger Agreement), at the same location as the "Closing" (as defined in the Merger Agreement).  The effective date and time of the Transaction Closing are herein referred to as the "Transaction Closing Date."  All of the contemplated transactions under this Agreement shall be deemed to be consummated as of 11:59:59 p.m. Eastern Time on the Transaction Closing Date (the "Effective Time") and all actions taken at Transaction Closing shall be deemed to have occurred simultaneously and shall be deemed effective as of the dates and times specified in this Agreement.
Section 2.2    ACP's Transaction Closing Date Deliveries.  Subject to fulfillment or waiver (where permissible) of the conditions set forth in Article VII, at the Transaction Closing, ACP shall deliver to AmTrust all of the following:

-5-

(a)    FIRPTA Certificate.  Unless ACP is a foreign person, a certification from ACP and signed by a responsible officer of ACP, as contemplated under Section 1.1445-2(b)(2) of the Treasury Regulations, certifying that ACP is not a foreign person.
(b)    Transaction Documents.  A copy of (i) each Transaction Document (other than this Agreement) duly executed by ACP or its applicable Affiliate and (ii) such other documents and instruments as AmTrust reasonably requests to consummate the transactions contemplated by this Agreement.
Section 2.3    AmTrust's Transaction Closing Date Deliveries.  Subject to fulfillment or waiver (where permissible) of the conditions set forth in Article VII, at the Transaction Closing, AmTrust shall deliver to ACP a copy of (a) each Transaction Document (other than this Agreement) duly executed by AmTrust or its applicable Affiliate and (b) such other documents and instruments as ACP reasonably requests to consummate the transactions contemplated by this Agreement.
 
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF ACP
Subject to the exceptions and qualifications set forth in the Disclosure Schedule, ACP represents and warrants to AmTrust as follows:
Section 3.1    Organization, Standing and Corporate Power.  ACP is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction in which it is organized and has the requisite corporate power and authority to carry on its business as now being conducted.
Section 3.2    Authority.  ACP has the requisite corporate power and authority to enter into this Agreement and the other Transaction Documents and to consummate the transactions contemplated hereby and thereby.  The execution and delivery of this Agreement and the other Transaction Documents by ACP and the consummation by ACP of the transactions contemplated hereby and thereby have been duly authorized by all necessary corporate action on the part of ACP and no other corporate action or proceeding on the part of ACP or any Affiliate of ACP is necessary (including any shareholder vote).  This Agreement and each of the other Transaction Documents has been duly executed and delivered by ACP and, assuming this Agreement and the other Transaction Documents constitute the valid, legal and binding agreement of AmTrust, constitutes a valid, legal and binding obligation of ACP, enforceable against ACP in accordance with its terms, except that (a) such enforcement may be subject to applicable bankruptcy, insolvency or other similar laws, now or hereafter in effect, affecting creditors' rights generally and (b) the remedy of specific performance and injunctive and other forms of equitable relief may be subject to equitable defenses and to the discretion of the court before which any proceeding therefor may be brought.
Section 3.3    Noncontravention; Consents.  Neither the execution and delivery of this Agreement or  the other Transaction Documents by ACP, nor the consummation by ACP of the transactions contemplated hereby or thereby, nor performance or compliance by ACP with any of the terms or provisions hereof or thereof, will (i) conflict with or violate any provision of the certificate or articles of incorporation, code of regulations, by-laws or other comparable charter or organizational documents of ACP or (ii) assuming (A) that the actions described in Section 4.02(a) of the Merger Agreement have been completed, (B) that the 

-6-

authorizations, consents and approvals referred to in this Section 3.3 are obtained and (C) that the filings referred to in this Section 3.3 are made and any waiting periods thereunder have terminated or expired, in the case of each of clauses (A) through (C), prior to the Effective Time, (x) conflict with, contravene or violate any Law, judgment, writ or injunction of any Governmental Entity applicable to ACP or the Tower Companies or (y) conflict with, contravene or violate or constitute a default or breach under any of the terms, conditions or provisions of any Contract to which ACP or any of the Tower Companies is a party or accelerate ACP's or any of the Tower Companies', if applicable, obligations under any such Contract.  Except for (a) compliance with the applicable requirements of the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder, (b) compliance with the rules and regulations of the NASDAQ Stock Market, (c) the filing of appropriate documents with the relevant authorities of other jurisdictions in which any of the Tower Companies is qualified to do business, (d) compliance with any applicable state securities or blue sky laws and (e) the Regulatory Approvals as set forth in Section 3.3 of the Disclosure Schedule, no consent or approval of, action by or in respect of, or filing, license, permit or authorization, declaration or registration with, any court or governmental or regulatory authority or agency, domestic or foreign (a "Governmental Entity"), the performance by ACP of its obligations pursuant to this Agreement and the other Transaction Documents and the consummation by ACP of the transactions contemplated hereunder and thereunder.
Section 3.4    Brokers.  No broker, investment banker, financial advisor or other Person is entitled to any broker's, finder's, financial advisor's or other similar fee or commission in connection with the transactions contemplated by this Agreement or the other Transaction Documents based upon arrangements made by or on behalf of ACP or the Tower Companies.
Section 3.5    No Other Representations and Warranties.  Except for the representations and warranties contained in this Article III (including the related portions of the Disclosure Schedules), none of ACP or any other Person has made or makes any other express or implied representation or warranty, either written or oral, on behalf of ACP, including any representation or warranty as to the accuracy or completeness of any information regarding the Tower Companies furnished or made available to AmTrust and its representatives.
Section 3.6    Merger Agreement Representations, Warranties and Covenants.  To ACP's knowledge, the representations and warranties set forth in the Merger Agreement are true and correct as of the Closing Date (as defined in the Merger Agreement).  For the avoidance of doubt, all qualifiers as to materiality, material adverse effect and all other qualifiers contained in such representations and warranties in the Merger Agreement shall be given effect in the determination of the accuracy of such representations and warranties pursuant to this Section 3.6. 
ARTICLE IV 
REPRESENTATIONS AND WARRANTIES OF AMTRUST

-7-

Subject to the exceptions and qualifications set forth in the Disclosure Schedule, AmTrust represents and warrants to ACP as follows:
Section 4.1    Organization, Standing and Corporate Power.  AmTrust is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware and has the requisite corporate power and authority to carry on its business as now being conducted.
Section 4.2    Authority.  AmTrust has the requisite corporate power and authority to enter into this Agreement and the other Transaction Documents and to consummate the transactions contemplated hereby and thereby.  The execution and delivery of this Agreement and the other Transaction Documents by AmTrust and the consummation by AmTrust of the transactions contemplated hereby and thereby have been duly authorized by all necessary corporate action on the part of AmTrust.  No action by the stockholders of AmTrust is necessary to authorize the execution and delivery by AmTrust of this Agreement and the other Transaction Documents and the consummation by AmTrust of the transactions contemplated hereby and thereby.  This Agreement and each of the other Transaction Documents has been duly executed and delivered by AmTrust and, assuming this Agreement constitutes the valid, legal and binding agreement of ACP, constitutes a valid, legal and binding obligation of AmTrust, enforceable against AmTrust in accordance with its terms except that (i) such enforcement may be subject to applicable bankruptcy, insolvency or other similar laws, now or hereafter in effect, affecting creditors' rights generally and (ii) the remedy of specific performance and injunctive and other forms of equitable relief may be subject to equitable defenses and to the discretion of the court before which any proceeding therefor may be brought.
Section 4.3    Noncontravention; Consents.  The execution and delivery of this Agreement and the other Transaction Documents do not, and except as disclosed in Section 4.3 of the Disclosure Schedule, the consummation of the transactions contemplated hereby or thereby will not, (i) conflict with, be prohibited by, or require any approval that has not already been obtained under, any of the provisions of the certificate of incorporation or the by-laws of AmTrust or the comparable organizational documents of any of its Subsidiaries, (ii) subject to the matters referred to in the next sentence, conflict with, result in a breach of or default (with or without notice or lapse of time, or both) under, be prohibited by, require approval or consent under, give rise to a right of termination under, or result in the creation of any Lien (other than a Permitted Lien) on any property or asset of AmTrust or any of its Affiliates under, any agreement, permit, franchise, license or instrument to which AmTrust or any of its Subsidiaries is a party or (iii) subject to the matters referred to in the next sentence, contravene, be prohibited by, or require approval or consent under, any Applicable Law, judgment, injunction or award applicable to AmTrust or any of its Subsidiaries, which, in the case of clauses (ii) and (iii) above, would materially impair the ability of AmTrust to consummate any of the transactions contemplated hereby or thereby.  No consent, approval or authorization of, or declaration or filing with, or notice to, any Governmental Entity is required by or with respect to AmTrust or any of its Subsidiaries in connection with the execution and delivery of this Agreement or the other Transaction Documents by AmTrust or the consummation by AmTrust of any of the transactions contemplated hereby or thereby, except for (i) the approvals, filings and notices required under the insurance laws of the jurisdictions set forth in Section 4.3 of the Disclosure Schedule, (ii) such other consents, approvals, authorizations, declarations, filings or notices as are set forth in Section 4.3 of the Disclosure Schedule and (iii) such other consents, approvals, authorizations, declarations, filings or notices that are not required to 

-8-

be set forth pursuant to clauses (ii) and (iii) the failure to obtain or make which, in the aggregate, would not materially impair the ability of AmTrust to consummate any of the transactions contemplated hereby.
Section 4.4    Litigation.  There is no suit, action, proceeding or arbitration pending or threatened in writing against or affecting AmTrust or any Affiliate of AmTrust that (i) seeks to restrain or enjoin the consummation of any of the transactions contemplated by this Agreement or the other Transaction Documents or (ii) would reasonably be expected to impair the ability of AmTrust to consummate any of the transactions contemplated by this Agreement or the other Transaction Documents.
Section 4.5    Brokers.  No broker, investment banker, financial advisor or other person is entitled to any broker's, finder's, financial advisor's or other similar fee or commission in connection with the transactions contemplated by this Agreement or the other Transaction Documents based upon arrangements made by or on behalf of AmTrust or any Affiliate.
ARTICLE V
COVENANTS
Section 5.1    Commercially Reasonable Efforts.  Upon the terms and subject to the conditions and other agreements set forth in this Agreement, each of the parties agrees to use its commercially reasonable efforts to take, or cause to be taken, all actions, and to do, or cause to be done, and to assist and cooperate with the other parties in doing, all things necessary, proper or advisable to consummate and make effective, in the most expeditious manner practicable, the transactions contemplated by this Agreement.
Section 5.2    Consents, Approvals and Filings.  ACP and AmTrust shall each use their commercially reasonable efforts, and shall cooperate fully with each other (i) to comply as promptly as practicable with all governmental requirements applicable to the transactions contemplated by this Agreement and (ii) to obtain as promptly as practicable all necessary permits, orders or other consents, approvals or authorizations of Governmental Entities and consents or waivers of all third parties necessary in connection with the consummation of the transactions contemplated by this Agreement.  In connection therewith, ACP and AmTrust shall make and cause their respective Affiliates to make all legally required filings as promptly as practicable in order to facilitate prompt consummation of the transactions contemplated by this Agreement, and shall provide and shall cause their respective Affiliates to provide such information and communications to Governmental Entities as such Governmental Entities may request.  The parties hereto shall not willfully take any action that will have the effect of delaying, impairing or impeding the receipt of all necessary permits, orders or other consents, approvals or authorizations of Governmental Entities and consents or waivers of all third parties necessary in connection with the consummation of the transactions contemplated by this Agreement.
Section 5.3    Public Announcements.  Until the Transaction Closing Date, the parties hereto shall consult with each other before issuing, and give each other the opportunity to review and comment upon, any press release or other public statements with respect to the transactions contemplated hereunder, and shall not issue any such press release or make any such public statement prior to such consultation and joint approval of AmTrust and ACP, except as may be required by Applicable Law, court process or the rules and regulations of any national securities exchange or national securities quotation system provided that, to the 

-9-

extent possible under the circumstances, the party making such disclosure consults with the other party, and considers in good faith the views of the other party, before doing so.
Section 5.4    Further Assurances.  ACP and AmTrust agree, and ACP, prior to the Transaction Closing, and AmTrust, after the Transaction Closing, agree to cause the Tower Companies and each of their Subsidiaries, to execute and deliver such other documents, certificates, agreements and other writings and to take such other actions as may be reasonably necessary or desirable in order to consummate or implement expeditiously the transactions contemplated by this Agreement.
Section 5.5    Notice of Events.
(a)    AmTrust shall promptly notify ACP, and ACP shall promptly notify AmTrust, in writing, upon (1) becoming aware of any order or decree or any complaint praying for an order or decree restraining or enjoining the execution of this Agreement or the consummation of the transactions contemplated by this Agreement, or (2) receiving any notice from any Governmental Entity of its intention to (i) institute a suit or proceeding to restrain or enjoin the execution of this Agreement or the consummation of the transactions contemplated by this Agreement or (ii) nullify or render ineffective this Agreement or such transactions if consummated.
(b)    During the period from the date hereof to the Transaction Closing Date or the earlier termination of this Agreement, AmTrust shall promptly notify ACP in writing if AmTrust becomes aware of: (i) the occurrence or non-occurrence of any event or the existence of any fact or condition that would cause or constitute a breach of any of its representations or warranties had any such representation or warranty been made as of the time of AmTrust's discovery of such event, fact or condition; (ii) any material failure on its part or ACP's or the Tower Companies' part to comply with or satisfy any covenant, condition or agreement to be complied with or satisfied by it hereunder; or (iii) the occurrence or non-occurrence of any event or the existence of any fact or condition that would cause or constitute a breach of any of ACP's representations or warranties hereunder.
(c)    During the period from the date hereof to the Transaction Closing Date or the earlier termination of this Agreement, ACP shall promptly notify AmTrust in writing if ACP becomes aware of: (i) the occurrence or non-occurrence of any event or the existence of any fact or condition that would cause or constitute a breach of any of its representations or warranties had any such representation or warranty been made as of the time of ACP's discovery of such event, fact or condition; (ii) any material failure on its part or AmTrust's part to comply with or satisfy any covenant, condition or agreement to be complied with or satisfied by it hereunder; or (iii) the occurrence or non-occurrence of any event or the existence of any fact or condition that would cause or constitute a breach of any of AmTrust's representations or warranties hereunder.
Section 5.6    Merger Agreement.  During the period from the date hereof to the Transaction Closing Date or the earlier termination of this Agreement, ACP shall promptly notify AmTrust in writing if ACP becomes aware of: (a) the occurrence or non-occurrence of any event or the existence of any fact or condition that would cause or constitute a material breach of any of Tower's representations or warranties set forth in the Merger Agreement had any such representation or warranty been made as of the time of ACP's discovery of such event, fact or condition; (b) any material failure on Tower's part to comply with or satisfy 

-10-

any covenant, condition or agreement to be complied with or satisfied by it under the Merger Agreement; or (c) the occurrence or non-occurrence of any event or the existence of any fact or condition that would cause or constitute a material breach of any of Tower's representations or warranties under the Merger Agreement.  ACP hereby agrees that without AmTrust's written consent that it shall not waive: (x) any material breach by Tower of any of its representation or warranty set forth in the Merger Agreement; or (y) any material failure by Tower to comply with any covenants or conditions to closing contained in the Merger Agreement. 
Section 5.7    Transition Services.  From time to time following the Transaction Closing Date, AmTrust may request from ACP any transition services that AmTrust reasonably determines are necessary for the Commercial Lines Business.  AmTrust shall reimburse ACP for any costs actually incurred by ACP in providing any such services to AmTrust.   
Section 5.8    Use of Office Space.  From time to time following the Transaction Closing Date, AmTrust may elect to use of all or a portion of the office space used by any of the Companies prior to such date, including, without limitation, employee work stations, telephone and computer equipment and other facilities as AmTrust determines are reasonably necessary for the Commercial Lines Business.  AmTrust shall reimburse ACP for costs actually incurred by ACP in connection therewith.  
ARTICLE VI
RESERVED
ARTICLE VII
CONDITIONS PRECEDENT
Section 7.1    Conditions to Each Party's Obligations.  The respective obligations of each party to consummate the transactions contemplated hereby are subject to the satisfaction or waiver on or prior to the Transaction Closing Date of the following conditions:
(a)    Governmental Consents.  All filings required to be made prior to the Transaction Closing Date with, and all consents, approvals, permits and authorizations required to be obtained prior thereto from, Governmental Entities in connection with the consummation of the transactions contemplated hereby by ACP and AmTrust set forth in Section 3.3 and Section 4.3 of the Disclosure Schedule shall have been made or obtained.
(b)    No Injunctions or Restraints.  No temporary restraining order, preliminary or permanent injunction or other order issued by any court of competent jurisdiction and no Applicable Law of any Governmental Entity preventing the consummation of the Transactions or any of the other transactions contemplated hereby shall be in effect; provided, that the party invoking this condition shall have used all reasonable efforts to have any such order or injunction vacated, and no Governmental Entity shall have instituted any proceeding that is pending seeking any such order, preliminary or permanent injunction or other order to prohibit the consummation of the transactions contemplated hereby or any of the other transactions contemplated hereby.

-11-

(c)    Consents.  All consents, waivers, clearances, approvals and authorizations from third parties under the contracts and agreements set forth on Section 7.1(c) of the Disclosure Schedule as being required to be obtained prior to Transaction Closing shall have been retained.
(d)    Merger Agreement.    The Closing (as defined in the Merger Agreement) of the Merger (as defined in the Merger Agreement) shall occur contemporaneous with the transactions contemplated herein.
(e)    Personal Lines Master Agreement.  The transactions contemplated by the Personal Lines Master Agreement to be effected as of the "Transaction Closing" (as defined in the Personal Lines Master Agreement) shall occur contemporaneous with the transactions contemplated herein.
Section 7.2    Conditions to Obligations of AmTrust.  The obligations of AmTrust to consummate the transactions contemplated hereby and the other actions to be taken at the Transaction Closing are further subject to the satisfaction or waiver by AmTrust on or prior to the Transaction Closing Date of the following conditions:
(a)    Representations and Warranties.  The representations and warranties of ACP in this Agreement shall be true and correct in all material respects, in each case as of the date of this Agreement and as of the Transaction Closing Date as though made on and as of the Transaction Closing Date (except as to any representation or warranty which specifically relates to another date).
(b)    Performance of Obligations of ACP.  ACP shall have performed in all material respects all obligations required to be performed by it under this Agreement on or prior to the Transaction Closing Date.
(c)    Closing Deliveries.  ACP shall have delivered to AmTrust each of the items described in Section 2.2.
Section 7.3    Conditions to Obligations of ACP.  The obligations of ACP to consummate the transactions contemplated hereby and the other actions to be taken at the Transaction Closing are further subject to the satisfaction or waiver by ACP on or prior to the Transaction Closing Date of the following conditions:
(a)    Representations and Warranties.  The representations and warranties of AmTrust set forth in this Agreement shall be true and correct in all material respects, in each case as of the date of this Agreement and as of the Transaction Closing Date as though made on and as of the Transaction Closing Date (except as to any representation or warranty which specifically relates to another date).
(b)    Performance of Obligations of AmTrust.  AmTrust shall have performed in all material respects all obligations required to be performed by it under this Agreement on or prior to the Transaction Closing Date.
(c)    Closing Deliveries.  AmTrust shall have delivered to ACP each of the items described in Section 2.3.

-12-

Section 7.4    Frustration of Closing Conditions.  No party to this Agreement may rely on the failure of any condition set forth in this Article VII to be satisfied if such failure was caused by such party's failure to use reasonable best efforts to cause the Transaction Closing to occur, as required by Section 5.1 hereof.
ARTICLE VIII
INDEMNIFICATION
Section 8.1    Obligation to Indemnify.
(a)    ACP agrees to indemnify, defend and hold harmless AmTrust and its Affiliates and their respective representatives from and against all Losses to the extent arising from or related to any material breach of any of the covenants and agreements of ACP contained in this Agreement.
(b)    AmTrust agrees to indemnify, defend and hold harmless ACP and its Affiliates and their respective representatives from and against all Losses to the extent arising from or related to any breach of any of the covenants and agreements of AmTrust contained in this Agreement. 
(c)    The parties' obligations pursuant to this Section 8.1 shall terminate as of the Transaction Closing Date, except for claims based on actual fraud, criminal activity or willful misconduct.  Following the Transaction Closing Date, the parties' indemnification rights and obligations shall be as set forth in the applicable Transaction Document.  
Section 8.2    Indemnification Procedures.
(a)    If any third party shall notify either party (the "Indemnified Party") with respect to any matter (a "Third-Party Claim") which may give rise to a claim for indemnification against any other Party (the "Indemnifying Party") under this Article VIII, then the Indemnified Party shall promptly (and in any event within five Business Days after receiving notice of the Third-Party Claim) notify the Indemnifying Party thereof in writing.
(b)    An Indemnifying Party will have the right at any time to assume and thereafter conduct the defense of the Third-Party Claim with counsel of its choice; provided, that the Indemnifying Party will not consent to the entry of any judgment or enter into any settlement with respect to the Third-Party Claim without the prior written consent of the Indemnified Party (not to be unreasonably withheld) unless the judgment or proposed settlement involves only the payment of money damages and does not impose an injunction or other equitable relief upon the Indemnified Party.
(c)    Unless and until an Indemnifying Party assumes the defense of the Third-Party Claim as provided in Section 8.2(b) above, the Indemnified Party may defend against the Third-Party Claim in any manner it may reasonably deem appropriate.
(d)    In no event will the Indemnified Party consent to the entry of any judgment on or enter into any settlement with respect to the Third-Party Claim without the prior written consent of each of the Indemnifying Parties.

-13-

ARTICLE IX
TERMINATION PRIOR TO CLOSING
Section 9.1    Termination of Agreement.  This Agreement may be terminated at any time prior to the Transaction Closing:
(a)    by the written agreement of AmTrust and ACP;
(b)    by either ACP or AmTrust in writing, if there shall be any order, injunction or decree of any Governmental Entity which prohibits or restrains any party from consummating the transactions contemplated hereby, and such order, injunction or decree shall have become final and nonappealable; 
(c)    by either ACP or AmTrust in writing, if a Governmental Entity shall have disapproved a Regulatory Approval;
(d)     unless ACP or AmTrust otherwise agree in writing, upon the withdrawal of filings submitted in connection with any Regulatory Approvals; or
(e)    automatically, following the termination of the Merger Agreement.
Section 9.2    Effect of Termination.  In the event of termination pursuant to Section 9.1, this Agreement shall become null and void and have no effect (other than Section 5.3 (Public Announcements), Article VIII (Indemnification), this Section 9.2 and Article X (General Provisions), all of which shall survive termination of this Agreement), and there shall be no liability on the part of ACP, the Tower Companies or AmTrust or their respective directors, officers and Affiliates, except (a) as liability may exist pursuant to the sections specified in the immediately preceding parenthetical that survive such termination and (b) that no such termination shall relieve any party from liability for any willful and material breach by such party of any representation, warranty, covenant or agreement set forth in this Agreement or fraud.  For purposes hereof, "willful and material breach" means a material breach by a party of the applicable provision of this Agreement as a result of an action or failure to act by such Person that it knew would result in a breach of this Agreement.
ARTICLE X
GENERAL PROVISIONS
Section 10.1    No Survival of Representations, Warranties, Covenants and Agreements.  This Article X, Article VIII and the agreements of ACP and AmTrust contained in Article II, Article V and Article VI shall survive the Effective Time.  No other representations, warranties, covenants or agreements in this Agreement shall survive the Effective Time.
Section 10.2    Fees and Expenses.  Whether or not the transactions contemplated hereby are consummated, each party hereto shall pay its own fees and expenses incident to preparing for, entering into and carrying out this Agreement and the consummation of the transactions contemplated hereby.  For the avoidance of doubt, ACP shall be solely responsible for the payment of all of the transaction expenses incurred 

-14-

by or on behalf of ACP or the Tower Companies incident to the transaction which is the subject of this Agreement, including investment banking fees, accounting fees and legal fees.
Section 10.3    Notices.  All notices, requests, claims, demands and other communications under this Agreement shall be in writing and shall be deemed given if delivered personally, by facsimile (which is confirmed as provided below) or sent by overnight courier (providing proof of delivery) to the parties at the following addresses (or at such other address for a party as shall be specified by like notice):
if to AmTrust, to
59 Maiden Lane, 43rd Floor 
New York, New York 10038 
(646) 458-7913 
Fax:  (212) 220-7130 
Attention: Stephen Ungar, Esq.
if to ACP, to 
 
Washington Mall
7 Reid Street, Suite 404 
Hamilton HM11 Bermuda
Attn: General Counsel
Notice given by personal delivery or overnight courier shall be effective upon actual receipt.  Notice given by facsimile shall be confirmed by appropriate answer back and shall be effective upon actual receipt if received during the recipient's normal business hours, or at the beginning of the recipient's next Business Day if not received during the recipient's normal business hours.  All notices by facsimile shall be confirmed promptly after transmission in writing by personal delivery or overnight courier.
Section 10.4    Interpretation.  When a reference is made in this Agreement to a section, exhibit or schedule, such reference shall be to a section of, or an exhibit or schedule to, this Agreement unless otherwise indicated.  The inclusion of any information in the Disclosure Schedule will not be deemed an admission or acknowledgment, in and of itself and solely by virtue of the inclusion of such information in the Disclosure Schedule, that such information is required to be listed in the Disclosure Schedule or that such items are material to the Tower Companies.  The specification of any dollar amount in the Disclosure Schedule is not intended to imply that such amount, or higher or lower amounts is or is not material for purposes of this Agreement and no party shall use the fact of the setting forth of such amount in any dispute or controversy between the parties as to whether any obligation, item or matter not described therein is or is not material for purposes of this Agreement. Unless the Agreement specifically provides otherwise, neither the specification of any item or matter in any representation or warranty contained in this Agreement nor the inclusion of any specific item in the Disclosure Schedule is intended to imply that such item or matter, or other items or matters, are or are not in the ordinary course of business (except as expressly provided herein), and no party shall use the fact of the setting forth or the inclusion of any such item or matter in any dispute or controversy among the parties as to whether any obligation, item or matter not described in this Agreement or included in any Disclosure Schedule is or is not in the ordinary course of business for purposes of this Agreement (except as expressly provided herein).  The disclosure of an item in one section of the Disclosure 

-15-

Schedule as an exception to a particular covenant, representation or warranty will be deemed adequately disclosed as an exception with respect to all other covenants, representations or warranties to the extent that the relevance of such item to such other covenants, representations or warranties is reasonably apparent on the face of such item, notwithstanding the presence or absence of an appropriate section of the Disclosure Schedule with respect to such other covenants, representations or warranties or an appropriate cross-reference thereto.  The table of contents and headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement.  Whenever the words "include", "includes" or "including" are used in this Agreement, they shall be deemed to be followed by the words "without limitation."  Whenever the singular is used herein, the same shall include the plural, and whenever the plural is used herein, the same shall include the singular, where appropriate.
Section 10.5    Entire Agreement; Third-Party Beneficiaries.  This Agreement (including all exhibits and schedules hereto) constitutes the entire agreement, and supersedes all prior agreements, understandings, representations and warranties, both written and oral, among the parties with respect to the subject matter of this Agreement.  AmTrust has sufficient knowledge and experience in financial and business matters so as to be capable of evaluating the merits and risks of the transactions contemplated hereby and is capable of bearing the economic risks thereof.  Except as expressly provided herein, this Agreement is not intended to confer upon any Person other than the parties hereto any rights or remedies.
Section 10.6    Governing Law.  This Agreement shall be governed by, and construed in accordance with, the laws of the State of New York applicable to contracts executed in and to be performed entirely within that State, regardless of the laws that might otherwise govern under any applicable conflict of laws principles, except to the extent the provisions of the laws of Bermuda are mandatorily applicable to the Merger.
Section 10.7    Assignment.  Neither this Agreement nor any of the rights, interests or obligations under this Agreement shall be assigned, in whole or in part, by operation of law or otherwise by any of the parties without the prior written consent of the other parties, and any such assignment that is not consented to shall be null and void.  Subject to the preceding sentence, this Agreement will be binding upon, inure to the benefit of, and be enforceable by, the parties and their respective successors and assigns.
Section 10.8    Dispute Resolution; Enforcement.
(a)    In the event of any dispute arising under this Agreement, prior to the commencement of litigation, a senior officer of AmTrust and a senior officer of ACP shall attempt in good faith to resolve the dispute consistent with the terms of this Agreement.  If they are unable to resolve the dispute in this manner within a reasonable period of time, the parties may pursue judicial remedies with respect to such dispute.  This section shall not apply to any application to obtain emergency judicial intervention.
(b)    All actions and proceedings arising out of or relating to the interpretation and enforcement of the provisions of this Agreement and in respect of the transactions contemplated by this Agreement (except to the extent any such proceeding mandatorily must be brought in Bermuda) shall be heard and determined in the United States District Court for the Southern District of New York and any Federal appellate court therefrom (or, if United States federal jurisdiction is unavailable over a particular matter, the Supreme Court of the State of New York, New York County) and the parties hereto hereby 

-16-

irrevocably submit to the exclusive jurisdiction and venue of such courts in any such action or proceeding and irrevocably waive the defense of an inconvenient forum or lack of jurisdiction to the maintenance of any such action or proceeding.  The consents to jurisdiction and venue set forth in this Section 10.8(b) shall not constitute general consents to service of process in the State of New York and shall have no effect for any purpose except as provided in this paragraph and shall not be deemed to confer rights on any Person other than the parties hereto.  Each party hereto agrees that service of process upon such party in any action or proceeding arising out of or relating to this Agreement shall be effective if notice is given by overnight courier at the address set forth in Section 10.3 of this Agreement.  The parties hereto agree that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by applicable Law; provided, that nothing in the foregoing shall restrict any party's rights to seek any post-judgment relief regarding, or any appeal from, a final trial court judgment.
Section 10.9    WAIVER OF JURY TRIAL.  TO THE FULLEST EXTENT PERMITTED BY LAW, THE PARTIES HERETO HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON, ARISING OUT OF, RELATED TO OR CONNECTED WITH THIS AGREEMENT, THE TRANSACTIONS CONTEMPLATED HEREBY OR ANY DEALINGS BETWEEN THEM RELATING TO THE SUBJECT MATTER OF THIS TRANSACTION.  THE SCOPE OF THIS WAIVER IS INTENDED TO BE ALL-ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT MATTER OF THIS AGREEMENT, INCLUDING WITHOUT LIMITATION, CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS.  IN THE EVENT OF LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.
Section 10.10    Severability; Amendment and Waiver.
(a)    Whenever possible, each provision or portion of any provision of this Agreement will be interpreted in such manner as to be effective and valid under Applicable Law, but if any provision or portion of any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect under any Applicable Law or rule in any jurisdiction, such invalidity, illegality or unenforceability will not affect any other provision or portion of any provision in such jurisdiction, and this Agreement will be reformed, construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable provision or portion of any provision had never been contained herein.
(b)    This Agreement may be amended, and the terms hereof may be waived, only by a written instrument signed by each of the parties or, in the case of a waiver, by the party waiving compliance.
(c)    No delay on the part of any party in exercising any right, power or privilege hereunder shall operate as a waiver thereof, nor shall any waiver on the part of any party of any right, power or privilege, nor any single or partial exercise of any such right, power or privilege, preclude any further exercise thereof or the exercise of any other such right, power or privilege.
Section 10.11    Counterparts.  This Agreement may be executed in counterparts, each of which shall be deemed an original and all of which together shall be deemed to be one and the same agreement. A signed 

-17-

copy of this Agreement delivered by facsimile, e-mail or other means of electronic transmission shall be deemed to have the same legal effect as delivery of an original signed copy of this Agreement.
Section 10.12    Commercially Reasonable Efforts.  AmTrust and ACP acknowledge and agree that any reference made to commercially reasonable efforts in this Agreement shall not include any obligation to commence or continue any contested arbitration or litigation other than the filing of a proof of claim or similar filing requirement necessary to preserve a claim against any insolvent or otherwise financially impaired debtor.
Section 10.13    Specific Enforcement.  The parties hereto agree that irreparable damage for which monetary relief, even if available, would not be an adequate remedy, would occur in the event that any provision of this Agreement is not performed in accordance with its specific terms or is otherwise breached, including if the parties hereto fail to take any action required of them hereunder to consummate this Agreement.  The parties acknowledge and agree that (a) the parties shall be entitled to an injunction or injunctions, specific performance or other equitable relief to prevent breaches of this Agreement and to enforce specifically the terms and provisions hereof in the courts described in Section 10.8(b) without proof of damages or otherwise, this being in addition to any other remedy to which they are entitled under this Agreement and (b) the right of specific enforcement is an integral part of the transactions contemplated hereunder and without that right, neither AmTrust nor ACP would have entered into this Agreement.  The parties hereto agree not to assert that a remedy of specific enforcement is unenforceable, invalid, contrary to Applicable Law or inequitable for any reason, and not to assert that a remedy of monetary damages would provide an adequate remedy or that the parties otherwise have an adequate remedy at law.  The parties hereto acknowledge and agree that any party seeking an injunction or injunctions to prevent breaches of this Agreement and to enforce specifically the terms and provisions of this Agreement in accordance with this Section 10.13 shall not be required to provide any bond or other security in connection with any such order or injunction.
[Signature Page Follows]

-18-

 IN WITNESS WHEREOF, ACP and AmTrust have caused this Agreement to be signed by their respective officers thereunto duly authorized as of the date first written above.

ACP RE, LTD

By  /s/ Michael Karfunkel    
Name:  Michael Karfunkel    
Title:  Chairman    

AMTRUST FINANCIAL SERVICES, INC.

By  /s/ Stephen Ungar    
Name: Stephen Ungar    
Title:  SVP, Secretary and General Counsel 

[Signature Page to Commercial Lines Master Agreement]

Exhibit A
LOSS PORTFOLIO TRANSFER AGREEMENT

by and AMONG
TOWER INSURANCE COMPANY OF NEW YORK,
CASTLEPOINT NATIONAL INSURANCE COMPANY,
TOWER NATIONAL INSURANCE COMPANY,
HERMITAGE INSURANCE COMPANY,
CASTLEPOINT FLORIDA INSURANCE COMPANY,
NORTH EAST INSURANCE COMPANY,
YORK INSURANCE COMPANY OF MAINE,
MASSACHUSETTS HOMELAND INSURANCE COMPANY,
PRESERVER INSURANCE COMPANY,
CASTLEPOINT INSURANCE COMPANY
(THE “COMPANIES”)
AND
CASTLEPOINT REINSURANCE COMPANY LTD,
(the “Reinsurer”)
 

Exhibit 10.1

TABLE OF CONTENTS
	
				
	Article 1
	DEFINITIONS
	2
	

	 
	Section 1.1
	2
	

	Article 2
	BASIS OF REINSURANCE AND BUSINESS REINSURED
	5
	

	 
	Section 2.1 Existing Business 
	5
	

	 
	Section 2.2 Transfer of Loss Reserves and Unearned Premium Reserves
	5
	

	 
	Section 2.3 Inuring Reinsurance
	6
	

	Article 3
	PAYMENTS, OFFSET, AND SECURITY
	6
	

	 
	Section 3.1 Offset Rights 
	6
	

	 
	Section 3.2 Reports and Remittances 
	7
	

	 
	Section 3.3 Security 
	7
	

	Article 4
	CLAIMS, UNDERWRITING AND OTHER ADMINISTRATION
	9
	

	Article 5
	REGULATORY MATTERS
	9
	

	Article 6
	DUTY OF COOPERATION & INDEMNITY
	10
	

	 
	Section 6.1 Cooperation 
	10
	

	 
	Section 6.2 Indemnity 
	10
	

	Article 7
	[INTENTIONALLY OMITTED]
	10
	

	Article 8
	INSOLVENCY
	10
	

	Article 9
	REGULATORY APPROVALS
	10
	

	Article 10
	DURATION
	11
	

	Article 11 
	FOLLOW THE FORTUNES 
	11
	

	Article 12 
	SURVIVAL; INDEMNIFICATION 
	11
	

	 
	Section 12.1 Indemnification 
	11
	

	Article 13
	MISCELLANEOUS
	12
	

	 
	Section 13.1 Notices 
	12
	

	 
	Section 13.2 Assignment; Parties in Interest  
	13
	

	 
	Section 13.3 Waivers and Amendments; Preservation of Remedies  
	13
	

	 
	Section 13.4 Governing Law; Venue 
	13
	

	 
	Section 13.5 Counterparts
	13
	

	 
	Section 13.6 Entire Agreement; Merger  
	13
	

	 
	Section 13.7 Exhibits and Schedules 
	14
	

	 
	Section 13.8 Headings 
	14
	

	 
	Section 13.9 Severability 
	14
	

	 
	Section 13.10 Expenses 
	14
	

	 
	Section 13.11 Currency 
	14
	

    

LOSS PORTFOLIO TRANSFER AGREEMENT

THIS LOSS PORTFOLIO TRANSFER AGREEMENT (this “Agreement”) is entered into as of [ ], 2014 by and among TOWER INSURANCE COMPANY OF NEW YORK, an insurance company organized under the laws of New York, CASTLEPOINT NATIONAL INSURANCE COMPANY, an insurance company organized under the laws of Illinois, TOWER NATIONAL INSURANCE COMPANY, an insurance company organized under the laws of Massachusetts, HERMITAGE INSURANCE COMPANY, an insurance company organized under the laws of New York, CASTLEPOINT FLORIDA INSURANCE COMPANY, an insurance company organized under the laws of Florida, NORTH EAST INSURANCE COMPANY, an insurance company organized under the laws of Maine, YORK INSURANCE COMPANY OF MAINE, an insurance company organized under the laws of Maine, MASSACHUSETTS HOMELAND INSURANCE COMPANY, an insurance company organized under the laws of Massachusetts, PRESERVER INSURANCE COMPANY, an insurance company organized under the laws of New Jersey, and CASTLEPOINT INSURANCE COMPANY, an insurance company organized under the laws of New York, as the Companies (collectively, the “Companies” and, individually, each a “Company”), and CastlePoint Reinsurance Company Ltd. (the “Reinsurer”) (collectively, the “Parties”).
WHEREAS, ACP Re, Ltd., a Bermuda corporation (the “Seller”), AmTrust Financial Services, Inc., a Delaware corporation (“AmTrust”), and National General Holdings Corporation, a Delaware corporation (“National General”) are entering into a series of agreements by which Seller has agreed to acquire Tower Group International, Ltd. (“Tower”), a Bermuda insurance holding company, which transacts commercial and personal lines insurance business in the United States through the Companies which are parties to this Agreement, and, in connection therewith, AmTrust and National General have agreed to administer the run-off of Tower’s legacy business, provide stop-loss coverage to Reinsurer with respect thereto, and, prospectively, manage and reinsure all business to be written by the Companies after the Effective Time;

WHEREAS, Seller, pursuant to that certain Merger Agreement among Seller, Merger Sub and Tower dated as of January 3, 2014 (the “Merger Agreement”) is acquiring Tower and its subsidiaries, including, indirectly, all of the issued and outstanding shares of capital stock of the Companies, through the merger of Merger Sub with and into Tower with Tower surviving such merger (the “Merger”);
WHEREAS, AmTrust and Seller, pursuant to that certain Commercial Lines Master Agreement dated as of April __, 2014, have agreed to enter into the Transaction Documents (as described therein) by which AmTrust will manage and reinsure Commercial Lines Business written after the Effective Time for and on behalf of the Companies;
WHEREAS, National General and Seller, pursuant to that certain Personal Lines Master Agreement dated as of April __, 2014, have agreed to enter into the Transaction Documents (as described therein) by which National General will manage and reinsure Personal Lines Business written after the Effective Time for and on behalf of the Companies;
WHEREAS, Technology Insurance Company, Inc. (the “Commercial Lines Reinsurer”) and the Companies are parties to that certain Commercial Lines Cut-Through Quota Share Reinsurance Agreement, dated January 3, 2014 (the “Commercial Lines Cut-Through QSA”) pursuant to which the Commercial Lines Reinsurer is reinsuring Subject Policies and Included Existing Contracts (as defined in the Commercial Lines Cut-Through QSA and herein called the “Commercial Lines New Policies”) relating to the Commercial Lines Business (as defined in the Commercial Lines Cut-Through QSA); 

-1-

WHEREAS, Integon National Insurance Company (the “Personal Lines Reinsurer”) and the Companies are parties to that certain Personal Lines Cut-Through Quota Share Reinsurance Agreement dated as of January 3, 2014 (the “Personal Lines Cut-Through QSA”) pursuant to which the Personal Lines Reinsurer is reinsuring Subject Policies and Included Existing Contracts (as defined in the Personal Lines Cut-Through QSA, and together with the Commercial Lines New Policies herein called the “New Policies”) relating to the Personal Lines Business (as defined in the Personal Lines Cut-Through QSA); and
WHEREAS, as more particularly set forth herein, the Companies and the Reinsurer wish to enter into a new reinsurance arrangement pursuant to which the Reinsurer will reinsure all the business written by the Companies prior to the Effective Time.  
NOW, THEREFORE, in consideration of the mutual and several promises and undertakings herein contained, and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the Parties agree as follows:
ARTICLE 1
DEFINITIONS
Section 1.1    Defined Terms.
The following terms shall have the respective meanings specified below throughout this Agreement.  
“Agreement” has the meaning set forth in the first paragraph.
“Affiliate” (and, with a correlative meaning, “Affiliated”) means, with respect to any Person, any other Person that directly, or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, such first Person.  As used in this definition, “control” (including, with correlative meanings, “controlled by” and “under common control with”) shall mean possession, directly or indirectly, of power to direct or cause the direction of management or policies (whether through ownership of securities or partnership or other ownership interests, by contract, as trustee or executor, or otherwise).
“Alternative Accountants” has the meaning set forth in Section 2.2(c). 
“AmTrust” has the meaning set forth in the Recitals.
“Ancillary Agreements” shall mean the Merger Agreement, the Commercial Lines Cut-Through QSA, the Personal Lines Cut-Through QSA, the Commercial Lines Master Agreement and the Personal Lines Master Agreement. 
“Applicable Law” means any domestic or foreign federal, state or local statute, law, ordinance or code, or any written rules, regulations or administrative interpretations issued by any Governmental Entity pursuant to any of the foregoing, and any order, writ, injunction, directive, judgment or decree of a court of competent jurisdiction applicable to the parties hereto. 
“Claim” and “Claims” means any and all claims, requests, demands or notices made by or on behalf of policyholders, beneficiaries or third party claimants for the payment of Losses and any other amounts due or alleged to be due under or in connection with the Insurance Contracts.
“Closing Date” means the date upon which the Merger is effected.

-2-

“Commercial Lines LPTA Administrative Services Agreement” means the Commercial Lines LPTA Administrative Services Agreement to be entered into by Reinsurer, the Companies and AmTrust North America, Inc. pursuant to the Commercial Lines Master Agreement in the form attached thereto.
“Commercial Lines New Policies” has the meaning set forth in the Recitals.
“Commercial Lines Reinsurer” has the meaning set forth in the Recitals.
“Commercial Lines Cut-Through QSA” has the meaning set forth in the Recitals.
“Commercial Lines Master Agreement” means the Commercial Lines Master Agreement dated April __, 2014 between the Seller and AmTrust.
“Company” has the meaning set forth in the first paragraph.
“Damages” means all damages, losses, liabilities and expenses (including reasonable attorneys’ fees and reasonable expenses of investigation in connection with any action, suit or proceeding).
“Effective Time” means 12:01 a.m. Eastern Time on the Closing Date.
“Governmental Entity” means any foreign, domestic, federal, territorial, state or local U.S. or non-U.S. governmental authority, quasi-governmental authority, instrumentality, court or government, self-regulatory organization, commission, tribunal or organization or any political or other subdivision, department, branch or representative of any of the foregoing. 
“IBNR” has the meaning set forth in the definition for the term Loss Reserves.
“Initial Reserve Transfer Amount” has the meaning set forth in Section 2.2(a).
“Insurance Contracts” means all insurance contracts, policies, certificates, binders, slips, covers or other agreements of insurance, including all supplements, riders and endorsements issued or written in connection therewith and extensions thereto, whether or not in-force, issued, renewed, or written by or on behalf of any Company prior to the Effective Time (other than the New Policies reinsured under the Commercial Lines QSA or the Personal Lines QSA).  
“Inuring Reinsurance” means all reinsurance agreements, treaties and contracts, including any renewals or extensions thereof, to the extent such reinsurance agreements, treaties and contracts provide reinsurance coverage for the Insurance Contracts.
“Losses” shall mean liabilities and obligations to make payments to policyholders, beneficiaries and/or other third party claimants under the Insurance Contracts (excluding liabilities or assessments arising from a Company’s participation, if any, in any voluntary or involuntary pools, guaranty funds, or other types of government-sponsored or government-organized insurance funds) and all loss adjustment expenses and defense costs, including, without limitation, (i) all expenses incurred by or on behalf of a Company related to the investigation, appraisal, adjustment, litigation, defense or appeal of claims under or covered by the Insurance Contracts and/or coverage actions under or covered by the Insurance Contracts, (ii) all liabilities for consequential, exemplary, punitive or similar extra contractual damages, or for statutory or regulatory fines or penalties, or for any loss in excess of the limits arising under or covered by any Insurance Contract, and (iii) court costs accrued prior to final judgment, prejudgment interest or delayed damages and interest accrued after final judgment.  

-3-

“Loss Reserves” shall mean, with respect to a Company, as of any date the amount recorded on the books of such Company, net of Inuring Reinsurance but without taking into account the reinsurance ceded to the Reinsurer hereunder, on account of its actual or potential obligations for unpaid Losses as of such date, including, without limitation, amounts for incurred but not reported Losses (“IBNR”), calculated consistent with the established actuarial practices applied by such Company in respect of the Insurance Contracts, but in all cases consistent with the reserve requirements, statutory accounting rules and actuarial principles applicable to such Company under Applicable Law as of the date at issue.  For avoidance of doubt, such reserve requirements, statutory accounting rules and actuarial principles as of the date hereof shall be those in effect prior to giving effect to the Merger but thereafter such reserve requirements, statutory accounting rules and actuarial principles shall be those then in effect.
“Merger” has the meaning set forth in the Recitals.
“Merger Agreement” has the meaning set forth in the Recitals.
“Merger Sub” means London Acquisition Company Limited.
“National General” has the meaning set forth in the Recitals.
“New Policies” has the meaning set forth in the Recitals.
“Parties” has the meaning set forth in the first paragraph.
“Person” shall mean any individual, corporation, partnership, firm, joint venture, association, joint-stock company, limited liability company, trust, estate, unincorporated organization, Government Entity or other entity.
     “Personal Lines Cut-Through QSA” has the meaning set forth in the Recitals.
“Personal Lines LPTA Administrative Services Agreement” means the Commercial Lines LPTA Administrative Services Agreement to be entered into by Reinsurer, the Companies and AmTrust North America, Inc. pursuant to the Commercial Lines Master Agreement in the form attached thereto.
“Personal Lines Reinsurer” has the meaning set forth in the Recitals.
“Personal Lines Master Agreement” means that certain Personal Lines Master Agreement dated April __, 2014 between the Seller and National General Holdings Corp.
“Reinsurer” has the meaning set forth in the first paragraph.
“Reserve True Up Report” has the meaning set forth in Section 2.2(b).
“Reserve Adjustment” has the meaning set forth in Section 2.2(d).
“Seller” has the meaning set forth in the Recitals.
“Tower” has the meaning set forth in the Recitals.
“Trust Account” has the meaning set forth in Section 3.3(b).
“Trust Agreement(s)” has the meaning set forth in Section 3.3(b).
“Trustee” has the meaning set forth in Section 3.3(b).

-4-

“Unearned Premium Reserves” means the reserves established by the Companies for their liability for return of the portion of premiums related to the unexpired term of the Insurance Contracts as of the Effective Time. 
 
ARTICLE 2
BASIS OF REINSURANCE AND BUSINESS REINSURED
Section 2.1    Existing Business.
(a)    Each Company hereby cedes, and the Reinsurer hereby assumes, one hundred percent (100%) of all Losses occurring on Insurance Contracts for which such Company is liable (other than Losses assumed under the Commercial Lines Cut-Through QSA and the Personal Lines Cut-Through QSA). All Losses reinsured hereunder and any payments of Claims with respect to such Losses by the Reinsurer shall be net Inuring Reinsurance paid and collected for the benefit of the applicable Company.  
(b)    In the event the Reinsurer makes an indemnity payment on behalf of a Company directly to any policyholder, insured or third party pursuant to any Insurance Contract that pays, in full or in part, a Loss, cost or expense under such Insurance Contract, such payment satisfies and extinguishes any and all obligation of the Reinsurer hereunder to indemnify such Company for such Loss, cost or expense to the extent of such payment.  In no event shall the Reinsurer be obligated hereunder to indemnify with respect to any Loss, cost or expense under an Insurance Contract for an amount in excess of such Loss, cost or expense.
Section 2.2    Transfer of Loss Reserves and Unearned Premium Reserves.
(a)    On the Closing Date, the Companies shall convey to the Reinsurer one hundred percent (100%) of the aggregate Loss Reserves and Unearned Premium Reserves of the Companies by wire transfer of immediately available funds in an amount equal to [ ] Dollars ($[ ]), which amount represents the estimate of the sum of the Loss Reserves and Unearned Premium Reserves as of the Closing Date (the “Initial Reserve Transfer Amount”).
(b)    Within ninety (90) days following the Closing Date, the Reinsurer shall perform a calculation of the sum of the aggregate Loss Reserves and Unearned Premium Reserves of the Companies as of the Closing Date, and, if different from the Initial Reserve Transfer Amount, the Reinsurer shall send to the Companies its computation of the sum of such aggregate Loss Reserves and Unearned Premium Reserves together with its work papers used to compute the same (the “Reserve True Up Report”).  The sum of such aggregate Loss Reserves and Unearned Premium Reserves shall be calculated utilizing the established actuarial practices as followed by the Companies in respect of the Insurance Contracts, as well as the reserve requirements, statutory accounting rules and actuarial principles applicable to the Companies as of the Effective Time.
(c)    Within ten (10) days following the Companies’ receipt of the Reserve True-Up Report, the Parties shall confer in good faith with regard to any disputed calculations and an appropriate adjustment shall be made to the sum of the aggregate Loss Reserves and aggregate Unearned Premium Reserves as agreed upon by the Parties.  If the Parties are unable to agree on an appropriate adjustment within twenty (20) days of the Reserve True Up Report, “Alternative Accountants,” whose decision on the matter shall be binding on the Parties, shall be designated by agreement between the Companies and the Reinsurer.  If the Parties fail to agree on the selection of the Alternative Accountants, the Alternative Accountants shall be selected by mutual agreement of each of the Companies’ and the Reinsurer’s outside independent auditors.  

-5-

The Alternative Accountants shall conduct such analysis as they deem appropriate, during a period not to exceed thirty (30) days after they are selected, to determine the amounts which they conclude should have been reflected in the Reserve True Up Report and shall issue their decision (which shall be rendered in writing and shall specify the reasons for the decision) within fifteen (15) days after the conclusion of their analysis.  The Alternative Accountants’ decision shall include a determination of the aggregate Loss Reserve and aggregate Unearned Premium Reserve, the amounts which they have determined should be used for the Reserve True Up Report and a determination of the Reserve Adjustment (as that term is defined in Section 2.2(d)) due to the Reinsurer or the Companies, as the case may be.  Each Party shall make available to the other Party and the Alternative Accountants such work papers as may be reasonably necessary to calculate the aggregate Loss Reserves and aggregate Unearned Premium Reserves and Reserve Adjustment under this Section 2.2(c).  No Party shall have any ex parte discussions or communications, directly or indirectly, with the Alternative Accountants regarding the subject matter of a dispute arising under this Section 2.2(c), unless the Party seeking such discussions or communications first obtains the other Party’s written consent to such ex parte contact with the Alternative Accountants.  For the avoidance of doubt, in the event of any dispute with respect to the Loss True Up Report, such dispute shall be governed by this Section 2.2 and the procedures set forth herein.
(d)    On the fifth (5th) business day following the deemed acceptance of, the mutual written agreement of the Companies and the Reinsurer to, or the determination by the Alternative Accountants of, the aggregate Loss Reserves and aggregate Unearned Premium Reserves, if the sum of the aggregate Loss Reserves and aggregate Unearned Premium Reserves exceeds the Initial Reserve Transfer Amount, the Companies shall remit funds to the Reinsurer equal to the difference, and if the sum of the aggregate Loss Reserves and Unearned Premium Reserves are less than the Initial Reserve Transfer Amount, the Companies shall be paid such difference by the Reinsurer (the amount so transferred being herein called the “Reserve Adjustment”).
(e)    From and after the Effective Time, the Reinsurer shall maintain as a liability on its statutory financial statements adequate reserves for all liabilities ceded under this Agreement.  The Reinsurer shall provide the Companies with its periodic reports filed with its insurance regulators and a copy of its audited financial statements along with the audit report thereon within fifteen (15) days of the Reinsurer’s filing of such statements and reports with the insurance regulator of its jurisdiction of domicile.
Section 2.3    Inuring Reinsurance.
As additional consideration for the liabilities assumed by the Reinsurer pursuant to this 
Agreement, the parties hereby agree that all Inuring Reinsurance shall inure to the benefit of the
Reinsurer and, accordingly, any recovery of funds under the Inuring Reinsurance shall be paid
promptly to the Reinsurer.
 
ARTICLE 3
PAYMENTS, OFFSET, AND SECURITY
Section 3.1    Offset Rights.
Except as otherwise expressly provided, each Party hereto, and each of its respective Affiliates at the time an offset is asserted, shall have, and may exercise at any time and from time to time, the right to offset any balance or balances due to the other Party under this Agreement at the time an offset is asserted; provided, however, that in the event of the insolvency of a Party hereto or any of its Affiliates, offsets shall only be allowed in accordance with the provisions of Applicable Law. 

-6-

Section 3.2    Reports and Remittances.
(a)    The Parties shall conduct quarterly settlements based upon quarterly bordereaux to be provided by or on behalf of the Companies pursuant to the Commercial Lines LPTA Administrative Services Agreement and Personal Lines LPTA Administrative Services Agreement evidencing the amount due or to be due in a form, and containing such detail, as is agreed to by the Parties.  Each Party shall pay or credit in cash or its equivalent to the other all gross amounts for which it may be liable under the terms and conditions of this Agreement within thirty (30) days after receipt of each monthly bordereau.    
(b)    The Companies and the Reinsurer shall furnish each other with such records, reports and information with respect to the Losses, Claims, Inuring Reinsurance, and the reinsurance contemplated hereby as may be reasonably required by the other Party to comply with any internal reporting requirements or reporting requirements of any Governmental Entity or to prepare and complete such Party’s quarterly and annual financial statements.      
(c)    If a Company or the Reinsurer receives notice of, or otherwise becomes aware of, any inquiry, investigation, proceeding, from or at the direction of a Governmental Entity, or is served or threatened with a demand for litigation, arbitration, mediation or any other similar proceeding relating to the Insurance Contracts, such Company or the Reinsurer, as applicable, shall promptly notify the other party thereof, whereupon the parties shall cooperate in good faith and use their respective commercially reasonable efforts to resolve such matter in a mutually satisfactory manner in light of all the relevant business, regulatory and legal facts and circumstances.
(d)    Each Party shall have the right, through authorized representatives and  upon reasonable advance notice during normal business hours, to periodically audit and inspect all books, records, and papers of the other Party solely in connection with the Insurance Contracts, the Inuring Reinsurance and any reinsurance hereunder or claims in connection therewith.  Each Party shall treat the other Party’s books, records, and papers in confidence. Each Party shall comply in all material respects with its privacy policies as to and all Privacy Laws with respect to Personal Information.  “Personal Information” means any information related to an identified or identifiable natural person and does not meet the definition of de-identified as defined by the Health Insurance Portability and Accountability Act of 1996.  “Privacy Laws” shall mean any laws, statutes, rules, regulations, codes, orders, decrees, and rulings thereunder of any federal, state, regional, county, city, municipal or local government of the United States that relate to privacy, data protection or data transfer issues.
Section 3.3    Security.
(a)    As regards Insurance Contracts coming within the scope of this Agreement, each Company agrees that, when it files with the applicable jurisdiction(s) or sets up on its books reserves for the Policies covered hereunder, which it is required by law to set up, it will forward to the Reinsurer a statement showing the proportion of such reserves applicable to it.  For purposes of this Article, "reserves" will consist of:
(i)    Loss and loss adjustment expense paid by such Company but not recovered from the Reinsurer; 
(ii)    Loss and loss adjustment expense reported and outstanding; 
(iii)    A reserve amount for incurred but not reported losses; and
(iv)    Unearned premium.

-7-

(b)    The Reinsurer hereby agrees that with respect to each Company severally, it will fund an amount equal to the Reinsurer’s proportion of such reserves by establishing a trust account pursuant to trust agreement (“Trust Account”) which may be combined with one or more of the following:
(i)    Cash advances or funds withheld; or
(ii)    Letters of credit
(c)    Except as otherwise provided herein, the Reinsurer will have the option of determining the method of funding referred to above, provided it is reasonably acceptable to the applicable Company and, to the extent that funding is required for such Company to receive credit for the reinsurance under this Agreement, each applicable regulatory authority.  Income on the amounts funded as provided above shall accrue to the benefit of the Reinsurer.
(d)    If a Reinsurer's choice of funding is or includes a letter of credit, it will apply for and secure delivery to the applicable Company of a clean, irrevocable, unconditional letter of credit, dated on or before December 31 of the year in which the request is made, issued by a member of the Federal Reserve System or any other bank approved for use by the National Association of Insurance Commissioners' Securities Valuation Office and such Company, containing provisions acceptable to the insurance regulatory authorities having jurisdiction over such Company's reserves in an amount equal to the Reinsurer's proportion of such reserves as shown in the statement prepared by such Company.
(e)    Any letter of credit will be issued for a period of not less than one year, and will be automatically extended for one year from its date of expiration or any future expiration date unless thirty (30) days prior to any expiration date the issuing bank notifies the Company that is the beneficiary of such letter of credit by registered mail that the issuing bank elects not to consider the letter of credit extended for any additional period.  An issuing bank, not a member of the Federal Reserve System or not chartered in the state of domicile of the Company that is the beneficiary of such letter of credit, will provide 60 days’ notice to such Company prior to any expiration in the event of nonextension.
(f)    Notwithstanding any other provisions of this Agreement, a Company or its court-appointed successor in interest may draw upon and apply any amounts which it may draw against such letter of credit or trust agreement (pursuant to the terms of the agreement under which the letter of credit or trust agreement is held), or any other method of funding that may apply, at any time without diminution because of the insolvency of such Company or of Reinsurer for one or more of the following purposes only:
(i)    To reimburse such Company for the Reinsurer's share of unearned premium (if applicable) on Insurance Contracts reinsured hereunder on account of cancellations of such Insurance Contracts.
(ii)    To pay the Reinsurer's share or to reimburse such Company for the Reinsurer's share of any Loss reinsured by this Agreement, which has not been otherwise paid.  
(iii)    To make refund of any sum in excess of 102% of the actual amount of the Reinsurer’s security requirement under this Agreement.  
(iv)    In the event of nonextension of the letter of credit as provided for above, to establish deposit of the Reinsurer's security requirement under this Agreement.  Such cash deposit will be held in an interest-bearing account separate from such Company's other assets, and interest thereon will accrue to the benefit of the Reinsurer, except that any such 

-8-

interest shall accrue to the benefit of such Company to the extent that the Reinsurer has not fully complied with its funding obligations hereunder.
(v)    In the event that the Reinsurer funds its obligations hereunder by use of a trust agreement, where such Company has received notification of termination of the trust account established by the trust agreement to secure the Reinsurer’s obligations to such Company and where the Reinsurer’s entire obligations to such Company under the Agreement remain unliquidated and undischarged ten (10) days prior to the termination date, to withdraw amounts equal to such Reinsurer’s obligations under the Agreement, including reserves for outstanding claims (including claims incurred but not reported), reserves for loss adjustment expenses and reserves for unearned premium, if applicable, and deposit those amounts in a separate account, in the name of such Company in any qualified United States financial institution as defined in relevant state insurance laws and regulations apart from its general assets, in trust for such uses and purposes specified above as may remain executory after such withdrawal and for any period after the termination date.
(vi)    To pay the Reinsurer's share of any other amounts such Company claims are due under this Agreement. 
(g)    Quarterly, each Company will prepare, for the sole purpose of determining the funding required in this Article, a specific statement of the Reinsurer's security requirement under this Agreement.  If the statement shows that the Reinsurer's security requirement exceeds the balance of funding as of the statement date, the Reinsurer will, within fifteen (15) days after receipt of notice of such excess, make an adjustment increasing the amount of such funding by the amount of such difference.  If, however, the statement shows that the Reinsurer's security requirement is less than the balance of funding as of the statement date, such Company will, within fifteen (15) days after receipt of written request from the Reinsurer release such excess by making the appropriate adjustment.  
ARTICLE 4
CLAIMS, UNDERWRITING AND OTHER ADMINISTRATION
(a)    All services related to claims, underwriting and administration with respect to Commercial Lines Business reinsured hereunder shall be provided by AmTrust and its Affiliates pursuant to the Commercial Lines LPTA Administrative Services Agreement.
(b)    All services related to claims, underwriting and administration with respect to Personal Lines Business reinsured hereunder shall be provided by National General and its Affiliates pursuant to the Personal Lines LPTA Administrative Services Agreement.
 
ARTICLE 5
 REGULATORY MATTERS
At all times during the term of this Agreement, each Company and the Reinsurer shall hold and maintain all licenses and authorizations required under Applicable Law and otherwise take all actions that may be necessary to perform its obligations hereunder.

-9-

 
ARTICLE 6
DUTY OF COOPERATION & INDEMNITY
Section 6.1    Cooperation.
Each Party hereto shall cooperate fully with the other in all reasonable respects in order to accomplish the objectives of this Agreement.
Section 6.2    Indemnity.
This Agreement is an agreement for indemnity reinsurance solely between the Companies and the Reinsurer and shall not create any legal relationship whatsoever between the Reinsurer and any Person other than the Companies.
 
ARTICLE 7 
[INTENTIONALLY OMITTED]
ARTICLE 8 
INSOLVENCY
In the event of the insolvency of a Company, this reinsurance shall be payable directly to such Company or its liquidator, receiver, conservator or statutory successor on the basis of the amount of the claims allowed in the insolvency proceeding without diminution because of the insolvency of such Company or because the liquidator, receiver, conservator or statutory successor of such Company has failed or is unable to pay all or a portion of a claim, except where (a) this Agreement specifically provides another payee of such reinsurance in the event of such Company’s insolvency, provided that this exception shall only apply to the extent that the reinsurance proceeds due such payee are actually paid by the Reinsurer, or (b) the Reinsurer, with the consent of the direct insured or insureds, has assumed such policy obligations of such Company as direct obligations of the Reinsurer to the payees under such policies and in full and complete substitution for the obligations of such Company to such payees.  It is agreed, however, that the liquidator, receiver, conservator or statutory successor shall give written notice to the Reinsurer of the pendency of a claim against such Company indicating the Insurance Contract which involves a possible liability on the part of the Reinsurer within reasonable time after such claim is filed in the conservation or liquidation proceeding or in the receivership and that, during the pendency of such claim, the Reinsurer may investigate such claim and interpose, at its own expense, in the proceeding where such claim is to be adjudicated, any defense or defenses that it may deem available to such Company or its liquidator, receiver, conservator or statutory successor.  The expenses thus incurred by the Reinsurer shall be chargeable, subject to the Court’s approval, against such Company as part of the expense of the conservation or liquidation to the extent of a pro rata share of the benefit that may accrue to such Company solely as a result of the defense undertaken by the Reinsurer.
ARTICLE 9 
REGULATORY APPROVALS
The Companies and the Reinsurer shall submit all necessary registrations, filings and notices with, and obtain all necessary consents, approvals, qualifications and waivers from, all Governmental Entities and 

-10-

other parties which may be required under Applicable Law as a result of the transactions contemplated by this Agreement.  The Parties agree that where formal approval is required by any Governmental Entity, this Agreement shall not be effective as to any and all Insurance Contracts to be reinsured hereunder in such jurisdiction until such approval is obtained.
ARTICLE 10 
 
DURATION
This Agreement shall not be subject to termination by any Party except (i) by written agreement between Reinsurer and the Companies on the date indicated by such agreement, after receipt of any required approval from Government Entities, or (ii) upon the expiration of all liability on all Insurance Contracts, and the complete performance by Reinsurer and the Companies of all obligations and duties arising under this Agreement. 
ARTICLE 11 
 
FOLLOW THE FORTUNES
The Reinsurer’s liability shall attach simultaneously with that of the Companies and shall be subject in all respects to the same risks, original terms and conditions, interpretations, waivers, and to the same cancellation of the Insurance Contracts as the Companies are subject to, the true intent of this Agreement being that the Reinsurer shall, in every case to which this Agreement applies, follow the fortunes and follow the settlements of the Companies.
ARTICLE 12 
 
SURVIVAL; INDEMNIFICATION
Section 12.1    Indemnification.
(a)    The Reinsurer agrees to indemnify and hold the Companies and their Affiliates, predecessors, successors and assigns (and their respective officers, directors, employees and agents) harmless from and against and in respect of all Damages resulting from or relating to a breach by the Reinsurer of any covenant or agreement of the Reinsurer in this Agreement and to be performed after the date hereof.

-11-

(b)    Each Company agrees, severally and not jointly, to indemnify and hold the Reinsurer and its Affiliates, predecessors, successors and assigns (and their respective officers, directors, employees and agents) harmless from and against and in respect of all Damages, resulting from or relating to a breach by such Company of any covenant or agreement of such Company in this Agreement and to be performed after the date hereof.  
ARTICLE 13 
 
MISCELLANEOUS
Section 13.1    Notices.  All notices, requests, demands and other communications hereunder shall be given in writing and shall be:  (a) personally delivered; (b) sent by telecopier, facsimile transmission or other electronic means of transmitting written documents; or (c) sent to the Parties at their respective addresses indicated herein by registered or certified U.S. mail, return receipt requested and postage prepaid, or by private overnight mail courier service.  The respective addresses to be used for all such notices, demands or requests are as follows:
(a)    If to any Company, to:
Tower Group
120 Broadway
New York, NY 10271
Attention:  William E. Hitselberger
Facsimile:  (212) 655-2067
E-mail: bhiltselberger@twrgrp.com

or to such other person or address as the Companies shall furnish to the Reinsurer in writing.
		
	(b)
	If to the Reinsurer, to:

CastlePoint Re, Ltd.
Washington Mall
7 Reid Street Suite 404 
Hamilton HM11 Bermuda
Attn: General Counsel

or to such other person or address as the Reinsurer shall furnish to the Companies in writing.
If personally delivered, such communication shall be deemed delivered upon actual receipt; if electronically transmitted pursuant to this paragraph, such communication shall be deemed delivered the next business day after transmission (and sender shall bear the burden of proof of delivery); if sent by overnight courier pursuant to this paragraph, such communication shall be deemed delivered upon receipt; and if sent by U.S. mail pursuant to this paragraph, such communication shall be deemed delivered as of the date of delivery indicated on the receipt issued by the relevant postal service, or, if the addressee fails or refuses to accept delivery, as of the date of such failure or refusal.  Any Party to this Agreement may change its address for the purposes of this Agreement by giving notice thereof in accordance with this Section.

-12-

Section 13.2    Assignment; Parties in Interest.
(a)    Assignment.  Except as expressly provided herein, the rights and obligations of a Party hereunder may not be assigned, transferred or encumbered without the prior written consent of the other Party. 
(b)    Parties in Interest.  This Agreement shall be binding upon, inure to the benefit of, and be enforceable by the Parties and their respective successors and permitted assigns.  Except as provided in Section 3.1, nothing contained herein shall be deemed to confer upon any other Person any right or remedy under or by reason of this Agreement. 
Section 13.3    Waivers and Amendments; Preservation of Remedies.  This Agreement may be amended, superseded, canceled, renewed or extended, and the terms hereof may be waived, only by a written instrument signed by each of the Parties or, in the case of a waiver, by the Party waiving compliance.  No delay on the part of any Party in exercising any right, power or privilege hereunder shall operate as a waiver thereof, nor shall any waiver on the part of any Party of any right, power, remedy or privilege, nor any single or partial exercise of any such right, power, remedy or privilege, preclude any further exercise thereof or the exercise of any other such right, remedy, power or privilege.  The rights and remedies herein provided are cumulative and are not exclusive of any rights or remedies that any Party may otherwise have under Applicable Law or in equity.
Section 13.4    Governing Law; Venue.  This Agreement shall be construed and interpreted according to the internal laws of the State of New York excluding any choice of law rules that may direct the application of the laws of another jurisdiction.  Subject to the provisions of Article 7, the Parties hereby stipulate that any action or other legal proceeding arising under or in connection with this Agreement may be commenced and prosecuted in its entirety in the federal or state courts sitting in New York, New York, each Party hereby submitting to the personal jurisdiction thereof, and the Parties agree not to raise the objection that such courts are not a convenient forum.  Process and pleadings mailed to a party at the address provided in Section 13.1 shall be deemed properly served and accepted for all purposes.
Section 13.5    Counterparts.  This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.  
Section 13.6    Entire Agreement; Merger.  This Agreement, the Ancillary Agreements, and any exhibits, schedules and appendices attached hereto and thereto together constitute the final written integrated expression of all of the agreements among the Parties with respect to the subject matter hereof and is a complete and exclusive statement of those terms, and supersede all prior or contemporaneous, written or oral, memoranda, arrangements, contracts and understandings between the Parties relating to the subject matter hereof.  Any representations, promises, warranties or statements made by any Party which differ in any way from the terms of this Agreement or any applicable provisions contained in the Ancillary Agreements shall be given no force or effect.  The Parties specifically represent, each to the other, that there are no additional or supplemental agreements or contracts between or among them related in any way to the matters herein contained unless specifically included or referred to in this Agreement or any applicable provisions contained in the Ancillary Agreements.  No addition to or modification of any provision of this Agreement or any applicable provisions of the Ancillary Agreements shall be binding upon either Party unless embodied in a dated written instrument signed by both Parties.  

-13-

Section 13.7    Exhibits and Schedules.  All exhibits, schedules and appendices are hereby incorporated by reference into this Agreement as if they were set forth at length in the text of this Agreement.
Section  13.8    Headings. The headings in this Agreement are inserted for convenience only and shall not constitute a part hereof.
Section 13.9    Severability.  If any part of this Agreement is contrary to, prohibited by, or deemed invalid under Applicable Law or regulations, that provision shall not apply and shall be omitted to the extent so contrary, prohibited, or invalid; but the remainder of this Agreement shall not be invalidated and shall be given full force and effect insofar as possible.
Section 13.10    Expenses. Regardless of whether or not the transactions contemplated in this Agreement are consummated, each of the Parties shall bear their own expenses and the expenses of its counsel and other agents in connection with the transactions contemplated hereby.
Section 13.11    Currency.  The currency of this Agreement and all transactions under this Agreement shall be in United States Dollars.

-14-

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their duly authorized representatives as of the day and year first written above to be effective as of the Effective Time.
CASTLEPOINT REINSURANCE COMPANY LTD.
By                            
Title                            

TOWER INSURANCE COMPANY OF NEW YORK
By                            
Title                            

CASTLE POINT NATIONAL INSURANCE COMPANY
By                            
Title                            

TOWER NATIONAL INSURANCE COMPANY
By                            
Title                            

HERMITAGE INSURANCE COMPANY
By                            
Title                            

CASTLE POINT FLORIDA INSURANCE COMPANY

By                            
Title                            

NORTH EAST INSURANCE COMPANY
By                            
Title                            

YORK INSURANCE COMPANY OF MAINE,
By                            
Title                            

MASSACHUSETTS HOMELAND INSURANCE COMPANY
By                            
Title                        

PRESERVER INSURANCE COMPANY
By                            
Title                            

CASTLE POINT INSURANCE COMPANY 
By                            
Title                             

Exhibit B
COMMERCIAL LINES LPTA ADMINISTRATIVE SERVICES AGREEMENT
BY AND AMONG
CASTLEPOINT NATIONAL INSURANCE COMPANY,
NORTH EAST INSURANCE COMPANY,
PRESERVER INSURANCE COMPANY,
YORK INSURANCE COMPANY OF MAINE,
MASSACHUSETTS HOMELAND INSURANCE COMPANY,
TOWER INSURANCE COMPANY OF NEW YORK,
TOWER NATIONAL INSURANCE COMPANY,
HERMITAGE INSURANCE COMPANY,
CASTLEPOINT FLORIDA INSURANCE COMPANY,
CASTLEPOINT INSURANCE COMPANY,
CASTLEPOINT REINSURANCE COMPANY, LTD.
AND
AMTRUST NORTH AMERICA, INC.

COMMERCIAL LINES LPTA ADMINISTRATIVE SERVICES AGREEMENT
THIS COMMERCIAL LINES LPTA ADMINISTRATIVE SERVICES AGREEMENT (this "Agreement") is made and entered into as of __________, 2014, by and among: 
		
	1.
	CastlePoint National Insurance Company ("CastlePoint"), an insurance company organized under the laws of Illinois, North East Insurance Company ("North East"), an insurance company organized under the laws of Maine, Preserver Insurance Company ("Preserver,"), an insurance company organized under the laws of New Jersey, York Insurance Company of Maine ("York"), an insurance company organized under the laws of Maine, Massachusetts Homeland Insurance Company ("Massachusetts,"), an insurance company organized under the laws of Massachusetts, Tower Insurance Company of New York ("TIC"), an insurance company organized under the laws of New York, Tower National Insurance Company ("TNIC"), an insurance company organized under the laws of Massachusetts, Hermitage Insurance Company ("Hermitage"), an insurance company organized under the laws of New York, CastlePoint Florida Insurance Company ("CPF"), an insurance company organized under the laws of Florida, and CastlePoint Insurance Company ("CPIC") (collectively, the "Companies"); 

		
	2.
	CastlePoint Reinsurance Company, Ltd., a Bermuda corporation ("Reinsurer"); and

		
	3.
	AmTrust North America, Inc., a Delaware corporation (the "Administrator") (collectively, the "Parties" and each, a "Party").

RECITALS
WHEREAS, ACP Re, Ltd., a Bermuda corporation ("ACP"), AmTrust Financial Services, Inc., a Delaware corporation ("AmTrust"), and National General Holdings Corporation, a Delaware corporation ("National General") are entering into a series of agreements by which Seller has agreed to acquire Tower Group International, Ltd. ("Tower"), a Bermuda insurance holding company, which transacts commercial and personal lines insurance business in the United States through the Companies which are parties to this Agreement, and, in connection therewith, AmTrust and National General have agreed to administer the run-off of Tower’s legacy business, provide stop-loss coverage to Reinsurer with respect thereto, and, prospectively, manage and reinsure all business to be written by the Companies after the Effective Time; 
WHEREAS, in connection with the transactions described above, Reinsurer and the Companies entered into that certain Loss Portfolio Transfer Agreement (the "LPTA"), pursuant to which Reinsurer assumed all insurance liabilities and unearned premium liability (to the extent not previously assumed by Affiliates of AmTrust or National General) of the Companies;  
WHEREAS, each of the Companies previously conducted or currently conducts a commercial lines insurance business involving policies that fall within the Commercial Lines Business and which have been issued prior to the Effective Date in the states or other jurisdictions where they are respectively authorized to conduct such business through independent agents appointed by the Companies (collectively, the "Subject Business" or "Subject Policies," as the context dictates); and
WHEREAS, for a period of time following the Effective Date and as more particularly set forth herein, each of the Companies wishes to appoint Administrator as its third-party administrator for purposes of performing the claims administration related to the runoff of claims under Subject Policies issued by such Company prior to the Effective Time, pursuant to the LPTA, and claims administration related to Insurance Contracts and Claims arising under the Cut-Through Agreement (as defined below).

-1-

NOW, THEREFORE, in consideration of the foregoing premises and the mutual covenants and promises contained herein, and for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Parties hereto agree as follows:
 ARTICLE 1:
DEFINITIONS
1.1    Definitions.  The following terms have the respective meanings set forth below throughout this Agreement and the following definitions are equally applicable to both the singular and plural forms of any of the terms defined herein:
"Administrator Indemnitees" has the meaning set forth in Section 9.2.    
"Affiliate" means, with respect to any Person, at the time in question, any other Person controlling, controlled by or under common control with such Person. 
"Agreement" has the meaning set forth in the preamble. 
"AmTrust" has the meaning set forth in the Recitals.  
"Assignment Termination Date" has the meaning set forth in Section 8.3.
"Books and Records" means all hard-copy and electronic policy information, data, records and policy forms in the possession or control of the Companies relating primarily to the Subject Business, including, but not limited to, administrative records, claim records, marketing compliance records, policy files, sales records, files and records relating to regulatory matters, files and records relating to tax information and tax qualification reporting, reinsurance records, underwriting records and accounting records (in whatever form maintained and wherever housed or held); provided, however, that if any such records contain information which does not relate to the Subject Business, such information shall not constitute "Books and Records" and may be redacted from the "Books and Records" as the Companies reasonably deem appropriate. Books and Records shall exclude any records that are subject to attorney-client privilege. Except with respect to records or documents that are subject to the attorney-client privilege or that do not relate to the Subject Business, the Companies shall provide Administrator with reasonable access to any books and records that are excluded herein from the definition of "Books and Records" and retained by the Companies to the extent reasonably required by Administrator to perform its obligations under this Agreement. 
"Business Day" means any day other than a Saturday, Sunday or other day on which banking institutions in the State of New York are permitted or obligated by applicable Law to be closed.
"Commercial Lines Business" means all insurance contracts, policies, certificates, binders, slips, covers or other agreements of insurance, including all supplements, riders, endorsements, renewals and extensions (other than Personal Lines Business) issued by a Company. 
"Companies" has the meaning set forth in the preamble. 
"Company Indemnitees" has the meaning set forth in Section 9.1. 
"Confidential Information" means all Books and Records and all documents and information concerning (i) one Party or any of its Affiliates, (ii) a Policyholder, or (iii) the Subject Business, in each case furnished to a Party or such Party’s Affiliates (the "Receiving Party") or representatives in 

-2-

connection with this Agreement or the Services contemplated hereby, except that, to the extent not prohibited by applicable Law, Confidential Information shall not include information which: (i) at the time of disclosure or thereafter is generally available to and known by the public other than by way of a wrongful disclosure by the Receiving Party hereto or by any representative of the Receiving Party; (ii) was available on a non-confidential basis from a source other than the Receiving Party or its representatives, provided that such source is not and was not bound by a confidentiality agreement with  the Party disclosing such information; (iii) prior to the disclosure, was already in the Receiving Party’s possession as evidenced by written records kept in the ordinary course of the Receiving Party’s business or by proof of actual use by the Receiving Party (other than the Books and Records which shall remain "Confidential Information"); or (iv) was independently developed by the Receiving Party without violating any obligations under this Agreement and without the use of any Confidential Information. 
"Cut-Through Agreement" means the Commercial Lines Cut-Through Quota Share Reinsurance Agreement, dated as of January 3, 2014, by and among the Companies and Technology Insurance Company, Inc., an insurance company organized under the laws of New Hampshire.
"Disbursement Account" means a bank account or accounts to be established by a Company, Reinsurer and/or Affiliate of AmTrust prior to the Effective Date and to be used by Administrator on behalf of the Companies as provided in this Agreement and as more particularly described in ARTICLE 3.
"Effective Date" means the date hereof.
"Effective Time" means 12:01 a.m. Eastern Standard Time on the Effective Date. 
"Government Entity" means any court, arbitrator, department, commission, board, bureau, agency, authority, instrumentality or other body, whether federal, state, municipal, foreign or other.
"Law" or "Laws" means any statute, law, ordinance, rule, regulation, administrative or judicial order, bulletin or other governmental pronouncement issued or adopted by any Government Entity.
"Legally Required Company Action" means any specific action that the Companies are required by applicable Law or Government Entities to take on their own behalf, without Administrator acting in their name or on their behalf, solely with respect to the Subject Business.
"Loss" has the meaning set forth in Section 9.1. 
"Miscellaneous Costs" has the meaning set forth in Section 5.1. 
"Out-of-Pocket Costs" has the meaning set forth in Section 5.1.
"Party" or "Parties" have the meanings set forth in the preamble.
"Person" means any individual, corporation, partnership, firm, joint venture, association, joint stock company, limited liability company, trust, unincorporated organization, Government Entity, business unit, division or entity.
"Personal Lines Business" means all insurance contracts, policies, certificates, binders, slips, covers or other agreements of insurance, including all supplements, riders, endorsements, renewals and extensions for personal automobile liability and physical damage, homeowners, personal excess and umbrella coverage issued by the Companies.

-3-

"Policyholder" means the owner and/or named insured on policies that are included within the Subject Business.
"Reinsurer" has the meaning set forth in the Recitals.
"Services" has the meaning set forth in Section 2.1(c).
"Subject Business" has the meaning set forth in the Recitals.
"Subject Business Losses" shall mean liabilities and obligations to make payments to policyholders, beneficiaries and third party claimants under the Subject Business and all loss adjustment expenses and defense costs, including (i) all expenses incurred by or on behalf of the Companies in the investigation, appraisal, adjustment, litigation, defense or appeal of claims under the Subject Business and/or coverage actions under the Subject Business, (ii) all liabilities for consequential, exemplary, punitive or similar extracontractual damages, or for statutory or regulatory fines or penalties, or for any loss in excess of the limits of any Subject Business, whether owing to the policyholders or insureds under the Subject Business, and (iii) court costs accrued prior to final judgment, prejudgment interest or delayed damages and interest accrued after final judgment.
"Subject Consideration" has the meaning set forth in Section 5.1.
"Taxes" or "Tax" means all federal, state, local or foreign taxes, charges, fees, levies, rates or dues, or other assessments, including all income, capital gains, capital, sales, use, excise, transfer, goods and services, value added, franchise, withholding, payroll, premium, gross receipts, employment, employment insurance, business, property or other taxes, customs, duties, surtaxes, fees, assessments, charges or governmental imposts of any kind whatsoever imposed by any governmental authority or taxing authority, together with any interest, penalty, fine, or addition thereto, whether disputed or not.
ARTICLE 2:
SERVICES APPOINTMENT
2.1    Appointment and Acceptance; Standards.  
(a)    Effective as of the Effective Time until the complete performance by Administrator and Reinsurer of all obligations and duties arising under this Agreement, and subject to Section 2.2, the Companies and Reinsurer hereby appoint Administrator to perform on their respective behalf (i) all claims administration services related to claims under Subject Policies written by the Companies prior to the Effective Time, as more particularly set forth in this ARTICLE 2 and (ii) all claims administration services related to the Insurance Contracts and Claims under the Cut-Through Agreement (Insurance Contracts and Claims having the meaning set forth therein) (collectively, the "Services"), and Administrator hereby accepts such appointment and agrees to act as the designated representative of the Companies as necessary to perform the Services in accordance with the terms of this Agreement and applicable Law.  
(b)    Subject to Section 2.2, Administrator agrees that in providing the Services it shall conduct itself in accordance with all reasonable commercial and professional standards of skill, diligence, care, effort and expertise that are at least equal in quality to the standards Administrator exercises in carrying out its own insurance business; provided, that such standards must be in material compliance with the provisions of applicable Law.

-4-

(c)    For the avoidance of doubt, and notwithstanding anything contained herein to the contrary, no authority is given or obligations assigned or imposed upon Administrator under this Agreement with respect to (i) the administration of Personal Lines Business written by the Companies (if any), or (ii) the billing, collection, cancellation, renewals or other activities commonly associated with the issuance and administration of policies (other than claims activities) and related to the Subject Business.  For the further avoidance of doubt, the claims and other administration of the Personal Lines Business or other personal lines business written by the Companies shall be provided by National General, pursuant and subject to the Personal Lines LPTA Administrative Services Agreement by and among National General and the Companies. 
2.2    Control of Subject Business.  The performance of the Services by Administrator pursuant to this Agreement shall in no way impair the absolute control, and responsibility for, the business and operations of the Companies by their respective officers and boards of directors. The Companies have the ultimate control over the functions and Services delegated to Administrator pursuant to this Agreement in regards to their Subject Business. Administrator shall comply with any written directions from the Companies with respect to all matters affecting the Services in regards to their Subject Business, so long as such directions comply with applicable Law and are not inconsistent with the terms of this ARTICLE 2; provided, that nothing in this Agreement shall be construed to conflict with the Companies’ ultimate authority and obligation to make decisions with respect to the administration of the Subject Business. In respect of such directions involving the Business, the Companies shall jointly and severally indemnify and hold harmless Administrator and its Affiliates in following such directions. 
2.3    Power of Attorney.  The Companies hereby appoint and name Administrator, acting through its duly authorized officers, employees and agents, as their true and lawful attorney-in-fact insofar as necessary to enable Administrator to provide the Services in the name of the Companies, from and after the Effective Time for so long as Administrator is authorized hereunder to provide the Services. Without limiting the foregoing, Administrator is expressly authorized, subject to Section 2.2: (a) to do any and all lawful acts that the Companies might have done with respect to the Subject Business insofar as such acts qualify as Services; (b) to proceed by all lawful means to perform any and all of the Companies’ claims administration obligations with respect to the Subject Business; (c) to enforce any right and defend against any liability arising under the Subject Business as they relate to the Services; (d) to sue or defend in the name of the Companies, or any of them, any action arising under the Subject Business; (e) to sign in the name of the Companies vouchers, receipts, releases and other papers in connection with any of the foregoing matters, and (f) to endorse checks payable to the Companies for deposit. If requested by Administrator, the Companies shall execute and deliver to Administrator powers of attorney evidencing such power in a form reasonably acceptable to the Companies.   
2.4    Confidentiality and Privacy. 
(a)    The Parties agree that, other than as contemplated hereunder and to the extent permitted or required to implement this Agreement, each of them will and will cause their officers, employees and agents to keep confidential and will not use or disclose Confidential Information and the terms and conditions of this Agreement, including, without limitation, the exhibits and schedules hereto, except as otherwise required by applicable Law or as may be agreed in writing by the Parties hereto.  
(b)    The Parties acknowledge and agree that Administrator and its Affiliates shall and shall cause their agents to only use Confidential Information regarding Policyholders or the Subject Business in accordance with this Agreement and applicable Law and with due and careful regard for rights of confidentiality and privacy, in order to perform the Services.

-5-

(c)    Administrator shall and shall cause its Affiliates and their officers, employees and agents to implement and maintain appropriate administrative, technical and physical safeguards to (i) ensure the security, confidentiality and integrity of Confidential Information regarding Policyholders and the Subject Business, (ii) protect against reasonably anticipated threats or hazards to the security or integrity of such Confidential Information, and (iii) protect against unauthorized access to, or use of, such Confidential Information.
(d)    Nothing in this Section 2.4 shall prohibit Administrator or any of its Affiliates providing services associated with the Subject Business from allowing disclosures of Confidential Information required under applicable Law or to Governmental Entities or as reasonably requested by rating agencies.
2.5    Communication with Government Entities.  Except as otherwise provided herein, and subject to  Section 2.2 and ARTICLE VI hereof, from and after the Effective Time, Administrator shall be responsible on behalf of the Companies to communicate, make filings and/or correspond with Government Entities with respect to the Subject Business and/or the Services. The Companies, as applicable, shall have the right to receive, as promptly as shall be commercially practicable, copies of all communications, filings, and correspondence with respect to the Subject Business and/or the Services, whether made to or received from Government Entities by Administrator, and shall have the right to prior review, at their expense, of such communications, filings and correspondence to or with Government Entities.
2.6    Audit Rights.  During the term of this Agreement and for a period of three (3) months thereafter, each Company shall have the right, at its sole cost and expense, to audit the Services during regular business hours and upon reasonable notice.
2.7    Administrator’s Services.  From and after the Effective Date and until the termination of this Agreement, and subject to Section 2.2, Administrator shall provide the following administrative services on behalf of the Companies with respect to the Subject Business in accordance with applicable Law and subject to the terms of the Subject Business:
(a)    Facilities, Supplies and Staffing. Administrator shall provide the facilities and retain all personnel required to perform the Services as determined in the reasonable discretion of the Administrator. Administrator shall also furnish all of the operating forms, printing supplies and any other related items which may become necessary for the operation of the Subject Business, except, for the forms specified by the Companies which they shall provide and which are technically compatible with Administrator’s facilities and equipment.
(b)    Losses, Claim Expenses, Attorney Appointments, Loss Reporting and Reinsurance.
(i)    Administrator shall receive, consider, review, investigate, defend, reject, supervise the adjustment of, settle, compromise and pay all Losses on the Subject Business, and shall also pay all survey, investigating, legal and other costs thereof, provided that the Companies shall have the ultimate and final authority as to payment or nonpayment of claims in regards to their respective Subject Policies and shall have reasonable access to Administrator’s claim files and other claim records in regards to their respective Subject Policies during normal business hours upon reasonable notice. Administrator shall pay all such losses and claims expenses out of funds held in the Disbursement Account. Administrator shall have no access to, or power to draw on, any other account of the Companies for purposes of this Agreement.
(ii)    Administrator shall maintain claims files on all Subject Business, which claims files shall be subject to review by the Companies, or their Representatives, in regards to their Subject Business during normal business hours and upon reasonable notice.

-6-

(iii)    Administrator shall appoint claims, defense and loss control attorneys or other outside vendors for the Subject Business.
(iv)    Administrator shall report all losses to the Companies and any applicable reinsurers in a timely manner.
(v)    Administrator shall determine and evaluate coverage issues arising out of or in connection with the Subject Business and prepare and send all applicable correspondence relating to the Subject Business, including, but not limited to reservation of rights and coverage denial letters.
(vi)    Administrator shall have the obligation to exercise control and direction over litigation involving the Subject Business and defend against such litigation pursuant to this Agreement, and shall have the authority to settle or consent to judgment in any such litigation subject to obtaining the applicable Company’s prior written consent, which consent shall not be unreasonably withheld.
(vii)    Administrator shall perform all commercially reasonable services to pursue salvage and subrogation recoveries and to properly credit recoveries to the appropriate claim file.
(viii)    Following reasonable written request therefore, specifying information or reports and filing dates, Administrator shall prepare and submit to the Companies, as applicable, all Tax information and Tax-related business reports related to the Services and reasonably necessary for the Companies to file all Tax returns or reports, and shall do so no later than fifteen (15) days before such Tax returns or reports must be filed.
(ix)    To the extent Administrator collects any premium in respect of the Subject Business, Administrator shall remit such premium to the Companies within 15 days of the end of the month in which it was collected.
(c)    Books and Records.
(i)    From and after the Effective Time, the Companies, or their Representatives, shall deliver to Administrator a copy of any Books and Records as reasonably requested by Administrator to the extent that Administrator or any of its Affiliates does not already possess copies of such Books and Records. Administrator shall keep all information related to the Subject Business and the Books and Records confidential, subject to Section 2.4, and shall not disclose or provide access to such information to any third party, except as otherwise contemplated or permitted under this Agreement or required by applicable Law or with the Companies’ prior written consent, which consent shall not be unreasonably withheld, conditioned or delayed. Notwithstanding the foregoing, upon termination of the Services under this Agreement, any copies of the Books and Records and all other books and records maintained at such time by Administrator pertaining to the Subject Business, or copies thereof, shall be delivered promptly to the Companies, as the case may be, or such other person or entity as they shall designate in writing.
(ii)    Administrator agrees that it will and will cause its Affiliates and agents to maintain books and records, including the Books and Records, with respect to the Services, in accordance with the same standards Administrator applies to its own business and applicable Law, including all such books and records as may be required by applicable Law, and all such books and records, including the Books and Records, shall be (A) the property of the Companies in regards to their Subject Business, and (B) available for inspection and copying by the Companies, or their Representatives, in regards to their Subject Business and at their sole cost and expense, and any 

-7-

Government Entities at any reasonable time during Administrator’s normal business hours upon prior reasonable notice. Administrator shall maintain facilities and procedures comparable to the facilities and procedures it employs for its own books and records for the safekeeping of all books and records used in the performance of the Services and in accordance with applicable Law.
(iii)    Administrator agrees to maintain an adequate system of internal controls over financial reporting as it relates to the Services, and at the Companies’ sole option and cost, to allow the Companies, or their Representatives, to conduct periodic tests of such internal controls over financial reporting in regards to their Subject Business during normal business hours and upon reasonable notice. Administrator shall make the relevant employees of Administrator or its Affiliates available to the Companies, and/or their Representatives, for purposes of this Section 2.7(c)(iii).
(d)    Accounting and Reporting. Administrator agrees to provide the following accounting and reporting services:
(i)    Within fifteen (15) days after the close of each quarter, Administrator or its Representatives shall render a quarterly account to the Companies summarizing the following items pertaining to the Subject Business and the Services and any amounts due in this regard to the Companies:
(A)    paid Subject Business Losses less subrogation and salvages and amounts received during the quarter;
(B)    a statement of the gross and net Subject Business Losses outstanding (including loss reserves) at the close of each quarter; and
(C)    a statement of reinsurance recoverables on paid and unpaid Subject Business Losses from third party reinsurance.
(ii)    Administrator or its Representatives shall also provide such other reports with respect to the Subject Business as may be reasonably requested by the Companies that arise out of or relate to the Services, including, but not limited to, such reports as are necessary to prepare the Companies’ Tax returns and financial statements, actuarial analyses of the Subject Business and related reserves, or any report required by any Government Entity, in each case within the time frame needed by the Companies to comply with their own contractual or other legal obligations or as otherwise mutually agreed by the Parties.
(iii)    The Companies and Administrator will cooperate with each other in good faith to develop a mutually acceptable format for the accounts, statements or other reports required under this Section
(iv)    The quarterly accounting and cash settlement are unconditional upon the performance of any other agreement or Person.
(e)    Miscellaneous Services. Without limiting the foregoing, Administrator shall provide any and all other services on behalf of the Companies that may be necessary, required or appropriate for the provision of the Services, including, but not limited to, the following, but only insofar as they constitute claims administration or claims-related services for the Subject Business: (i) providing or causing the provision of usual and customary services for Policyholders; (ii) processing or causing the processing of all necessary Policyholder notifications and collections; (iii) answering all inquiries; (iv) subject to ARTICLE 11, preparing and handling all regulatory filings; (v) performing all necessary accounting, financial and 

-8-

regulatory reporting, and where applicable, providing the statistical and other information required for such reporting to the Companies in a timely manner, as reasonably required by the Companies from time to time in accordance with the terms of this Agreement.
(f)    Services Not Covered.  For the avoidance of doubt, each of the Companies will be responsible for performing all of its own accounting, financial and regulatory reporting, and Manager will have no responsibility with respect thereto; provided, that Manager will provide the Companies with the statistical and other information required for such reporting in a timely manner, as reasonably requested by the Companies from time to time in accordance with the terms of this Agreement.
ARTICLE 3:
DISBURSEMENT ACCOUNT
 3.1    Disbursement Account.
(a)    Any and all amounts needed to pay Subject Business Losses arising under the Subject Business shall be paid on behalf of the Companies by Administrator exclusively from one or more disbursement accounts identified by the Companies and/or Reinsurer for such purposes (the "Disbursement Account").  
(b)    The Disbursement Account shall be funded by the Companies and/or Reinsurer on a monthly basis based on reasonable estimates of cash flow and capital requirements; provided, that if the amounts in the Disbursement Account are insufficient to cover Subject Business Losses, the Companies and/or Reinsurer shall, within two Business Days of notice thereof from Administrator, deposit additional amounts sufficient to cover such Subject Business Losses.  
(c)    No later than five days prior to the end of each month during the term of this Agreement, Administrator and its Affiliates shall remit to the Companies any and all amounts they receive for or on behalf of the Companies in respect of the Subject Business during such month.
(d)    All investment income on funds held in the Disbursement Account shall be credited to the Companies and/or the Reinsurer.
(e)    Administrator acknowledges and agrees that it has a fiduciary obligation to the Companies and/or Reinsurer to access and disburse funds from the Disbursement Account solely for the purposes set forth in this Section 3.1.

ARTICLE 4:
TERM AND TERMINATION RIGHTS
4.1    Term.
(a)    Unless terminated earlier as set forth in this Sections 4.1(a) or 4.2 of this Agreement, the Services provided hereunder with respect to the Subject Business shall terminate as to the Subject Business on the first to occur of: (i) and the complete performance by Administrator and Reinsurer of all obligations and duties arising under this Agreement; or (ii) upon the mutual written consent by the Parties hereto to the termination of this Agreement.

-9-

(b)    Upon the expiration or termination of this Agreement pursuant to Sections 4.1(a) or 4.2, Reinsurer and/or its Affiliates shall assume responsibility for performance of the Services relative to the Subject Business, and Administrator shall cooperate with Reinsurer and/or its Affiliates to effect an orderly transition of the Services to Reinsurer and/or its Affiliates at Reinsurer’s sole cost and expense. Such cooperation on the part of Administrator shall include, without limitation: (i) transferring all Books and Records to Reinsurer or its Affiliates, and (ii) using its commercially reasonable efforts to assign at the Reinsurer’s sole cost and expense, for the benefit of Reinsurer or its Affiliates, any agreements with authorized third-party administrators or other service providers relating to the Services.
4.2    Termination Rights.  Without limiting any other rights of any Party under this Agreement:
(a)    Reinsurer shall have the right to terminate this Agreement (i) if Administrator does not cure, within thirty (30) days of receiving written notice thereof: (A) any material breach of Administrator’s services hereunder, including without limitation any material breach of Administrator’s obligation to perform the Services in accordance with the standards set forth in Section 2.1, or (B) any material failure by Administrator to perform the Services to the reasonable satisfaction of Reinsurer; or (ii) upon written notice to Administrator if: (A) Administrator becomes subject to dissolution, liquidation, conservation, rehabilitation, bankruptcy, statutory reorganization, receivership, or similar proceedings in any jurisdiction, (B) creditors of Administrator take over its management, (C) Administrator otherwise enters into any arrangement with creditors or makes an assignment for the benefit of creditors, (D) any significant part of Administrator’s undertakings are enjoined, or Administrator’s property is impounded or confiscated, by actions of any Government Entity, or (E) Administrator breaches its fiduciary obligations under Section 3.1(e); and
(b)    Administrator shall have the right to terminate this Agreement upon a Change of Control of Reinsurer, provided that such Change of Control shall have been approved by all applicable insurance regulators and other Government Entities.  For purposes of this Section, "Change of Control" means any transaction or a series of transactions which results, directly or indirectly, in the transfer of control of Reinsurer or all or substantially all of its assets or businesses, in all cases, to a third party not then affiliated with Reinsurer, including without limitation: (i) any merger, consolidation, reorganization, recapitalization or other business combination pursuant to which a third party not then affiliated with Reinsurer is transferred to or combined with that of another non-affiliated entity; or (ii) the acquisition by a non-affiliated person or entity of (i) beneficial ownership of any shares of capital stock (or rights to acquire the same) of Reinsurer representing more than 50% of the voting power of Reinsurer or the right or ability by voting power, contract or otherwise to elect or designate for election a majority of the members of the board of directors of Reinsurer or (ii) all or substantially all of the assets of Reinsurer.  
ARTICLE 5:
COMPENSATION
5.1    Subject Consideration.  Reinsurer shall reimburse Administrator for the following costs and expenses: (i) the portion of the total actual costs incurred by Administrator for the claims operations for the Subject Business (including wages and employee benefits provided to Administrator’s employees, and overhead costs related to the performance of the Services, including without limitation, other loss adjustment expenses not incurred in relation to a specific claim within the Subject Business), (ii) all of Administrator’s out-of-pocket expenses in respect of the Subject Business, including, without limitation, claims investigations, legal fees, defense costs and loss containment expenses, or other third-party vendor costs that are incurred in relation to a specific claim within the Subject Business ("Out-of-Pocket Costs"), (iii) costs paid in connection with any modifications to Administrator’s claims system necessary to perform the Services 

-10-

("Miscellaneous Costs"), and (iv) an allocated portion of the Claims Service Expenses paid by the Companies pursuant to the Cut-Through Agreement (collectively, the "Subject Consideration"). 
5.2    Procedure.  Within thirty (30) days following the end of each quarter, Administrator shall provide Reinsurer with requests for payment hereunder consisting of a reasonably itemized bill and other reasonable proof requested by Reinsurer for such amounts. Subject to the foregoing and relative to undisputed amounts, Reinsurer shall pay Administrator the Subject Consideration no later than 15 days following its receipt of a request for payment. Disputed amounts under this Section 5.1 will be paid subject to the dispute resolution provisions incorporated in Article 10. For the avoidance of doubt, the Subject Consideration shall not include any amounts for Out-of-Pocket Costs or Miscellaneous Costs incurred or paid by Administrator that are not reasonably related or allocable to the performance of the Services.
 
ARTICLE 6:
REGULATORY MATTERS
6.1    Regulatory Matters.  From and after the Effective Date, Administrator, on behalf of the Companies, shall be responsible for all state insurance department filings and compliance with all regulatory requirements (if any), but only insofar as they arise out of claims administration or Services for the Subject Business, and subject to prior review and approval by the Companies in the case of any such filing outside of the ordinary course of business.
6.2    Legally Required Company Actions.  From and after the Effective Date, Administrator will give the Companies timely notice of any Legally Required Company Action insofar as they arise out of the Services for the Subject Business, including, without limitation, filings with insurance regulators and other Government Entities, which, in each case, relate to the Subject Business. Administrator will, reasonably prior to the date on which such filings are required, provide to the Companies all information with respect to the Subject Business that may be required by it to prepare and make such filings. In addition, Administrator shall cooperate with the Companies and provide such information necessary for them to comply with all applicable reporting, withholding and disclosure requirements under the federal Internal Revenue Code and state and local tax laws with respect to the Subject Business.
 
ARTICLE 7:
CAPACITY OF ADMINISTRATOR
7.1    Capacity.  Administrator has and will continue to have and maintain during the term of this Agreement all licenses, authorizations and resources necessary to provide, or to obtain a licensed and authorized subcontractor to provide, the Services in accordance with applicable Law, and Administrator has, or has available to it via agents or subcontractors, sufficient expertise, trained personnel, resources, systems, controls and procedures (financial, legal, accounting, administrative, data processing or otherwise) as may be necessary or appropriate to discharge Administrator’s services hereunder.
7.2    Insurance.  Administrator agrees to maintain general liability and errors and omissions coverages for itself and for its directors, officers and employees as outlined in Schedule 7.2 and to provide updated evidence of that coverage as reasonably requested by the Companies and/or Reinsurer.

-11-

7.3    Inability to Perform Services.  Without limitation to any of the Companies’ rights hereunder, in the event that Administrator shall be unable to materially perform the Services as required by this Agreement for any reason whatsoever for a period that can reasonably be expected to exceed five Business Days, Administrator shall promptly notify the Companies and/or Reinsurer in writing and cooperate with them in obtaining an alternative means of providing such Services.
 
ARTICLE 8:
RESERVED
 
ARTICLE 9:
RESERVED
 
 ARTICLE 10:
RESOLUTION OF DISPUTES
10.1    Governing Law.  This Agreement shall be governed by, and construed in accordance with, the laws of the State of New York applicable to contracts executed in and to be performed entirely within that State.
10.2    Dispute Resolution; Enforcement.
(a)    In the event of any dispute arising under this Agreement, prior to the commencement of litigation, a senior officer of Administrator and a senior officer of Reinsurer shall attempt in good faith to resolve the dispute consistent with the terms of this Agreement. If they are unable to resolve the dispute in this manner within a reasonable period of time, the parties may pursue judicial remedies with respect to such dispute. This section shall not apply to any application to obtain emergency judicial intervention. 
(b)    All actions and proceedings arising out of or relating to the interpretation and enforcement of the provisions of this Agreement and in respect of the transactions contemplated by this Agreement shall be heard and determined in the United States District Court for the Southern District of New York and any Federal appellate court therefrom (or, if United States federal jurisdiction is unavailable over a particular matter, the Supreme Court of the State of New York, New York County) and the parties hereto hereby irrevocably submit to the exclusive jurisdiction and venue of such courts in any such action or proceeding and irrevocably waive the defense of an inconvenient forum or lack of jurisdiction to the maintenance of any such action or proceeding. The consents to jurisdiction and venue set forth in this Section 10.2(b) shall not constitute general consents to service of process in the State of New York and shall have no effect for any purpose except as provided in this paragraph and shall not be deemed to confer rights on any Person other than the parties hereto. Each party hereto agrees that service of process upon such party in any action or proceeding arising out of or relating to this Agreement shall be effective if notice is given by overnight courier at the address set forth in Section 11.3 of this Agreement. The parties hereto agree that a final judgment 

-12-

in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by applicable Law; provided, that nothing in the foregoing shall restrict any party’s rights to seek any post-judgment relief regarding, or any appeal from, a final trial court judgment.
10.3    WAIVER OF JURY TRIAL. TO THE FULLEST EXTENT PERMITTED BY LAW, THE PARTIES HERETO HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON, ARISING OUT OF, RELATED TO OR CONNECTED WITH THIS AGREEMENT, THE TRANSACTIONS CONTEMPLATED HEREBY OR ANY DEALINGS BETWEEN THEM RELATING TO THE SUBJECT MATTER OF THIS TRANSACTION. THE SCOPE OF THIS WAIVER IS INTENDED TO BE ALL-ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT MATTER OF THIS AGREEMENT, INCLUDING WITHOUT LIMITATION, CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS. IN THE EVENT OF LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.
10.4    Survival.  This  ARTICLE 10  and  Section 2.4 shall survive the termination of this Agreement.
    
ARTICLE 11:
MISCELLANEOUS
11.1    Cooperation.  Each Party hereto shall cooperate fully with the other in all reasonable respects in order to accomplish the objectives of this Agreement.
11.2    Assignment; Parties in Interest.
(a)    Assignment. Except as expressly provided herein, the rights and obligations of a Party hereunder may not be assigned, transferred or encumbered without the prior written consent of the other Party.
(b)    Parties in Interest. This Agreement shall be binding upon, inure to the benefit of, and be enforceable by the Parties and their respective successors and permitted assigns. Nothing contained herein shall be deemed to confer upon any other Person any right or remedy under or by reason of this Agreement.
11.3    Notices.  All notices, requests, demands and other communications hereunder shall be given in writing and shall be: (a) personally delivered; (b) sent by telecopier, facsimile transmission or other electronic means of transmitting written documents; or (c) sent to the Parties at their respective addresses indicated herein by registered or certified U.S. mail, return receipt requested and postage prepaid, or by private overnight mail courier service. The respective addresses to be used for all such notices, demands or requests are as follows:
If to a Company:
c/o Tower Group
120 Broadway

-13-

New York, NY 10271
Attention:  William E. Hitselberger
Facsimile:  (212) 655-2067
E-mail: bhiltselberger@twrgrp.com
If to Reinsurer:
c/o ACP Re, Ltd.
Washington Mall
7 Reid Street Suite 404 
Hamilton HM11 Bermuda
Attn: General Counsel

If to Administrator:
c/o AmTrust Financial Services, Inc.
59 Maiden Lane, 43rd Floor
New York, NY 10038
Attn:    Stephen Ungar
Facsimile No.:  (212) 220-7130
E-mail: Steve.Ungar@amtrustgroup.com 
or to such other person or address as a Party shall furnish to the Companies in writing.
If personally delivered, such communication shall be deemed delivered upon actual receipt; if electronically transmitted pursuant to this paragraph, such communication shall be deemed delivered the next Business Day after transmission (and sender shall bear the burden of proof of delivery); if sent by overnight courier pursuant to this paragraph, such communication shall be deemed delivered upon receipt; and if sent by U.S. mail pursuant to this paragraph, such communication shall be deemed delivered as of the date of delivery indicated on the receipt issued by the relevant postal service, or, if the addressee fails or refuses to accept delivery, as of the date of such failure or refusal. Any Party to this Agreement may change its address for the purposes of this Agreement by giving notice thereof in accordance with this Section.
11.4    Entire Agreement; Merger.  This Agreement and any exhibits, schedules and appendices attached hereto together constitute the final written integrated expression of all of the agreements among the Parties with respect to the subject matter hereof and is a complete and exclusive statement of those terms, and supersede all prior or contemporaneous, written or oral, memoranda, arrangements, contracts and understandings between the Parties relating to the subject matter hereof, except for any applicable provisions contained in the LPTA. Any representations, promises, warranties or statements made by any Party which differ in any way from the terms of this Agreement or any applicable provisions contained in any of the LPTA shall be given no force or effect. The Parties specifically represent, each to the other, that there are no additional or supplemental agreements or contracts between or among them related in any way to the matters herein contained unless specifically included or referred to in this Agreement or any applicable provisions contained in any of the LPTA. No addition to or modification of any provision of this Agreement or any applicable provisions of any of the LPTA shall be binding upon either Party unless embodied in a dated written instrument signed by both Parties.
11.5    Waivers and Amendments; Preservation of Remedies.  This Agreement may be amended, superseded, canceled, renewed or extended, and the terms hereof may be waived, only by a written instrument signed by each of the Parties or, in the case of a waiver, by the Party waiving compliance. No delay on the 

-14-

part of any Party in exercising any right, power or privilege hereunder shall operate as a waiver thereof, nor shall any waiver on the part of any Party of any right, power, remedy or privilege, nor any single or partial exercise of any such right, power, remedy or privilege, preclude any further exercise thereof or the exercise of any other such right, remedy, power or privilege. The rights and remedies herein provided are cumulative and are not exclusive of any rights or remedies that any Party may otherwise have under applicable Law or in equity.
11.6    Counterparts.  This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.
11.7    Governing Law.  This Agreement shall be construed and interpreted according to the internal laws of the State of New York excluding any choice of law rules that may direct the application of the laws of another jurisdiction. Subject to the provisions of ARTICLE 10, the Parties hereby stipulate that any action or other legal proceeding arising under or in connection with this Agreement may be commenced and prosecuted in its entirety in the federal or state courts having jurisdiction over New York, each Party hereby submitting to the personal jurisdiction thereof, and the Parties agree not to raise the objection that such courts are not a convenient forum.  Process and pleadings mailed to a party at the address provided in Section 11.3 shall be deemed properly served and accepted for all purposes.
11.8    Headings.  The headings in this Agreement are inserted for convenience only and shall not constitute a part hereof.
11.9    Severability.  If any part of this Agreement is contrary to, prohibited by, or deemed invalid under applicable Law or regulations, that provision shall not apply and shall be omitted to the extent so contrary, prohibited, or invalid; but the remainder of this Agreement shall not be invalidated and shall be given full force and effect insofar as possible.
11.10    Expenses.  Regardless of whether or not the transactions contemplated in this Agreement are consummated, each of the Parties shall bear its own expenses and the expenses of its counsel and other agents in connection with the transactions contemplated hereby.
11.11    Currency.  The currency of this Agreement and all transactions under this Agreement shall be in United States Dollars.
[SIGNATURE PAGES FOLLOW]

-15-

IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be executed on the day and year first written above. 

AMTRUST NORTH AMERICA, INC.
By                        
Title                        

TOWER INSURANCE COMPANY OF NEW YORK
By                        
Title                        

CASTLEPOINT NATIONAL INSURANCE COMPANY
By                        
Title                        

TOWER NATIONAL INSURANCE COMPANY
By                        
Title                        

HERMITAGE INSURANCE COMPANY
By                        
Title                        

CASTLEPOINT FLORIDA INSURANCE COMPANY
By                        
Title                        

NORTH EAST INSURANCE COMPANY
By                        
Title                        

YORK INSURANCE COMPANY OF MAINE
By                        
Title                        

MASSACHUSETTS HOMELAND INSURANCE COMPANY
By                        
Title                        

PRESERVER INSURANCE COMPANY
By                        
Title                        

CASTLEPOINT INSURANCE COMPANY 
By                        
Title                        

Exhibit C
COMMERCIAL LINES MANAGING GENERAL AGENT AGREEMENT
by and among
CASTLEPOINT NATIONAL INSURANCE COMPANY,
NORTH EAST INSURANCE COMPANY,
PRESERVER INSURANCE COMPANY,
YORK INSURANCE COMPANY OF MAINE,
MASSACHUSETTS HOMELAND INSURANCE COMPANY,
TOWER INSURANCE COMPANY OF NEW YORK,
TOWER NATIONAL INSURANCE COMPANY,
HERMITAGE INSURANCE COMPANY,
CASTLEPOINT FLORIDA INSURANCE COMPANY,
CASTLEPOINT INSURANCE COMPANY, 
ACP RE LTD
and
AMTRUST NORTH AMERICA, INC.

dated as of
_____________ __, 2014

TABLE OF CONTENTS

	
				
	 
	 
	Page
	

	I.
	DEFINITIONS
	2
	

	II.
	APPOINTMENTS
	3
	

	III.
	TERRITORY
	4
	

	IV.
	DUTIES OF MANAGER REGARDING UNDERWRITING 
	4
	

	V.
	DUTIES OF MANAGER REGARDING CLAIM ADMINISTRATION
	5
	

	VI.
	REPORTING AND REMITTANCES
	7
	

	VII.
	DUTIES AND AUTHORITY OF MANAGER
	8
	

	VIII.
	DUTIES OF COMPANY
	9
	

	IX.
	BOOKS AND RECORDS
	10
	

	X.
	CONFIDENTIAL INFORMATION; RESTRICTIVE COVENANTS
	11
	

	XI.
	COMPANY EMPLOYEES
	15
	

	XII.
	REMUNERATION
	15
	

	XIII.
	COMMENCEMENT AND TERMINATION
	15
	

	XIV.
	CONTINUING DUTIES OF MANAGER AFTER TERMINATION
	17
	

	XV.
	RELATIONSHIP OF THE PARTIES
	18
	

	XVI.
	INDEMNIFICATION
	18
	

	XVII.
	ADVERTISEMENT
	20
	

	XVIII.
	NOTICES
	20
	

	XIX.
	CHOICE OF LAW, VENUE, JURISDICTION
	21
	

	XX.
	AMENDMENT
	22
	

	XXI.
	WAIVER
	22
	

	XXII.
	SEVERABILITY
	22
	

	XXIII.
	ASSIGNMENT
	22
	

	XXIV.
	COUNTERPARTS
	23
	

	XXV.
	HEADINGS
	23
	

COMMERCIAL LINES MANAGING GENERAL AGENT AGREEMENT 
This Commercial Lines Managing General Agent Agreement (this "Agreement") is made as of _____________, 2014 (the "Effective Date") by and among: 
		
	1.
	CastlePoint National Insurance Company ("CastlePoint"), an insurance company organized under the laws of Illinois, North East Insurance Company ("North East"), an insurance company organized under the laws of Maine, Preserver Insurance Company ("Preserver"), an insurance company organized under the laws of New Jersey, York Insurance Company of Maine ("York"), an insurance company organized under the laws of Maine, Massachusetts Homeland Insurance Company ("Massachusetts"), an insurance company organized under the laws of Massachusetts, Tower Insurance Company of New York ("TIC"), an insurance company organized under the laws of New York, Tower National Insurance Company ("TNIC"), an insurance company organized under the laws of Massachusetts, Hermitage Insurance Company ("Hermitage"), an insurance company organized under the laws of New York, CastlePoint Florida Insurance Company ("CPF"), an insurance company organized under the laws of Florida, and CastlePoint Insurance Company ("CPIC") (collectively, the "Companies"); 

		
	2.
	Solely for purposes of Section X.B hereof, ACP Re Ltd ("ACP"), a Bermuda exempted company; and

		
	3.
	AmTrust North America, Inc., Delaware corporation (the "Manager" and, collectively with the Companies, the "Parties" and each, a "Party").

RECITALS
WHEREAS, this Agreement is being entered into in connection with that certain Commercial Lines MGA Quota Share Reinsurance Agreement (the "Reinsurance Agreement"), dated as of the date hereof, by and among Technology Insurance Company, Inc., a New Hampshire corporation ("Reinsurer"), and the Companies, pursuant to which Reinsurer will assume 100% of the business written by the Companies pursuant to the Program, and the Companies will cede to Reinsurer 100% of collected premium attributable to the Program; 
WHEREAS, each Company desires to appoint Manager as its agent to produce certain classes of insurance in the states where it is licensed to transact insurance business;
WHEREAS, each Company and Manager have agreed that this Agreement shall govern their relationship with respect to the Program and Claim Services (each as defined herein) and compensation payable to the Parties with respect to this Agreement; 
WHEREAS, Manager desires to serve as underwriting manager on behalf of each Company and to provide Claim Services for each Company with respect to the Commercial Lines Business (the "Program"); and 
WHEREAS, each Company desires to engage Manager to act as underwriting manager and to provide Claim Services on the terms and conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the mutual promises herein contained and for other good and valuable consideration, the receipt of which is hereby acknowledged, the Parties agree as follows:

1

		
	I.
	DEFINITIONS.

		
	A.
	"ACP Parties" shall have the meaning set forth in Section X.B.

		
	B.
	"Cause" shall mean Company Cause or Manager Cause.

		
	C.
	"Ceding Commission" has the meaning ascribed to such term in the Reinsurance Agreement.  

		
	D.
	"Claim" or "Claims" means any monetary demand or suit arising out of or in connection with any actual or alleged incident, occurrence or accident as such terms are defined in the Policy(ies) arising out of or related to the Program.

		
	E.
	"Claim Services" shall have the meaning set forth in Section II(A).  

		
	F.
	"Commercial Lines Business" means all insurance contracts, policies, certificates, binders, slips, covers or other agreements of insurance, including all supplements, riders, endorsements, renewals and extensions (other than Personal Lines Business) issued by a Company.

		
	G.
	"Cut-Through MGA Agreement" means the Managing General Agent Agreement, dated as of January 3, 2014, by and between the Manager and Tower Risk Management Corp.

		
	H.
	"Laws" shall mean all federal, state and local statutes, regulations and ordinances applicable to Manager’s duties under this Agreement.

		
	I.
	"Loss Fund Account" shall have the meaning set forth in Section VIII.E

		
	J.
	"Master Agreement" shall mean the Commercial Lines Master Agreement, dated as of ______, 2014, by and between ACP and AmTrust Financial Services, Inc., a Delaware corporation.  

		
	K.
	"National General" shall mean National General Holdings Corp., a Delaware corporation.

		
	L.
	"Person" means any individual, sole proprietorship, partnership, corporation, limited liability company, unincorporated society or association, trust or other entity.

		
	M.
	"Personal Lines Business" means all insurance contracts, policies, certificates, binders, slips, covers or other agreements of insurance, including all supplements, riders, endorsements, renewals and extensions for personal automobile liability and physical damage, homeowners, personal excess and umbrella coverage issued by the Companies. 

		
	N.
	"Policy" or "Policies" shall mean all policies, master policies, binders, certificates, endorsements and contracts of insurance issued by a Company through Manager in connection with the Program.

		
	O.
	"Program Losses" shall mean liabilities and obligations to make payments to policyholders, beneficiaries and third party claimants under the Program and all loss adjustment expenses and defense costs, including (i) all expenses incurred by or on behalf of the Companies in the investigation, appraisal, adjustment, litigation, defense or appeal of claims under the Program and/or coverage actions under the Program, (ii) all liabilities for consequential, exemplary, punitive or similar extracontractual damages, or for statutory or regulatory fines or penalties, or for any loss in excess of the limits of any Program, whether owing to the policyholders or insureds under the Program, and (iii) court costs accrued prior to final 

2

judgment, prejudgment interest or delayed damages and interest accrued after final judgment.
		
	P.
	"Recoveries" shall include any and all credits, subrogation, overpayments, voided or returned checks, or other recoveries which shall be credited to the Policy.

		
	Q.
	"Reinsurance Agreement" has the meaning set forth in the recitals. 

		
	R.
	"Reinsurer" has the meaning set forth in the recitals. 

		
	S.
	The "Term" of this Agreement shall commence on the Effective Date and shall terminate or be canceled in accordance with Article XIII hereof.

		
	T.
	"Termination Date" means the effective date of any termination of this Agreement, whether such termination is subject to the expiration of a notice period or is effective immediately upon notice, or otherwise.

		
	U.
	"Termination Notice Date" means the date of receipt of any notice of termination.

		
	V.
	"Underwriting Guidelines" means the guidelines and other instructions provided to Manager by any of the Companies describing the policy term, limits, coverage classifications, territories and including without limitation (i) the maximum annual premium volume, (ii) the basis of the rates to be charged, (iii) the types of risks which may be written, (iv) maximum limits of liability, (v) applicable exclusions, (vi) territorial limitations, (vii) policy cancellation provisions, and (viii) the maximum policy period; as modified by the applicable Company at its sole discretion from time to time.

		
	II.
	APPOINTMENTS.

		
	A.
	Each Company hereby appoints Manager as its underwriting manager to produce insurance risks under the Program, as more particularly set forth in Article IV, and as its provider of all claims administration services with respect to Claims under the Program (collectively, the "Claims Services"), as more particularly set forth in Article V, with such power and authority as is set forth herein.  Each Company shall make the appropriate notifications of this appointment, or subsequent termination thereof, to any state insurance department as may be required of an insurer.

		
	B.
	Manager hereby accepts this appointment and shall make the appropriate notifications of such appointment, or subsequent termination thereof, to any state insurance department as may be required. 

		
	C.
	Manager will place with each Company business covered by the Program that meets such Company's Underwriting Guidelines.

		
	D.
	No Party to this Agreement shall have authority over the operations of the other Party to this Agreement.  Each Party to this Agreement shall at all times continue to be directed by its respective management and board of directors.

		
	E.
	Each Company at its sole discretion may immediately suspend Manager’s underwriting authority during the pendency of a dispute regarding cause for termination.

3

		
	III.
	TERRITORY.

		
	A.
	Manager is authorized to act as underwriting manager in all states in which the applicable Company is licensed to write business pursuant to the Program, subject to the applicable Company’s filed forms and rates (the "Territory").

		
	B.
	Manager is authorized to provide Claims Services in accordance with Article V in the Territory. 

		
	IV.
	DUTIES OF MANAGER REGARDING UNDERWRITING.

Subject to the terms and conditions of this Agreement, and subject to all Laws, Manager shall provide services for the Companies as follows:
		
	A.
	Underwriting During the Term of this Agreement.  Manager is hereby granted authority to solicit, receive, underwrite, bind, accept, non-renew and cancel insurance risks under the Program on behalf of each Company in accordance with the Underwriting Guidelines.  In conducting such underwriting, Manager is hereby authorized to perform the following administrative services on Policies placed with each Company under this Agreement:

		
	1.
	Manager shall solicit, receive, review and process all applications and submissions for insurance business under the Program in accordance with Underwriting Guidelines.

		
	2.
	Manager shall determine the acceptability of any insurance risk, and issue quotes and Policies in the name of a Company on policy forms approved by such Company. Manager will utilize its policy issuance system for the issuance of quotes, Policies and other Policy documents.

		
	3.
	Manager shall issue and deliver Policies to qualified insureds and maintain on behalf of the Companies such information as is necessary to assure the timely and proper issuance, delivery, execution or countersignature of all Policies.

		
	4.
	Manager shall develop and maintain proper underwriting files on behalf of Company that shall contain adequate information to clearly demonstrate the reasons for acceptance or rejection of any risk and documentation of the rate development for the premiums charged under the Policy.

		
	5.
	Consistent with applicable Laws and the terms and conditions of the Policy, Manager may cancel, terminate or otherwise non-renew Policies bound or written under the Program. 

		
	6.
	Manager shall provide proper and timely notice of any cancellation, non-renewal, change in coverage to policyholders, certificate holders, loss payee and/or any regulatory authority, as required by the Policy or any applicable Laws.  Any such cancellation, non-renewal, change in coverage shall be properly documented in such underwriting files maintained by Manager on behalf of the applicable Company.

		
	7.
	Manager shall market the Program and shall perform such related marketing, sales and production activities, and in so doing, shall comply at all times with applicable Laws.  In addition, Manager’s marketing activities shall be subject further to the limitations under Section XVI of this Agreement.

4

		
	8.
	Manager shall administer the collection and receipt of premiums, any policy related fees, any applicable late payment fees, reinstatement fees and/or all other sums chargeable and/or due in respect of any and all Policies ("Premiums"), and pay return premiums due in respect of all Policies.

		
	9.
	Manager shall pay commission due to producers, including Sub-Producers.

Company shall have the right to cancel or non-renew any Policy, consistent with the terms of such Policy, except as limited by applicable insurance Laws or regulations.

		
	B.
	Reinsurance.  Manager shall negotiate but not bind reinsurance on behalf of a Company on any business Manager places with such Company.

		
	C.
	Sub-Producers.  Manager shall be authorized to assign or delegate any of its authority hereunder to an affiliate of Manager without written approval from any Company.  Manager shall not be authorized to assign or delegate any of its authority to an unaffiliated party without the prior written approval from the applicable Company, provided, that notwithstanding the foregoing, Manager may designate and license producers (each individually, a "Sub-Producer") solely for the production of business under the Program without written approval from the applicable Company.  Manager shall ensure that any party so designated shall be lawfully licensed to transact the type of insurance for which designation is made, and shall require that during the term of such designation, such license shall be maintained continuously and in full force and effect. Manager shall be responsible to insure the compliance by all Sub-Producers with the term of this Agreement and all other written rules and regulations of the applicable Company, and treat as confidential and use only in the interest of such Company all instructions, information and materials of such Company. Manager shall be solely responsible for the performances of any Sub-Producer under the terms and provision hereof.  Manager shall require each Sub-Producer to maintain Errors and Omissions and fidelity insurance in an amount and upon terms reasonably acceptable to Manager and the applicable Company. Manager will terminate the designation and licensing of any Sub-Producer at the sole discretion of the Company, with or without cause. 

		
	D.
	Authorizations.  Manager represents and warrants that it possesses licenses or authorizations to perform the functions and duties set forth in this Agreement in the Territory, as may be required by law, and will promptly inform the applicable Company in writing of any and all changes in any of such licenses or authorizations in all states or territories relating to the authority of Manager to conduct the activities required of it under this Agreement.

		
	V.
	DUTIES OF MANAGER REGARDING CLAIM ADMINISTRATION.  

Subject to the terms and conditions of this Agreement, and subject to all Laws, Manager shall provide the following Claim Services in respect of Policies bound or written under this Agreement:
		
	A.
	Facilities, Supplies and Staffing. Manager shall provide the facilities and retain all personnel required to perform the Claim Services as determined in the reasonable discretion of the Manager.  Manager shall also furnish all of the operating forms, printing supplies and any other related items which may become necessary for the operation of the Program, except, for the forms specified by the Companies that they shall provide and that are technically compatible with Manager’s facilities and equipment.

5

		
	B.
	Losses, Claim Expenses, Attorney Appointments, Loss Reporting and Reinsurance.

		
	1.
	Manager shall receive, consider, review, investigate, defend, reject, supervise the adjustment of, settle, compromise and pay all Losses in respect of the Program, and shall also pay all survey, investigating, legal and other costs thereof, provided that the Companies shall have the ultimate and final authority as to payment or nonpayment of claims in regards to their respective Policies and shall have reasonable access to Manager’s claim files and other claim records in regards to their respective Policies during normal business hours upon reasonable notice. Manager shall pay all such losses and claims expenses out of funds held in the Loss Fund Account. Manager shall have no access to, or power to draw on, any other account of the Companies for purposes of this Agreement.

		
	2.
	Manager shall maintain claims files on all claims made under the Policies, which claims files shall be subject to review by the Companies, or their Representatives, in regards to their Policies during normal business hours and upon reasonable notice.

		
	3.
	Manager shall appoint claims, defense and loss control attorneys or other outside vendors for the Program.

		
	4.
	Manager shall report all losses to the Companies and any applicable reinsurers in a timely manner.

		
	5.
	Manager shall determine and evaluate coverage issues arising out of or in connection with the Program and prepare and send all applicable correspondence relating to the Program, including, but not limited to reservation of rights and coverage denial letters.

		
	6.
	Manager shall have the obligation to exercise control and direction over litigation involving the Program and defend against such litigation pursuant to this Agreement, and shall have the authority to settle or consent to judgment in any such litigation subject to obtaining the applicable Company’s prior written consent, which consent shall not be unreasonably withheld.

		
	7.
	Manager shall perform all commercially reasonable services to pursue salvage and subrogation recoveries and to properly credit recoveries to the appropriate claim file.

		
	8.
	Following reasonable written request therefore, specifying information or reports and filing dates, Manager shall prepare and submit to the Companies, as applicable, all Tax information and Tax-related business reports related to the Claim Services and reasonably necessary for the Companies to file all Tax returns or reports, and shall do so no later than fifteen (15) days before such Tax returns or reports must be filed.

		
	C.
	Miscellaneous Services. Without limiting the foregoing, Manager shall provide any and all other services on behalf of the Companies that may be necessary, required or appropriate for the provision of the services provided hereunder, including, without limitation, the services described in Article IV and the Claim Services.  Such other services shall include, without limitation, the following: (i) providing or causing the provision of usual and 

6

customary services for Policyholders; (ii) processing or causing the processing of all necessary policyholder notifications and collections; and (iii) answering all inquiries.
		
	D.
	Services Not Covered.  For the avoidance of doubt, each of the Companies will be responsible for performing all of its own accounting, financial and regulatory reporting, and Manager will have no responsibility with respect thereto; provided, that Manager will provide the Companies with the statistical and other information required for such reporting in a timely manner, as reasonably requested by the Companies from time to time in accordance with the terms of this Agreement.

		
	VI.
	REPORTING AND REMITTANCES.

		
	A.
	Manager shall provide all accounting and reporting services with respect to the Program to satisfy the requirements of each Company, including but not necessarily limited to the following:

		
	1.
	No later than fifteen (15) days after the end of each month, each Company shall submit to Manager a monthly account ("Monthly Underwriting Activity Report") setting forth Premiums written, Premium collected, and Premium adjustments made, including but not limited to, additional or return premiums, audit and rate adjustments and commissions paid during such month, in each case subject to, and in accordance with, Section VI.B. 

		
	2.
	No later than fifteen (15) days after the close of each month, Manager or its Representatives shall render a monthly account to the Companies summarizing the following items pertaining to the Program and the Claim Services and any amounts due in this regard to the Companies:

		
	(a)
	paid Program Losses less subrogation and salvages and amounts received during the month;

		
	(b)
	a statement of the gross and net Program Losses outstanding (including loss reserves) at the close of each month; 

		
	(c)
	a statement of reinsurance recoverables on paid and unpaid Program Losses from third party reinsurance; and 

		
	(d)
	such other reports with respect to the Program as may be reasonably requested by the Companies that arise out of or relate to the Claim Services, including, but not limited to, such reports as are necessary to prepare the Companies’ Tax returns and financial statements, actuarial analyses of the Program and related reserves, or any report required by any insurance department or other regulatory authority, in each case within the time frame needed by the Companies to comply with their own contractual or other legal obligations or as otherwise mutually agreed by the Parties (a though d, collectively, the "Monthly Claim Services Report").

		
	 3.
	As reasonably requested from time to time by a Company, Manager shall submit to such Company a copy of monthly banking statements with respect to the Loss Fund Account for said month, and shall effect reconciliation of such accounts in accordance with customary accounting practices.  As and when requested by a 

7

Company, Manager shall provide such Company with appropriate documentation in support of any specific transaction or reconciled entry.
		
	B.
	Remittances.    

		
	1.
	Upon receipt of any Premiums (as defined in Section IV.A.8), Manager shall deposit such Premiums, net of Ceding Commission attributable thereto, into a bank account or accounts designated by Reinsurer.    

		
	2.
	Manager shall deposit such Ceding Commission, net of any remuneration owed to Manager pursuant to Article XI, into a bank account or accounts designated by the Companies.

		
	VII.
	DUTIES AND AUTHORITY OF MANAGER.

		
	A.
	Regulatory Compliance.

		
	1.
	Manager shall provide, at its own expense, and within a reasonable time, as necessary, such information in its possession required to satisfy reporting requirements imposed upon the Companies by any regulatory authority, boards, bureaus or associations to enable the Companies to file required financial statements and reports, unit statistical and financial calls for information with insurance departments, regulatory bodies of competent jurisdiction, reinsurers, boards, bureaus or associations with regard to the business transacted or services provided pursuant to this Agreement.

		
	2.
	Manager shall promptly forward to the applicable Company, in no event later than the first business day after receipt thereof, any written notices, complaints, or inquiries received by any insurance department or any other regulatory authority from policyholders or claimants in connection with the Program and, in addition, shall provide to the applicable Company all information from its records which will assist such Company in its response to such Insurance Department or other regulatory authority, and otherwise cooperate fully with such Company in connection with any such notice, complaint or inquiry, and if requested by such Company, shall prepare and/or assist in the preparation of any response as reasonably necessary in defense of such Company.  

		
	 3.
	Manager shall promptly advise the applicable Company whenever it receives any notice of any regulatory audit, action or threat of sanctions charged against Manager or such Company with respect to or arising out of Manager’s acts or omissions with respect to or which affects the Program, and if requested by such Company, shall take and/or assist in any action as is reasonable and necessary to respond and/or address such matter.  Manager agrees to cooperate fully in the handling of any such audit, action or regulatory sanction.

		
	4.
	Any fines or penalties levied against a Company arising out of or related to the business produced, Policies serviced or Claim Services provided pursuant to this Agreement shall be paid by Manager to the extent and to the degree directly resulting from any act, error or omission whether intentional or unintentional, of Manager or any of its respective agents, sub-agents, brokers, producers, advisors, or contractors.  Except however, to the extent such fine or penalty is directly attributable to an action 

8

of a Company, then such Company shall be responsible for a full or pro-rata share, as applicable, of such fine or penalty to the extent that such action of such Company contributed to said fine or penalty.
		
	B.
	Limitations of Authority.  In addition to any other limitations expressly or implicitly contained in this Agreement, Manager shall not have authority to do any of the following acts in connection with this Agreement:

		
	1.
	commit a Company to participate in insurance or reinsurance syndicates, associations or pools or bind a Company to reinsurance agreements or arrangements;

		
	2.
	permit any Sub-Producer to serve on Manager’s board of directors;

		
	3.
	jointly employ any individual who is employed with a Company;

		
	4.
	exceed the maximum Policy limits established by the applicable Company from time to time; 

		
	5.
	on behalf of a Company, make, accept or endorse notes or otherwise incur any liability which is not incurred in the ordinary course of business of Manager pursuant to the terms and conditions of this Agreement;

		
	6.
	waive a forfeiture or issue a guaranty, other than as permitted expressly in writing by a Company;

		
	7.
	waive Premium payment, withhold any monies or property of a Company, or offer or pay any rebate of Premium, without the express written consent of such Company;

		
	8.
	bind coverage more than 10 days subsequent to the effective date of the Policy without the prior written approval of a Company;

		
	9.
	effect or authorize a flat cancellation more than forty-five (45) days after the effective date without the prior written approval of the applicable Company.  (In the event of such flat cancellation, Manager shall reasonably document the existence of substituted coverage or other reasons why such Company has no liability for payment of loss while coverage was in force); or

		
	10.
	reinstate Policies or certificates cancelled by a Company for other than non-payment of Premium without the prior written approval of such Company.

		
	VIII.
	DUTIES OF COMPANY.

Subject to the terms and conditions of this Agreement, and subject to all applicable Laws, each Company agrees to perform the following duties with respect to the Program:

		
	A.
	Changes in Authorizations.  Each Company will promptly inform Manager in writing of all changes in its licenses or eligibility in the Territory relating to the authority of Company to transact the business of insurance under this Agreement.

		
	B.
	Manager Compensation.  Each Company shall pay Manager’s compensation as provided in Section XII.

9

		
	C.
	Timely Cooperation.  Each Company shall comply in a timely and prompt manner with any reasonable request for instructions or approvals which Manager may make from time to time in order to perform its duties under this Agreement.

		
	D.
	Company Policy Issuance.  During the Term of this Agreement, each Company shall accept all Policies placed by Manager under the Program in accordance with the Underwriting Guidelines of such Company and the terms of this Agreement.

		
	E.
	Creation and Funding of the Loss Fund Accounts.  

		
	1.
	Any and all amounts needed to pay Program Losses arising under the Program shall be paid on behalf of the applicable Company by Manager exclusively from one or more disbursement accounts identified by the applicable Company for such purposes (the "Loss Fund Accounts").  

		
	2.
	The Loss Fund Accounts shall be funded on behalf of the applicable Company on a monthly basis based on reasonable estimates of cash flow and capital requirements; provided, that if the amounts in a Loss Fund Account are insufficient to cover Program Losses, additional amounts will be deposited on behalf of the applicable Company sufficient to cover such Program Losses within two Business Days of notice thereof from Manager to the applicable Company,  

		
	3.
	All investment income on funds held in the Loss Fund Accounts shall be credited to the applicable Company.

		
	4.
	Manager acknowledges and agrees that it has a fiduciary obligation to the Companies to access and disburse funds from the Loss Fund Accounts solely for the purposes set forth in this Section VIII.E.

		
	IX.
	BOOKS AND RECORDS.

		
	A.
	During the Term of this Agreement, Manager shall maintain, at its own expense, separately identifiable books and records and electronic files in connection with the Policies and Claims under the Program and the Claim Services, including but not limited to the following: accounting records, underwriting files, claim files, Policy and premium records, Policy register, bank records, records relating to the Loss Fund Account, licensing files, records of notices, complaints, inquiries, actions and suits served against Manager or, to the extent available to Manager, the Companies, Policies (both in-force and cancelled), and reports and records required to be retained in connection with this Agreement or required under applicable Laws for and on behalf of the Companies (hereinafter collectively referred to as "Books and Records"), with respect to each Policy for a period of seven (7) years following the end of the calendar year in which such Policy expires, is cancelled, non-renewed or otherwise terminated, or for any longer period which may be required by Law. All Books and Records other than those related to policy expirations are the property of the applicable Company, and upon its request, such Company shall be entitled to receive copies of any and all Books and Records. Manager shall be responsible for retaining the Books and Records required to be maintained by Manager under this Agreement, in hard copy form, microfilm, computer software systems and/or other generally accepted information storage medium, as well as, in any reasonable back-up form directed by Company for the period described above. Manager is obligated to provide to a Company copies of any and all such Books and Records, electronically in a format acceptable to such Company.

10

		
	B.
	During the Term of this Agreement, the Companies, or their representatives, shall deliver to Manager a copy of any Books and Records as reasonably requested by Manager to the extent that Manager or any of its Affiliates does not already possess copies of such Books and Records.

		
	C.
	Each Company or its designated representatives, without restrictions or limitations, shall, upon reasonable notice to Manager, have broad authority to inspect, copy and audit all Books and Records of Manager pertaining to the business written under this Agreement  during reasonable business hours, and, at its own expense, may make copies or extracts of any Books and Records pertaining thereto as such Company may deem necessary.  

		
	D.
	Both during the Term of this Agreement and following the Termination Date, Manager’s use and control of the expirations, the records thereof and Manager’s work product shall remain in the undisputed possession and ownership of Manager, and each Company’s record of such expirations and other material information relating to specific risks, will not be disclosed by such Company to any agent or broker.  Nothing contained in this Section IX.D. shall interfere with a Company’s obligation to renew or service policies following a Termination Date.

		
	E.
	Each Company has the right at any time to place in Manager’s office up to six (6) of its underwriting and/or claim representatives to monitor Manager’s performance under this Agreement. Manager will provide such Company representatives with reasonable accommodations, including office space and services as required. 

		
	F.
	The ownership of Policy supplies, undelivered Policies, or other property furnished by a Company for the purpose of conducting the business which is the subject of this Agreement, shall be vested in such Company.  Manager hereby agrees to surrender the same to the applicable Company, without expense to such Company.  Manager has no authority to release blank Policy or certificate supplies to any Sub-Producer; and agrees to maintain a Policy register of all voided Policies and shall retain and store all voided Policies on behalf of each Company, and deliver to or make such voided Policies available to the applicable Company or its authorized representatives immediately upon the Termination Date, or at any time upon the request of such Company.

		
	X.
	CONFIDENTIAL INFORMATION; RESTRICTIVE COVENANTS.

		
	A.
	Confidential Information. 

		
	1.
	The Parties hereby agree to treat as confidential any and all reports, information, and data relating to, obtained by, prepared or assembled by, or given to the other or developed as a result of information supplied by or on behalf of any Party under this Agreement, or by reason of, or relating to, the transactions contemplated by or incidental to this Agreement, including but not limited to any materials, presentations, records, and all matters affecting or relating to the proposed business and operations under the Program (such information being collectively referred to herein as "Confidential Information").  For purposes of this Section X.A, the party disclosing Confidential Information will be referred to as the "Disclosing Party" and the party receiving Confidential Information will be referred to as the "Receiving Party." 

11

		
	2.
	The Parties shall each take appropriate steps to ensure that all Confidential Information is kept confidential by the respective Parties and each of their directors, officers, principals, shareholders, affiliates, employees, agents and advisors, and that such Confidential Information will not be divulged, disclosed or communicated to any person, firm, association, corporation or other entity, during or subsequent to the Term of this Agreement, provided, however, that (a) disclosure of any Confidential Information to which the Disclosing Party has consented in writing may be made; (b) any Confidential Information may be disclosed to regulatory authorities or other appropriate parties pursuant to Laws or legal process after notice is given to the Disclosing Party to allow the Disclosing Party to contest or limit the scope of Confidential Information to be disclosed;  (c) Confidential Information may also be disclosed to auditors of any Receiving Party, Company reinsurers or retrocessionaires, to the extent reasonably appropriate; and (d) Confidential Information may also be disclosed by a Receiving Party to its Affiliates, provided the Receiving Party directs such Affiliates to treat such Confidential Information confidentially and in accordance with the terms of this Agreement.

		
	3.
	In the event of a breach of this Section X relating to Confidential Information, the affected Party shall be entitled to seek specific performance and injunctive or other equitable relief as a remedy for any such breach, which shall not be deemed to be the exclusive remedy for such breach, but shall be in addition to all the remedies available at law or equity.

		
	4.
	The term "Confidential Information" as used in this Agreement does not include information which (i) was or becomes generally available to the public other than as a result of the disclosure by or on behalf of the Receiving Party; or (ii) was or becomes available on a non-confidential basis from a source other than the Receiving Party or its representatives, provided that such source is not bound by a confidentiality agreement with, or similar obligation to the Disclosing Party.

		
	5.
	Manager agrees that any policyholder information, insured information, claimant information and any other information subject to a Federal, State or local Laws or regulations requiring information to be confidential, including but not limited to, non-public personal information and health information of an individual, will be treated as confidential in accordance with the requirement of such Laws or regulations.  Any such confidential information about individuals that Manager obtains in furtherance of its services under this Agreement may only be used as necessary to effect, administer or enforce a policyholder transaction.  Manager and its employees, agents, representatives, successors or assigns are not authorized to otherwise use or disclose such information to any third party, unless authorized by the applicable Company’s privacy policy or notice.  Manager agrees to adopt and implement privacy procedures that are consistent with any applicable Laws or regulations, as well as consistent with Company’s privacy notice and policy when Manager is servicing a Company’s policyholders.  Manager shall require its agents, representatives, Sub-Producers, Sub-Claim Adjusters and employees to comply with the foregoing privacy provisions.  Manager shall prepare, at its own cost and expense, for the applicable Company’s review and approval, all privacy notices required by applicable statutes, rules or regulations to be sent or delivered to policyholders or other persons.  Upon the applicable Company’s approval, Manager shall, at its own cost and expense, send such privacy notice to its intended recipient.

12

		
	6.
	Manager may from time to time provide each Company with access to certain proprietary systems developed by Manager, including without limitation, any source code, object code, executable code, data, databases, and related documentation in respect thereof (collectively, the "Manager IP"). Each Company acknowledges and agrees that the Manager IP, including without limitation program code, specifications, logic, design, ideas, techniques, know-how and procedures contained therein and all related documentation are confidential intellectual property exclusively owned by Manager.  This Agreement does not grant and shall not be construed to grant any license or right to use the Manager IP except as expressly authorized in writing by Manager.  Each Company and its employees shall not disclose Manager IP or any part thereof to any third party, including affiliates, except as expressly authorized by Manager.  Each Company shall not (a) use or access the Manager IP for any purpose other than performing its duties under this Agreement; or (b) modify, enhance, reverse engineer, delink, disassemble or decompile any of the Manager IP or part thereof. 

		
	B.
	Covenant Not to Compete, Solicit or Hire.  

		
	1.
	Each Company and ACP (collectively, the "ACP Parties") acknowledges and agrees that Manager and its Affiliates would be irreparably damaged if any ACP Party were to provide services or to otherwise participate in the business of any Person competing with the Commercial Lines Business in a similar business and that any such competition by an ACP Party would result in a significant loss of goodwill by Manager in respect of the Commercial Lines Business.  Each ACP Party further acknowledges and agrees that the covenants and agreements set forth in this Section X.B were a material inducement to Manager to enter into this Agreement and the other Transaction Documents (as defined in the Master Agreement) and to perform its obligations hereunder and thereunder, and that Manager and its Affiliates would not obtain the benefit of the bargain set forth in this Agreement or the other Transaction Documents as specifically negotiated by the parties hereto and thereto if any ACP Party breached the provisions of this Section X.B.  Therefore, in further consideration of Manager's performance of its obligations hereunder and under the other Transaction Documents, each of the ACP Parties agrees that during the period in which any parties have any obligations under any of the Transaction Documents and the five-year period thereafter, it shall not, and shall not permit any of its Subsidiaries to, directly or indirectly, either for itself, himself or herself or through any other Person, engage in, participate in, or permit such Person’s name to be used by any enterprise engaging in or participating in, the Commercial Lines Business. For purposes of this Agreement, the term "participate" includes any direct or indirect interest in any enterprise, whether as a stockholder, member, partner, joint venturer, franchisor, franchisee, executive, consultant or otherwise (other than by ownership of less than two percent (2%) of the stock of a publicly held corporation) or rendering any direct or indirect service or assistance to any Person.  Each ACP Party agrees that this covenant is reasonably designed to protect Manager’s substantial investment and is reasonable with respect to its duration, geographical area and scope.

		
	2.
	For so long as any ACP Party has continuing obligations under Section X.B.1 above, such ACP Party shall not (and shall cause its, his or her Subsidiaries not to) directly, or indirectly through another Person, (a) induce or attempt to induce (other than by 

13

a general solicitation advertisement, posting or similar job solicitation process) any employee, agent or producer of Manager or its Affiliates engaged in the Commercial Lines Business to leave the employ of Manager or any of its Subsidiaries or Affiliates, or in any way interfere with the relationship between Manager or any of its Subsidiaries or Affiliates and any such employee, except in accordance with Section XI, (b) hire (other than by a general solicitation advertisement, posting or similar job solicitation process) any employee, agent or producer of Manager or any of its Subsidiaries or Affiliates at any time during the six-month period immediately prior to the date on which such hiring would take place (it being conclusively presumed by the Parties so as to avoid disputes under this Section X.B.2 that any such hiring (other than by a general solicitation advertisement, posting or similar job solicitation process) within such six-month period is in violation of clause (i) above) , except in accordance with Section XI, or (c) call on, solicit or service any customer, agent, producer, supplier, licensee, licensor or other business relation of the Commercial Lines Business in order to induce or attempt to induce such Person to cease doing or decrease their business with Manager or any of its Subsidiaries or Affiliates, or in any way interfere with the relationship between any such customer, supplier, licensee or business relation and Manager or any of its Subsidiaries or Affiliates (including making any negative statements or communications about Manager or any of its Subsidiaries or Affiliates).
		
	3.
	If, at the time of enforcement of any of the provisions of this Section X.B, a court determines that the restrictions stated herein are unreasonable under the circumstances then existing, then the Parties agree that the maximum period, scope or geographical area reasonable under the circumstances shall be substituted for the stated period, scope or area.  The Parties further agree that such court shall be allowed to revise the restrictions contained herein to cover the maximum period, scope or geographical area permitted by law.

		
	4.
	If an ACP Party the "Restricted Persons") breaches, or threatens to commit a breach of, any of the provisions of this Section X.B (the "Restrictive Covenants"), Manager will have the following rights and remedies, each of which rights and remedies shall be independent of the others and severally enforceable, and each of which is in addition to, and not in lieu of, any other rights and remedies available to Manager at law or in equity:

		
	(a)
	the right and remedy to have the Restrictive Covenants specifically enforced by any court of competent jurisdiction, it being agreed that any breach or threatened breach of the Restrictive Covenants would cause irreparable injury to Manager and that money damages would not provide an adequate remedy to Manager; and

		
	(b)
	the right and remedy to require the Restricted Persons to account for and pay over to Manager any profits, monies, accruals, increments or other benefits derived or received by the Restricted Persons as the result of any transactions constituting a breach of the Restrictive Covenants.

14

		
	XI.
	COMPANY EMPLOYEES. 

		
	A.
	From time to time on or after the date hereof, upon ten (10) days written notice to ACP and National General (an "Employee Offer Notice"), subject to subsection (b) below, Manager may, or may cause an Affiliate to, offer employment to employees of any Company or its Affiliates that Manager reasonably determines are necessary for the Commercial Lines Business under terms and conditions satisfying the obligations of ACP under the Merger Agreement (as defined in the Master Agreement) with respect to such employees.  

		
	B.
	If within ten (10) days of receipt of an Employee Offer Notice, neither National General nor ACP has objected in writing to the making of offers of employment to the employees indicated in such Employee Offer Notice, Manager may make an offer of employment to such employees.  If National General or ACP provides such written objection, ACP, National General and Manager shall negotiate in good faith to coordinate the employment or retention of such employees among themselves.  If an agreement as to the employment or retention of such employees is reached, Manager may make offers to such employees pursuant to such agreement.  If within thirty (30) days of the delivery of any such objection, ACP, National General and Manager shall have failed to reach an agreement with respect to the employment or retention of such employees, ACP, Manager and National General shall enter mediation.  In the event pursuant to such mediation ACP, National General and Manager shall reach an agreement as the employment or retention of such employees, Manager may make offers of employment to the employees designated in such agreement.

		
	C.
	Nothing contained in this Agreement shall confer upon any employee of any Company or any of its Affiliates any right with respect to continued employment by Manager or any of its Affiliates.  No provision of this Agreement shall create any third-party rights in any such employee, or any beneficiary or dependent thereof, with respect to the compensation, terms and conditions of employment and benefits that may be provided to such employee by Manager or any of its Affiliates or under any benefit plan that Manager or any of its Affiliates may maintain.

		
	XII.
	REMUNERATION.

Manager’s sole remuneration from the Companies for all services that Manager may perform under this Agreement including, without limitation, any MGA Run-Off Services, shall be as set forth in Exhibit A attached hereto and made a part of this Agreement.  Manager will deduct the amount of such remuneration from any Ceding Commission payable to the Companies, in accordance with Section VI.B. 
		
	XIII.
	COMMENCEMENT AND TERMINATION.

		
	A.
	This Agreement shall remain in full force and effect for a term of ten (10) years and will automatically renew for additional one-year periods unless terminated earlier by either Manager (as between Manager and one Company or all of the Companies) or a Company (as between such Company and Manager) as set forth in this Section XIII.  Notwithstanding the foregoing, upon the termination by less than all of the Companies, this Agreement shall remain in full force and effect between Manager and the non-terminating Companies.

		
	B.
	Each Company may terminate this Agreement (i) upon written notice to Manager following Company Cause, as defined herein, (ii) on each anniversary of the date hereof by providing written notice to Manager no later than 180 days prior to the date of such anniversary, or (iii) by mutual written agreement of the Parties or as otherwise provided herein.  

15

		
	C.
	Manager may terminate this Agreement (i) upon written notice to the applicable Company following Manager Cause, as defined herein, (ii) following the fifth (5th) anniversary of the date hereof, on each anniversary of the date hereof by providing written notice to the applicable Company no later than 180 days prior to the date of such anniversary, or (iii) by mutual written agreement of the Parties or as otherwise provided herein.  

		
	D.
	Any termination under this Section XII shall not affect the rights or obligations of the Parties hereto as to transactions, acts, or things done by any Party prior to the Termination Date.  Furthermore, subject to the provisions of Section XIII, any notice of termination under this Section XII.B shall not affect the authority of Manager as described under Sections IV, V and VII from the period beginning on the Termination Notice Date through but not including the Termination Date, except as otherwise instructed by the applicable Company.  

		
	E.
	Upon the expiration or termination of this Agreement, the applicable Company and/or its Affiliates shall assume responsibility for performance of the Claim Services relative to the Program, and Manager shall cooperate with the applicable Company and/or its Affiliates to effect an orderly transition of the Claim Services to such Party, at such Party's sole cost and expense.

		
	F.
	Notwithstanding the foregoing, upon prior written notice, a Company may terminate this Agreement immediately (as between such Company and Manager), upon occurrence of any of the following grounds ("Company Cause"):

		
	1.
	if Manager or any of its affiliates, is or becomes insolvent, or is the subject of or commences any regulatory or judicial or other proceedings for its administrative oversight, conservation, supervision, dissolution, liquidation, bankruptcy, receivership or similar proceeding; or

		
	2.
	if all or a controlling portion of Manager’s capital stock or all or any part of its business is sold, transferred or merged into an entity which is not an affiliate of Manager, and such Company reasonably believes that such sale, transfer or merger has, or could have a material adverse impact on the Company's interests;

		
	3.
	the intentional misappropriation by Manager of any funds or property belonging to the Company;

		
	4.
	the fraud, gross negligence, or willful misconduct of Manager; or

		
	5.
	the material breach by Manager of this Agreement following notice and a reasonable opportunity to cure, which shall not exceed thirty (30) days.

		
	G.
	 Notwithstanding the foregoing, upon written notice Manager may terminate this Agreement immediately (as between Manager and the subject Company), upon occurrence of any of the following grounds ("Manager Cause"):

		
	1.
	if a Company is or becomes insolvent, or is the subject of or commences any regulatory or judicial or other proceedings for the administrative oversight, conservation, supervision, dissolution, liquidation, bankruptcy, receivership or similar proceeding; or

		
	2.
	if all or a controlling portion of a Company's capital stock or all or any part of its business is sold, transferred or merged into an entity which is not an affiliate of such 

16

Company, and Manager reasonably believes that such sale, transfer or merger has, or could have a material adverse impact on Manager's interests.
		
	H.
	If any required license or authority of a Company or Manager in any jurisdiction within the Territory covered by this Agreement is suspended, revoked or nonrenewed by a governmental or regulatory agency or becomes invalid or expires and is not renewed or reinstated, Company or Manager (as applicable for the purposes of this Section XII.E., the "Adversely Affected Party"), shall have sixty (60) days to cure such invalidity, expiration, nonrenewal, revocation and/or suspension during which time  no Policies shall be issued or renewed in such jurisdictions. If the Adversely Affected Party has not, after such sixty (60) day period cured such invalidity, expiration nonrenewal, revocation or suspension, the other Party (as between such Company and Manager) may, at its option, terminate this Agreement as to such jurisdiction.  This Agreement shall remain in full force and effect between Manager and Company as to such jurisdictions wherein the Adversely Affected Party’s license or authority has not been revoked, nonrenewed or suspended.

		
	I.
	If in connection with any termination of this Agreement in accordance with this Section XII, the ultimate result of which could subject a Company or Manager to penalty, fine or assessment for improper cancellation or non-renewal of insurance coverages in force, or for the unlawful withdrawal of business, the other Party hereby agrees that it shall reasonably cooperate with the threatened Party to remedy or mitigate such effect in accordance with applicable Laws or regulatory directive. 

		
	J.
	Except as provided in Section XIII or as required by applicable Law, upon the Termination Date, the rights and/or powers granted by the terminating Company to Manager hereunder shall be revoked, and Manager shall have no further authority to bind or write Policies for such Company, nor extend, renew or increase such Company’s liability on any existing Policy, nor administer Claims for such Company.  Except as provided herein, Manager shall immediately cease exercising such rights and/or shall execute any and all documents necessary or requested by the terminating Company to effect or confirm such revocation.

		
	K.
	In the event that Manager shall at any time become delinquent in the payment of any amounts due Company, Manager hereby agrees to pay any expenses which Company may incur in collecting such monies, including attorneys’ fees and other costs.  No provision of this Agreement must effect, be construed as or operate as a waiver of the right of the Party aggrieved by any breach of this Agreement to be compensated for any injury or damage resulting therefrom which is incurred either before or after the Termination Date.

		
	L.
	Nothing contained in this Section XII shall affect or impair any rights or obligations or liabilities arising prior to or at the time of the Termination Date, or which may arise by reason of an event causing the termination of this Agreement, and all such rights, obligations and liabilities of the Parties pursuant to this Agreement shall also survive the termination of this Agreement.  The rights and remedies provided in this Section XII and all other remedies provided for in this Agreement shall be cumulative and not exclusive and shall be in addition to any other remedies which the Parties may have under this Agreement or otherwise. 

		
	XIV.
	CONTINUING DUTIES OF MANAGER AFTER TERMINATION.

		
	A.
	Continuation of Duties.  Following a Termination Date, Manager shall perform all of the duties necessary pursuant to this Agreement in respect of the terminating Company and for 

17

the proper servicing of all Policies bound or written under this Agreement (the "MGA Run-Off Services"); provided, that at any time following a Termination Date, Reinsurer may, subject to the applicable Company's consent, which consent shall not be unreasonably withheld or delayed, assume authority from the terminating Company or Companies in all matters relating to the MGA Run-Off Services, including, without limitation, the administration of the Policies and any Claims thereunder.  The MGA Run-Off Services shall include, without limitation, accounting for Premiums and commissions, statistical filing, canceling Policies, non-renewing Policies, issuing mandatory endorsements, settling of balances, and administration of Claims.  
		
	B.
	Authority.  In furtherance of Reinsurer's right to assume authority for administration of the MGA Run-Off Services, each Company hereby appoints Reinsurer as its attorney-in-fact with respect to the rights, duties and privileges and obligations of such Company in and to the Policies, with full power and authority to act in the name, place and stead of such Company with respect to the Policies, including without limitation, the power to service such contracts, to adjust, defend, settle and to pay all Claims, to recover salvage and subrogation for any losses incurred and to take such other and further actions as may be necessary or desirable to effect the transactions contemplated by this Agreement, provided, that Reinsurer covenants to exercise such authority in a professional manner and to use the same level of care as is used in administering Reinsurer’s other insurance business.  In furtherance of such assumption of authority, each Company grants full authority to Reinsurer to adjust, settle or compromise all Losses hereunder, and all such adjustments, settlements and compromises shall be binding on such Company.  In connection with any such assumption of authority, each Company agrees to cooperate fully with Reinsurer in any transfer of administration, and Reinsurer agrees to be responsible for such administration.

		
	XV.
	RELATIONSHIP OF THE PARTIES.

The Parties are independent contractors and nothing herein contained shall be construed to create a relationship of employer and employee between any of the Parties and any of the Parties’ employees, officers, representatives, producers, agents, brokers, Sub-Producers, Sub-Claim Adjusters, sub-agents, sub-brokers or the like.  It is expressly understood and agreed by the Parties hereto that the relationship existing between each Company and Manager under this Agreement contemplates Manager as such Company’s agent or representative only in connection with the services or transactions set forth in this Agreement and directly related to each of Manager’s functions under this Agreement.  Furthermore, nothing contained herein shall prohibit a Company from entering into any claims services agreement, underwriting management agreement, agency agreement, producer agreement (or similar arrangement) or reinsurance agreement with respect to the business covered by the Program with any other party or parties.
		
	XVI.
	INDEMNIFICATION.

		
	A.
	Indemnification of the Companies by Manager.  Manager shall defend, indemnify and hold harmless each Company and their respective directors, officers, employees, shareholders, and affiliates (individually and collectively, the "Company Indemnitees") from and against any and all loss, claim, damage, or liability (or any action in respect thereof) (collectively, a "Loss") which is caused by or results from any malfeasance, negligence, action or inaction of Manager, its Sub-Producers, its Sub-Claim Adjusters and officers, directors, employees and agents of its duties and obligations under this Agreement; provided, that Manager shall not be obligated to indemnify any Company Indemnitee in respect of any Loss caused by such Company Indemnitee's negligence, willful misconduct or breach hereof.  If any claim, 

18

demand, action, suit, or proceeding is made or brought against any of the Company Indemnitees with respect to matters that are the subject of this indemnity, Manager shall assume the defense thereof with counsel reasonably satisfactory to the Company Indemnitees and shall pay all costs of such defense.  The provisions of this Section XVI.A. shall survive the termination of this Agreement.
		
	B.
	Indemnification of Manager and Claim Administrator by each Company.  Each Company shall defend, indemnify and hold harmless Manager and its directors, officers, employees, shareholders, and affiliates (individually and collectively, the "Manager Indemnitees") from and against any and all Loss which is caused by or results from the malfeasance, negligence, action or inaction of such Company with respect to this Agreement; provided, that no Company shall be obligated to indemnify Manager in respect of any Loss caused by Manager's negligence, willful misconduct or breach hereof.  If any claim, demand, action, suit or proceeding is made or brought against any of the Manager Indemnities with respect to matters that are the subject of this indemnity, such Company shall assume the defense thereof with counsel reasonably satisfactory to the Manager Indemnitees and shall pay all costs of such defense.  The provisions of this Section XVI.B shall survive the termination of this Agreement.

		
	C.
	Indemnification Procedures.

		
	1.
	Any Party hereto entitled to indemnification pursuant to this Section XV (the "Indemnitee"), shall promptly notify the Party responsible for such indemnification (the "Indemnitor") if the Indemnitee becomes aware of any Loss with respect to which indemnity may be asserted; and the failure to give such notice promptly shall not relieve the Indemnitor of its obligations hereunder.  Promptly after (i) the receipt by an Indemnitee of notice of any third party claim or (ii) the commencement of any action or proceeding, the Indemnitee will, if a claim with respect thereto is to be made against the Indemnitor, give the Indemnitor written notice in reasonable detail of such claim or the commencement of such action or proceeding and shall permit the Indemnitor to assume the defense of any such claim or any litigation resulting from such claim.  Failure by the Indemnitor to notify the Indemnitee of its election to defend any such action within a reasonable time, but in no event more than thirty (30) days after notice thereof shall have been given to the Indemnitor, shall be deemed a waiver by the Indemnitor of its right to defend such action.

		
	2.
	If the Indemnitor assumes the defense of any such claim or litigation resulting therefrom, the obligations of the Indemnitor as to such claim shall be limited to taking all steps necessary in the defense or settlement of such claim or litigation resulting therefrom and to holding the Indemnitee harmless from and against any and all Losses caused by, arising out of or relating to any settlement approved by the Indemnitor or any judgment in connection with such claim or litigation resulting therefrom. The Indemnitee may participate, at its expense, in the defense of such claim or any litigation provided that the Indemnitor shall direct and control the defense of such claim or litigation.  The Indemnitor shall not, in the defense of such claim or any litigation resulting therefrom, consent to entry of any judgment or enter into any settlement other than a judgment or settlement involving only the payment of money, except with the written consent of Indemnitee, such consent not to be unreasonably withheld.

19

		
	3.
	If the Indemnitor does not assume the defense of any such claim or litigation resulting therefrom, the Indemnitee may defend against such claim or litigation in such manner as it may deem appropriate.  The Indemnitee shall not enter into any settlement of such claim or litigation without the written consent of the Indemnitor, which consent shall not be unreasonably withheld.  The Indemnitor shall promptly reimburse the Indemnitee for the amount of all reasonable expenses, legal or otherwise, incurred by the Indemnitee in connection with the defense against or settlement of such claims or litigation.  If no settlement of such claim or litigation is made, the Indemnitor shall promptly reimburse the Indemnitee for the amount of any judgment rendered with respect to such claim or in such litigation and of all reasonable expenses, legal or otherwise, incurred by the Indemnitee in the defense of such claim or litigation.  The provisions of this Section XV.C. shall survive the termination of this Agreement.

		
	D.
	Errors and Omissions.  Manager represents and warrants that it shall maintain during the Term of this Agreement, and for a period of three (3) years after the effective date of termination of this Agreement, Errors and Omissions Liability insurance for Manager with policy limits equal to $5,000,000 for each occurrence and in the aggregate with deductibles not greater than $1,000,000, with an insurer acceptable to Company. The Company shall be provided a Certificate of Insurance evidencing the existence of the required errors and omissions liability insurance coverage which certificate shall contain the following provision: "The Company will receive thirty (30) days’ written notice of any cancellation or other termination of this policy."

		
	E.
	Fidelity Bond.  Manager represents and warrants that it shall maintain during the Term of this Agreement, and for a period of three (3) years after the effective date of termination of this Agreement, a Fidelity Bond insurance coverage for Manager with policy limits equal to $5,000,000 with an insurer and on a form and with a deductible acceptable to Company. The Company shall be provided a Certificate of Insurance for the fidelity bond which certificate shall contain the following provision: "The Company will receive thirty (30) days’ written notice of any cancellation or other termination of this policy.

		
	XVII.
	ADVERTISEMENT.

Manager shall use only advertising material pertaining to the Policies and the Program that has been approved by the applicable Company in advance of its use.  Subject to the applicable Company's approval, Manager may, at its own expense, develop and produce advertising or promotional materials to promote the sale of the Policies pursuant to this Agreement.  None of the Parties shall use the name, logo, trademark or other such promotional material of another Party or any of its affiliates in any advertising and/or promotional materials without obtaining the prior review and consent of such other Party for each separate promotion, advertisement or use.
		
	XVIII.
	NOTICES.

		
	A.
	All notices, consents, requests, waivers, elections and other communications (collectively "Notices") authorized, required or permitted to be given under this Agreement shall be addressed as follows:

20

To the Companies:
    
c/o Tower Group, Inc.
120 Broadway
New York, NY 10271
Attention:  William E. Hitselberger
Facsimile:  (212) 655-2067
E-mail: bhitselberger@twrgrp.com

Or to such other person or address as the applicable Company shall furnish to the other Parties in writing.

To Manager: 

c/o AmTrust Financial Services, Inc.
59 Maiden Lane, 43rd floor
New York, NY 10038
Attention: Stephen Ungar, Esq.
Facsimile No: (212) 220-7130
E-mail: stephen.ungar@amtrustgroup.com

Or to such other person or address as the Manager shall furnish to the other Parties in writing.

		
	B.
	All Notices must be in writing and will be deemed to have been duly given (a) when delivered in person, (b) when dispatched by electronic transfer (by facsimile or otherwise), (c) one Business Day after having been dispatched by a nationally recognized overnight courier service or (d) five Business Days after being sent by registered or certified mail, return receipt requested, postage prepaid, to the appropriate party at the address or facsimile number specified below

		
	C.
	In the event that any legal process, notice, regulatory bulletin, or the like, is served on Manager, in a suit or proceeding against Company, or for any other reason whatsoever, Manager shall promptly and forthwith forward such process, notice or bulletin to Company as directed above, via registered certified or overnight mail.

		
	XIX.
	CHOICE OF LAW, VENUE, JURISDICTION.

		
	A.
	This Agreement shall be governed by, and construed and enforced in accordance with the laws of the State of New York without regard to principles of conflict of laws otherwise applicable to such determination.  Any judicial proceeding brought against any of the Parties to this Agreement or any dispute arising in connection with or related to this Agreement shall be brought only in the State Court located in New York County, New York or the Federal District Court located in New York, New York and by execution and delivery of this Agreement, each of the Parties to this Agreement accepts the exclusive jurisdiction of each such court and irrevocably agrees to be bound by any judgment (as finally adjudicated) rendered thereby in connection with this Agreement.  To the fullest extent permitted by applicable law, each Party hereto hereby (i) irrevocably consents to the service of process outside the territorial jurisdiction of said courts in any such proceeding, (ii) agrees that any 

21

trial in connection with any such proceeding shall be before the court in said venue and (iii) waives any right it may otherwise have to a trial by jury in connection with any such proceeding.
		
	B.
	The Parties hereto acknowledge and agree that in the event of any breach of this Agreement, the non-breaching Party may suffer immediate and irreparable injury not compensable by money damages and for which the non-breaching Party may not have an adequate remedy available at law.  Accordingly, the non-breaching Party shall be entitled to obtain, from a court of competent jurisdiction, without the posting of any bond or security, such injunctive relief, restraining orders, specific performance or other equitable relief as may be necessary or appropriate to prevent or curtail any such breach.  The foregoing shall be in addition to and without prejudice to such other rights or remedies as the non-breaching Party may have at law or in equity.

NOTWITHSTANDING ANYTHING CONTAINED HEREIN TO THE CONTRARY, THIS AGREEMENT IS INTENDED TO COMPLY WITH APPLICABLE RULES AND REGULATIONS GOVERNING THE CONDUCT OF MANAGING GENERAL AGENTS, PROMULGATED BY APPLICABLE REGULATORY AUTHORITY; AS SUCH THIS AGREEMENT SHALL BE AMENDED TO THE EXTENT NECESSARY TO COMPLY WITH SUCH STATUTORY OR REGULATORY REQUIREMENT AS MAY BE AMENDED FROM TIME TO TIME.
		
	XX.
	AMENDMENT.

No oral explanation or oral information by any of the Parties hereto shall alter the meaning or interpretation of this Agreement.  No amendment, change or addition hereto shall be effective or binding on any of the Parties hereto unless reduced to writing, and signed by all Parties hereto.
		
	XXI.
	WAIVER.

No action, failure to act or any course of conduct of any Party hereto shall constitute a waiver of any provision of this Agreement.
		
	XXII.
	SEVERABILITY.

If any term or provision of this Agreement or the application thereof to any Party or circumstances shall, to any extent, be or become invalid or unenforceable, the remainder of this Agreement or the application of such term or provisions to Parties or circumstances other than those as to which it is held invalid or unenforceable under the applicable Laws now or hereafter in effect in the jurisdictions governing this Agreement, shall not be affected thereby, and each term and provision shall be valid and enforceable.  To the extent that any term or provision of this Agreement or the application thereof to any Party or circumstances shall be or becomes invalid or unenforceable under the laws or Insurance Department regulations now or hereafter in effect in the jurisdictions governing this Agreement, then such term or provision shall be deemed to conform with such applicable insurance Laws or regulation, and this Agreement shall not be affected thereby, and each term and provision shall be valid and enforceable.
		
	XXIII.
	ASSIGNMENT.

Except as expressly provided herein, this Agreement may not be assigned or transferred in whole or in part by any Party without the prior written consent of the other Parties.

22

		
	XXIV.
	COUNTERPARTS.

This Agreement may be executed in any number of counterparts, all of which when taken together shall constitute a single agreement.
		
	XXV.
	HEADINGS.

All headings in this Agreement are for the purpose of information and identification only and shall not be construed as forming part of this Agreement.
[Remainder of this page intentionally left blank.]

23

IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be executed on the day and year first written above. 

AMTRUST NORTH AMERICA, INC.
By                        
Title                        

TOWER INSURANCE COMPANY OF NEW YORK
By                        
Title                        

CASTLEPOINT NATIONAL INSURANCE COMPANY
By                        
Title                        

TOWER NATIONAL INSURANCE COMPANY
By                        
Title                        

HERMITAGE INSURANCE COMPANY
By                        
Title                        

CASTLEPOINT FLORIDA INSURANCE COMPANY
By                        
Title                        

NORTH EAST INSURANCE COMPANY
By                        
Title                        

YORK INSURANCE COMPANY OF MAINE
By                        
Title                        

MASSACHUSETTS HOMELAND INSURANCE COMPANY
By                        
Title                        

PRESERVER INSURANCE COMPANY
By                        
Title                        

CASTLEPOINT INSURANCE COMPANY 
By                        
Title                        

ACP RE LTD (SOLELY FOR PURPOSES OF SECTION X.B HEREOF) 
By                        
Title                        

EXHIBIT A
REMUNERATION
During the term of this Agreement, Manager shall receive (a) a commission equal to 10% of all business written, (b) the amount of commissions payable to producing Agents for all business written and (c) an allocated portion of the Loss Adjustment Expenses paid by the Manager pursuant to the Cut-Through MGA Agreement.

Exhibit D
COMMERCIAL LINES 
QUOTA SHARE REINSURANCE AGREEMENT

BY AND AMONG
TOWER INSURANCE COMPANY OF NEW YORK,
CASTLEPOINT NATIONAL INSURANCE COMPANY,
TOWER NATIONAL INSURANCE COMPANY,
HERMITAGE INSURANCE COMPANY,
CASTLEPOINT FLORIDA INSURANCE COMPANY,
NORTH EAST INSURANCE COMPANY,
YORK INSURANCE COMPANY OF MAINE,
MASSACHUSETTS HOMELAND INSURANCE COMPANY,
PRESERVER INSURANCE COMPANY,
CASTLEPOINT INSURANCE COMPANY 
AND
TECHNOLOGY INSURANCE COMPANY, INC.

Exhibit 10.1

TABLE OF CONTENTS
	
				
	Article 1
	DEFINITIONS
	1
	

	 
	Section 1.1 Defined Terms
	1
	

	Article 2
	BASIS OF REINSURANCE AND BUSINESS REINSURED
	3
	

	 
	Section 2.1 Covered Business 
	3
	

	 
	Section 2.2 Termination of Commercial Lines Cut-Through Quota Share
	4
	

	Article 3
	PAYMENTS, OFFSET, AND SECURITY
	4
	

	 
	Section 3.1 Premium
	4
	

	 
	Section 3.2 Offset Rights 
	4
	

	 
	Section 3.3 Deposit of Premiums 
	4
	

	 
	Section 3.4 Reports and Remittances 
	5
	

	 
	Section 3.5 Collateral for Ceded Losses 
	5
	

	Article 4
	CLAIMS, UNDERWRITING AND OTHER ADMINISTRATION
	6
	

	Article 5
	REGULATORY MATTERS
	6
	

	Article 6
	DUTY OF COOPERATION & INDEMNITY
	6
	

	 
	Section 6.1 Cooperation 
	6
	

	 
	Section 6.2 Reinsurance 
	6
	

	Article 7
	INSOLVENCY
	6
	

	Article 8
	REGULATORY APPROVALS
	7
	

	Article 9
	DURATION
	7
	

	Article 10
	FOLLOW THE FORTUNES
	7
	

	Article 11
	INDEMNIFICATION
	7
	

	 
	Section 11.1 Indemnification 
	7
	

	Article 12
	MISCELLANEOUS
	8
	

	 
	Section 12.1 Notices 
	8
	

	 
	Section 12.2 Assignment; Parties in Interest 
	9
	

	 
	Section 12.3 Waivers and Amendments; Preservation of Remedies 
	9
	

	 
	Section 12.4 Governing Law; Venue 
	9
	

	 
	Section 12.5 Counterparts 
	9
	

	 
	Section 12.6 Entire Agreement; Merger 
	9
	

	 
	Section 12.7 Exhibits and Schedules 
	10
	

	 
	Section 12.8 Headings 
	10
	

	 
	Section 12.9 Severability 
	10
	

	 
	Section 12.10 Expenses 
	10
	

	 
	Section 12.11 Currency 
	10
	

 

QUOTA SHARE REINSURANCE AGREEMENT

THIS COMMERCIAL LINES QUOTA SHARE REINSURANCE AGREEMENT (this “Agreement”) is entered into as of                 , 2014 by and among TOWER INSURANCE COMPANY OF NEW YORK, an insurance company organized under the laws of New York, CASTLEPOINT NATIONAL INSURANCE COMPANY, an insurance company organized under the laws of Illinois, TOWER NATIONAL INSURANCE COMPANY, an insurance company organized under the laws of Massachusetts, HERMITAGE INSURANCE COMPANY,  an insurance company organized under the laws of New York, CASTLEPOINT FLORIDA INSURANCE COMPANY, an insurance company organized under the laws of Florida, NORTH EAST INSURANCE COMPANY, an insurance company organized under the laws of Maine,  YORK INSURANCE COMPANY OF MAINE, an insurance company organized under the laws of Maine, MASSACHUSETTS HOMELAND INSURANCE COMPANY, an insurance company organized under the laws of Massachusetts, PRESERVER INSURANCE COMPANY, an insurance company organized under the laws of New Jersey, and CASTLEPOINT INSURANCE COMPANY, an insurance company organized under the laws of New York  (the “Companies” and, each a “Company”), and TECHNOLOGY INSURANCE COMPANY, INC., an insurance company organized under the laws of New Hampshire (the “Reinsurer”) (collectively, the “Parties”).
WHEREAS, ACP Re Ltd. (“ACP Re”), has entered into that certain Agreement and Plan of Merger of even date herewith by and between Tower Group International, Ltd. (“Tower”), ACP Re and London Acquisition Company Limited (the “Merger Agreement”) whereby London Acquisition Company Limited is merging with and into Tower with Tower surviving such merger (the “Merger”);
WHEREAS, effective as of the Effective Time, the Companies and AmTrust North America, Inc. (“AmTrust”), an Affiliate of Reinsurer, have entered into that certain Commercial Lines Managing General Agency Agreement (the “CL MGA Agreement”), whereby AmTrust will produce and manage  Commercial Lines Business for the Companies; and
WHEREAS, the Reinsurer, pursuant to this Agreement, will reinsure all Losses with respect to Policies (as defined herein) written by the Companies pursuant to the CL MGA Agreement.  
NOW, THEREFORE, in consideration of the mutual and several promises and undertakings herein contained, and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the Parties agree as follows:
ARTICLE I  
 
DEFINITIONS
Section 1.1    Defined Terms.
The following terms shall have the respective meanings specified below throughout this Agreement.  
“ACP Re” has the meaning set forth in the Recitals.
“Acquisition Costs” means actual out-of-pocket expenses incurred by the Companies for amounts paid or payable by, or on behalf of, the Companies to acquire the Policies, including all brokerage commissions and any adjustments thereto, and any Taxes, surcharges and other similar amounts on premiums required to be paid or collected by such Company or its producers or agents.

“Agreement” has the meaning set forth in the first paragraph.
“Affiliate” (and, with a correlative meaning, “Affiliated”) means, with respect to any Person, any other Person that directly, or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, such first Person.  As used in this definition, “control” (including, with correlative meanings, “controlled by” and “under common control with”) shall mean possession, directly or indirectly, of power to direct or cause the direction of management or policies (whether through ownership of securities or partnership or other ownership interests, by contract, as trustee or executor, or otherwise).  
“AmTrust” has the meaning set forth in the Recitals.
“Applicable Law” means any applicable order, law, statute, regulation, rule, pronouncement, ordinance, bulletin, writ, injunction, directive, judgment, decree, principle of common law, constitution or treaty enacted, promulgated, issued, enforced or entered by any Governmental Authority applicable to the parties hereto, or any of their respective businesses, properties or assets.  
     “Ceding Commission” means an amount equal to the sum of (i) the Companies’ Acquisition Costs, including, without limitation, the compensation payable to AmTrust pursuant to the CL MGA Agreement, Taxes, surcharges and other similar amounts on premiums required to be paid or collected by such Company and not paid by AmTrust and (ii) two (2%) percent of gross written premium (net of cancellation and return premiums) collected by AmTrust for the Companies pursuant to the CL MGA Agreement. 
“Claim” and “Claims” means any and all claims, requests, demands or notices made by or on behalf of Policyholders, beneficiaries or third party claimants for the payment of Losses and any other amounts due or alleged to be due under or in connection with Policies.
“CL MGA Agreement” has the meaning set forth in the Recitals.
“Closing Date” means the date upon which the Merger is effected.
“Commercial Lines Business” means all insurance contracts, policies, certificates, binders, slips, covers or other agreements of insurance, including all supplements, riders, endorsements, renewals and extensions (other than Personal Lines Business) issued by a Company.
 “Company(ies)” has the meaning set forth in the Recitals.
“Damages” means all damages, losses, liabilities and expenses (including reasonable attorneys’ fees and reasonable expenses of investigation in connection with any action, suit or proceeding).
“Effective Time” has the meaning set forth in the Merger Agreement.
“Governmental Authority” means any foreign, domestic, federal, territorial, state or local U.S. or non-U.S. governmental authority, quasi-governmental authority, instrumentality, court or government, self-regulatory organization, commission, tribunal or organization or any political or other subdivision, department, branch or representative of any of the foregoing.
 “Losses” shall mean liabilities and obligations to make payments to Policyholders, beneficiaries and/or other third party claimants under the Policies (including, without limitation, liabilities or assessments arising from a Company’s participation, if any, in any voluntary or involuntary pools, guaranty funds, or other types of government-sponsored or government-organized insurance funds) and all loss adjustment expenses and defense costs, including, without limitation, (i) all expenses incurred by or on behalf of the a Company related to the investigation, appraisal, adjustment, litigation, defense or appeal of claims under or 

- 2 -

covered by Policies and/or coverage actions under or covered by the Policies, (ii) all liabilities for consequential, exemplary, punitive or similar extra contractual damages, or for statutory or regulatory fines or penalties, or for any loss in excess of the limits arising under or covered by any Policy, and (iii) court costs accrued prior to final judgment, prejudgment interest or delayed damages and interest accrued after final judgment.  Notwithstanding the foregoing, “Losses” shall not include any liabilities or obligations incurred by or on behalf of a Company as a result of any willful, fraudulent and/or criminal act by a Company or any of its Affiliates or any of their respective officers, directors, employees or agents following the Effective Time.
“Merger” has the meaning set forth in the Recitals.  
“Merger Agreement” has the meaning set forth in the Recitals.
“Parties” has the meaning set forth in the first paragraph.
“Person” shall mean any individual, corporation, partnership, firm, joint venture, association, joint-stock company, limited liability company, trust, estate, unincorporated organization, Government Authority or other entity.
“Personal Lines Business” means all insurance contracts, policies, certificates, binders, slips, covers or other agreements of insurance, including all supplements, riders, endorsements, renewals and extensions for personal automobile liability and physical damage, homeowners, personal excess and umbrella coverage issued by the Companies.
“Personal Lines Reinsurance Agreement” means that Personal Lines Quota Share Reinsurance Agreement, dated as of the date hereof, by and among Reinsurer and the Companies.  
“Policies” means all insurance contracts, policies, certificates, binders, slips, covers or other agreements of insurance, including all supplements, riders, endorsements, renewals and extensions as to the Commercial Lines Business issued by the Companies pursuant to the CL MGA Agreement.
“Policyholder” means policyholders and named insureds of the Policies.
“Premium(s)” means all gross written premium(s), considerations, deposits, premium adjustments, fees and similar amounts related to the Policies, less cancellation and return premiums.
 “Reinsurer” has the meaning set forth in the first paragraph.
“Taxes” (or “Tax” as the context may require) means all United States federal, state, county, local, foreign and other taxes (including, without limitation, income taxes, payroll and employee withholding taxes, unemployment insurance, social security taxes, premium taxes, excise taxes, sales taxes, use taxes, gross receipts taxes, franchise taxes, ad valorem taxes, severance taxes, capital property taxes and import duties), and includes interest, additions to tax and penalties with respect thereto, whether disputed or not.
“Tower” has the meaning set forth in the Recitals.  
ARTICLE 2 
 
BASIS OF REINSURANCE AND BUSINESS REINSURED
Section 2.1    Covered Business.

- 3 -

(a)    From and after the Effective Time, each Company hereby cedes, and the Reinsurer hereby assumes, one hundred percent (100%) of all Losses for which such Company is liable in respect of the Policies that are issued pursuant to the CL MGA Agreement.
(b)    In the event the Reinsurer makes an indemnity payment on behalf of a Company directly to any Policyholder, insured or third party pursuant to any Policy that pays, in full, a Loss, cost or expense under such Policy, such payment satisfies and extinguishes any and all obligation of the Reinsurer hereunder to indemnify a Company for such Loss, cost or expense to the extent of such payment.  In no event shall the Reinsurer be obligated hereunder to indemnify with respect to any Loss, cost or expense under a Policy for an amount in excess of such Loss, cost or expense.
Section 2.2    Termination of Commercial Lines Cut-Through Quota Share.
The Commercial Lines Cut-Through Quota Share Reinsurance Agreement dated January 3, 2014 between the Companies and the Reinsurer (the "Cut-Through Agreement") is hereby terminated in accordance with Article 9 thereof.  Notwithstanding the foregoing, such termination shall be on a run-off basis, and the reinsurance with respect to the Subject Policies and the Included Existing Contracts (each as defined in the Cut-Through Agreement) shall remain in effect.  
ARTICLE 3 
 
PAYMENTS, OFFSET, AND SECURITY
Section 3.1    Premium.
(a)    As premium for Policies ceded under this Agreement, each Company shall pay to the Reinsurer (to the extent the Reinsurer has not retained such Premiums directly pursuant to Article 4) by wire transfers of immediately available funds one hundred percent (100%) of the collected Premiums attributable to the Policies, net of Ceding Commission.  
(b)    The Reinsurer shall pay to the Companies the Ceding Commission pursuant to the monthly settlement under Section 3.4; provided, that if the Reinsurer reduces the ceding commission payable to the Companies pursuant to the Personal Lines Reinsurance Agreement but does not apply such reduction to the Ceding Commission payable hereunder, and such reduction is approved by all applicable Governmental Authorities, the Reinsurer shall immediately apply the amount of such reduction to the Ceding Commission payable hereunder.
Section 3.2    Offset Rights.
Except as otherwise expressly provided, each Party hereto shall have, and may exercise at any time and from time to time, the right to offset any balance or balances due to the other Party arising under this Agreement, and regardless of whether on account of Premiums, Ceding Commissions, or Losses related to or arising under the Policies; provided, however, that in the event of the insolvency of a Party hereto or any of its Affiliates, offsets shall only be allowed in accordance with the provisions of Applicable Law. 
Section 3.3    Deposit of Premiums.
(a)    The Reinsurer is authorized to direct AmTrust to deposit Premiums, net of Ceding Commission, directly into one or more accounts designated by the Reinsurer.  The Reinsurer and the Companies agree to maintain accounting and operational records and books in adequate detail so as to identify the specific Policies and Policyholders of the Companies with respect to all collected Premiums.

- 4 -

(b)    The Reinsurer shall: (i) timely pay any return premium coming due under Policies; or (ii) promptly reimburse a Company for any of the foregoing amounts that are instead paid by such Company. 
Section 3.4    Reports and Remittances.
(a)    The Parties shall conduct monthly settlements based upon monthly bordereaux to be provided within fifteen (15) days of the end of each calendar month by the Companies or, at the direction of the Companies, by AmTrust, evidencing the amount due or to be due in a form, and containing such detail, as is agreed to by the Parties.    Each Party shall pay or credit in cash or its equivalent to the other all net amounts for which it may be liable under the terms and conditions of this Agreement within ten (10) days after receipt of each monthly bordereau.    
(b)    The Companies and the Reinsurer shall furnish each other with such records, reports and information with respect to the Losses, Claims and the reinsurance contemplated hereby as may be reasonably required by the other Party to comply with any internal reporting requirements or reporting requirements of any Governmental Authority or to prepare and complete such Party’s monthly and annual financial statements.    
(c)    If any Company or the Reinsurer receives notice of, or otherwise becomes aware of, any inquiry, investigation, proceeding, from or at the direction of a Governmental Authority, or is served or threatened with a demand for litigation, arbitration, mediation or any other similar proceeding relating to the Policies, such Company or the Reinsurer, as applicable, shall promptly notify the other party thereof, whereupon the parties shall cooperate in good faith and use their respective commercially reasonable efforts to resolve such matter in a mutually satisfactory manner in light of all the relevant business, regulatory and legal facts and circumstances.
(d)    Each Party shall have the right, through authorized representatives and upon reasonable advance notice during normal business hours, to periodically audit and inspect all books, records, and papers of the other Party solely in connection with the Policies and any reinsurance hereunder or claims in connection therewith and the performance of the claims, underwriting and other administration services pursuant to Article 4.  Each Party shall treat the other Party’s books, records, and papers in confidence.  A Party shall be permitted to conduct such audits no more frequently than semi-annually except as is otherwise reasonably necessary in the day-to-day administration of the Policies including but not limited to Claims. 
Section 3.5    Collateral for Ceded Losses.   
Without limiting the Reinsurer’s other obligations under this Section 3.5, in the event pursuant to Applicable Law of any state of the United States of America or the District of Columbia having jurisdiction over a Company, such Company is no longer able to take full reserve credit on its statutory financial statements for the reinsurance ceded to the Reinsurer without qualifying collateral therefor, the Reinsurer shall promptly agree to modifications to this Agreement so that the Reinsurer shall provide collateral for its obligations hereunder in the amount and form necessary for such Company to take full reserve credit on its statutory financial statements for the reinsurance provided hereunder on terms and conditions reasonably satisfactory to such Company and Reinsurer and in accordance with Applicable Law.  

- 5 -

ARTICLE 4 
 
CLAIMS, UNDERWRITING AND OTHER ADMINISTRATION
All services related to claims, underwriting and administration with respect to Policies reinsured hereunder shall be provided by AmTrust pursuant to the CL MGA Agreement.
ARTICLE 5 
 
REGULATORY MATTERS
At all times during the term of this Agreement, the Companies and the Reinsurer shall hold and maintain all licenses and authorizations required under Applicable Law and otherwise take all actions that may be necessary to perform its obligations hereunder.
ARTICLE 6 
 
DUTY OF COOPERATION & INDEMNITY
Section 6.1    Cooperation.
Each Party hereto shall cooperate fully with the other in all reasonable respects in order to accomplish the objectives of this Agreement.
Section 6.2    Reinsurance.
Without written consent of the Reinsurer (which consent may be withheld at Reinsurer’s sole discretion), the Companies shall not enter into any reinsurance agreements, treaties and contracts, including any renewals or extensions thereof, to the extent such reinsurance agreements, treaties and contracts provide reinsurance coverage for the Policies.     
ARTICLE 7 
INSOLVENCY
In the event of the insolvency of a Company, this reinsurance as to Policies issued by such Company shall be payable directly to such Company or its liquidator, receiver, conservator or statutory successor on the basis of the amount of the claims allowed in the insolvency proceeding without diminution because of the insolvency of such Company or because the liquidator, receiver, conservator or statutory successor of such Company has failed or is unable to pay all or a portion of a claim, except where (a) this Agreement specifically provides another payee of such reinsurance in the event of such Company’s insolvency, provided that this exception shall only apply to the extent that the reinsurance proceeds due such payee are actually paid by the Reinsurer, or (b) the Reinsurer, with the consent of the direct insured or insureds, has assumed such policy obligations of such Company as direct obligations of the Reinsurer to the payees under such policies and in full and complete substitution for the obligations of such Company to such payees.  It is agreed, however, that the liquidator, receiver, conservator or statutory successor shall give written notice to the Reinsurer of the pendency of a claim against such Company indicating the Policy which involves a possible liability on the part of the Reinsurer within reasonable time after such claim is filed in the conservation or liquidation proceeding or in the receivership and that, during the pendency of such claim, the Reinsurer may investigate such claim and interpose, at its own expense, in the proceeding where such claim is to be 

- 6 -

adjudicated, any defense or defenses that it may deem available to such Company or its liquidator, receiver, conservator or statutory successor.  The expenses thus incurred by the Reinsurer shall be chargeable, subject to the Court’s approval, against such Company as part of the expense of the conservation or liquidation to the extent of a pro rata share of the benefit that may accrue to such Company solely as a result of the defense undertaken by the Reinsurer.
ARTICLE 8  
 
REGULATORY APPROVALS
The Companies and the Reinsurer shall submit all necessary registrations, filings and notices with, and obtain all necessary consents, approvals, qualifications and waivers from, all Governmental Authorities and other parties which may be required under Applicable Law as a result of the transactions contemplated by, or to perform its respective obligations under, this Agreement.  The Parties agree that where formal approval is required by any Governmental Authority, this Agreement shall not be effective as to any and all Policies to be reinsured hereunder in such jurisdiction until such approval is obtained.
ARTICLE 9 
DURATION
Subject to Section 2.1 above, this Agreement shall not be subject to termination by any Party except upon the termination or expiration of the CL MGA Agreement, the expiration of all liability on all Policies, and the complete performance by Reinsurer and the Companies of all obligations and duties arising under this Agreement. 
ARTICLE 10 
 
FOLLOW THE FORTUNES
The Reinsurer’s liability shall attach simultaneously with that of each Company and shall be subject in all respects to the same risks, original terms and conditions, interpretations, waivers, and to the same cancellation of the Policies as such Company is subject to, the true intent of this Agreement being that the Reinsurer shall, in every case to which this Agreement applies, follow the fortunes and follow the settlements of such Company.
ARTICLE 11 
INDEMNIFICATION
Section 11.1    Indemnification.
(a)    Each Company agrees to indemnify and hold the Reinsurer and its Affiliates, predecessors, successors and assigns (and their respective officers, directors, employees and agents) harmless from and against and in respect of all Damages resulting from or relating to a breach by such Company of any covenant or agreement of such Company in this Agreement.
(b)    The Reinsurer agrees to indemnify and hold each Company and its Affiliates, predecessors, successors and assigns (and their respective officers, directors, employees and agents) harmless from and against and in respect of all Damages, resulting from or relating to a breach by the Reinsurer of any covenant or agreement of the Reinsurer in this Agreement or from any third party claim against a Company 

- 7 -

resulting from (i) the administration of Policies or Claims by Reinsurer or (ii) any action or failure to act of a Company pursuant to express written instructions of the Reinsurer.
ARTICLE 12 
MISCELLANEOUS
Section 12.1    Notices.       All notices, requests, demands and other communications hereunder shall be given in writing and shall be:  (a) personally delivered; (b) sent by telecopier, facsimile transmission or other electronic means of transmitting written documents; or (c) sent to the Parties at their respective addresses indicated herein by registered or certified U.S. mail, return receipt requested and postage prepaid, or by private overnight mail courier service.  The respective addresses to be used for all such notices, demands or requests are as follows:
(a)    If to a Company, to:
c/o Tower Group, Inc.
120 Broadway
New York, NY 10271
Attention:  William E. Hitselberger
Facsimile:  (212) 655-2067
E-mail: bhitselberger@twrgrp.com

or to such other person or address as the Company shall furnish to the Reinsurer in writing.
(b)    If to the Reinsurer, to:

c/o AmTrust Financial Services, Inc.
59 Maiden Lane, 43rd fl
New York, NY 10038
Attn:    Stephen Ungar, Esq.
Facsimile No.:  (212) 220-7130
E-mail: Steve.Ungar@amtrustgroup.com

or to such other person or address as the Reinsurer shall furnish to the Companies in writing.
If personally delivered, such communication shall be deemed delivered upon actual receipt; if electronically transmitted pursuant to this paragraph, such communication shall be deemed delivered the next business day after transmission (and sender shall bear the burden of proof of delivery); if sent by overnight courier pursuant to this paragraph, such communication shall be deemed delivered upon receipt; and if sent by U.S. mail pursuant to this paragraph, such communication shall be deemed delivered as of the date of delivery indicated on the receipt issued by the relevant postal service, or, if the addressee fails or refuses to accept delivery, as of the date of such failure or refusal.  Any Party to this Agreement may change its address for the purposes of this Agreement by giving notice thereof in accordance with this Section.

- 8 -

Section 12.2    Assignment; Parties in Interest.
(a)    Assignment.  Except as expressly provided herein, the rights and obligations of a Party hereunder may not be assigned, transferred or encumbered without the prior written consent of the other Party. 
(b)    Parties in Interest.  This Agreement shall be binding upon, inure to the benefit of, and be enforceable by the Parties and their respective successors and permitted assigns.  Except as provided in Section 3.2, nothing contained herein shall be deemed to confer upon any other Person any right or remedy under or by reason of this Agreement.
Section 12.3    Waivers and Amendments; Preservation of Remedies. This Agreement may be amended, superseded, canceled, renewed or extended, and the terms hereof may be waived, only by a written instrument signed by each of the Parties or, in the case of a waiver, by the Party waiving compliance.  No delay on the part of any Party in exercising any right, power or privilege hereunder shall operate as a waiver thereof, nor shall any waiver on the part of any Party of any right, power, remedy or privilege, nor any single or partial exercise of any such right, power, remedy or privilege, preclude any further exercise thereof or the exercise of any other such right, remedy, power or privilege.  The rights and remedies herein provided are cumulative and are not exclusive of any rights or remedies that any Party may otherwise have under Applicable Law or in equity.
Section 12.4    Governing Law; Venue.  This Agreement shall be construed and interpreted according to the internal laws of the State of New York excluding any choice of law rules that may direct the application of the laws of another jurisdiction.  The Parties hereby stipulate that any action or other legal proceeding arising under or in connection with this Agreement may be commenced and prosecuted in its entirety in the federal or state courts sitting in New York, New York, each Party hereby submitting to the personal jurisdiction thereof, and the Parties agree not to raise the objection that such courts are not a convenient forum.  Process and pleadings mailed to a party at the address provided in Section 12.1 shall be deemed properly served and accepted for all purposes.
Section 12.5    Counterparts.  This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.  
Section 12.6    Entire Agreement; Merger.  This Agreement, the Transaction Documents, and any exhibits, schedules and appendices attached hereto and thereto together constitute the final written integrated expression of all of the agreements among the Parties with respect to the subject matter hereof and is a complete and exclusive statement of those terms, and supersede all prior or contemporaneous, written or oral, memoranda, arrangements, contracts and understandings between the Parties relating to the subject matter hereof.  Any representations, promises, warranties or statements made by any Party which differ in any way from the terms of this Agreement or any applicable provisions contained in the Ancillary Agreements shall be given no force or effect.  The Parties specifically represent, each to the other, that there are no additional or supplemental agreements or contracts between or among them related in any way to the matters herein contained unless specifically included or referred to in this Agreement or any applicable provisions contained in the Transaction Documents.  No addition to or modification of any provision of this Agreement or any applicable provisions of the Transaction Documents shall be binding upon either Party unless embodied in a dated written instrument signed by both Parties.  

- 9 -

Section 12.7    Exhibits and Schedules.  All exhibits, schedules and appendices are hereby incorporated by reference into this Agreement as if they were set forth at length in the text of this Agreement.
Section 12.8    Headings. The headings in this Agreement are inserted for convenience only and shall not constitute a part hereof.
Section 12.9    Severability.  If any part of this Agreement is contrary to, prohibited by, or deemed invalid under Applicable Law or regulations, that provision shall not apply and shall be omitted to the extent so contrary, prohibited, or invalid; but the remainder of this Agreement shall not be invalidated and shall be given full force and effect insofar as possible.
Section 12.10    Expenses. Regardless of whether or not the transactions contemplated in this Agreement are consummated, each of the Parties shall bear their own expenses and the expenses of its counsel and other agents in connection with the transactions contemplated hereby.
Section 12.11    Currency.  The currency of this Agreement and all transactions under this Agreement shall be in United States Dollars.
(Signature Page Follows)
     

- 10 -

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their duly authorized representatives as of the day and year first written above to be effective as of the Effective Time.
COMPANIES:

TOWER INSURANCE COMPANY OF NEW YORK
By                            
Title                            

CASTLEPOINT NATIONAL INSURANCE COMPANY
By                            
Title                            

TOWER NATIONAL INSURANCE COMPANY
By                            
Title                            

HERMITAGE INSURANCE COMPANY 
By                            
Title                        

CASTLEPOINT FLORIDA INSURANCE COMPANY 
By                            
Title                            

NORTH EAST INSURANCE COMPANY 
By                            
Title                            

YORK INSURANCE COMPANY OF MAINE
By                            
Title                            

MASSACHUSETTS HOMELAND INSURANCE COMPANY
By                            
Title                            

PRESERVER INSURANCE COMPANY 
By                            
Title                            

CASTLEPOINT INSURANCE COMPANY 
By                            
Title                            

REINSURER:
TECHNOLOGY INSURANCE COMPANY, INC.
By                            
Title                        

Exhibit E

AGGREGATE STOP LOSS REINSURANCE CONTRACT
issued to
CASTLEPOINT REINSURANCE COMPANY, LTD.
Bermuda

	
			
	AGGREGATE STOP LOSS REINSURANCE CONTRACT
TABLE OF CONTENTS

	Article
	 
	Page

	1
	Business Covered
	1

	2
	Retention and Limit
	1

	3
	Term
	2

	4
	Exclusions
	2

	5
	Premium
	2

	6
	Definitions
	2

	7
	Uncollectability of Inuring Reinsurance
	3

	8
	Original Conditions
	3

	9
	No Third Party Rights
	4

	10
	Notice of Loss and Loss Settlements
	4

	11
	Currency
	4

	12
	Taxes
	5

	13
	Access to Records
	5

	14
	Confidentiality
	6

	15
	Indemnification and Errors and Omissions
	7

	16
	Insolvency
	8

	17
	Governing Law; Jurisdiction and Venue
	9

	18
	Entire Agreement
	9

	19
	Non-Waiver
	9

	20
	Mode of Execution
	9

	 
	Company Signing Block
	 

AGGREGATE STOP LOSS REINSURANCE CONTRACT
(the “Contract”)
issued to
CASTLEPOINT REINSURANCE COMPANY, LTD
Bermuda

(collectively, the “Company”)

by
THE SUBSCRIBING REINSURER(S) IDENTIFIED 
IN THE INTERESTS AND LIABILITIES CONTRACT(S) 
ATTACHED TO AND FORMING PART OF THIS CONTRACT
(the “Reinsurer”)

ARTICLE 1
BUSINESS COVERED
This Contract is to indemnify the Company in respect of the liability that may accrue to the Company as a result of loss or losses under Policies reinsured by the Company pursuant to the LPTA. This Contract will not apply in respect of any insurance issued by the Company, either before or after the Closing Date, other than the LPTA.
ARTICLE 2
RETENTION AND LIMIT
The Reinsurer shall indemnify the Company for 100% of the amount, if any, by which the aggregate of the Company’s Ultimate Net Loss exceeds the Retention.  The Reinsurer’s aggregate limit of liability in the aggregate shall be $250 million. The liability of each person constituting the Reinsurer shall be limited to $250million multiplied by its share of the interest and liabilities of the Reinsurer, as specified in its Interest and Liabilities Contract. The liability of the persons constituting the Reinsurer is several only, and not joint and several.

-1-

ARTICLE 3
TERM
This Contract shall take effect on the Closing Date, and shall remain in effect until the Company has no further liability for Ultimate Net Loss under the LPTA.
ARTICLE 4
EXCLUSIONS
None.
ARTICLE 5
PREMIUM
The Company shall pay to the Reinsurer 
ARTICLE 6
DEFINITIONS
		
	A.
	1.    “Ultimate Net Loss” means “Losses”, as defined in the LPTA, paid by the Company or which the Company becomes liable to pay under or pursuant to the terms of the LPTA.

		
	2.
	Salvages and all recoveries (including amounts due from all reinsurances that inure to the benefit of this Contract, whether recovered or not), shall be first deducted from such loss to arrive at the amount of liability attaching hereunder.

		
	3.
	All salvages, recoveries or payments recovered or received subsequent to loss settlement hereunder shall be applied as if recovered or received prior to the aforesaid settlement, and all necessary adjustments shall be made by the parties hereto.

		
	4.
	The Company shall be deemed to be “liable to pay” a loss when a judgment has been rendered that the Company does not plan to appeal, and/or the Company has obtained a release, and/or the Company has accepted a proof of loss.

		
	5.
	Nothing in this clause shall be construed to mean that losses are not recoverable hereunder until the Company’s “Ultimate Net Loss” has been ascertained.

-2-

		
	B.
	“Policy” means any binder, policy, or contract of insurance or reinsurance issued, accepted or held covered provisionally or otherwise, which is the subject of the LPTA.

		
	C.
	“Retention” means the sum of the Company’s reserves for losses and unearned premium after giving effect to, and under the terms of, the LPTA as of the Closing Date.

		
	D.
	“LPTA” means the Loss Portfolio Transfer Agreement effective on the Closing Date among the Company (as Reinsurer) and the U.S. Insurers.

		
	E.
	“Closing Date” means the date of the closing of the transactions described in the Merger Agreement and the Master Agreements.

		
	F.
	“Merger Agreement” means the Agreement and Plan of Merger dated as of January 3, 2014 by and among Tower Group International, Ltd., ACP RE, Ltd., and London Acquisition Company Limited.

		
	G.
	“Master Agreements” means the Commercial Lines Master Agreement dated April __, 2014 between ACP Re, Ltd., and AmTrust Financial Services, Inc., as amended and the Personal Lines Master Agreement dated April __, 2014 between ACP Re, Ltd., and National General Holding Corp.

		
	H.
	“U.S. Insurers” mean Tower Insurance Company of New York, CastlePoint National Insurance Company, Tower National Insurance Company, Hermitage Insurance Company, CastlePoint Florida Insurance Company, Northeast Insurance Company, York Insurance Company of Maine, Massachusetts Homeland Insurance Company, Preserver Insurance Company, and CastlePoint Insurance Company.

ARTICLE 7
UNCOLLECTABILITY OF INURING REINSURANCE
This Contract applies to any loss that the Company is obligated to pay under the LPTA, including amounts payable by the Company as a result of the inability of the Company or the U.S. Insurers’ to collect from any reinsurer(s), whether specific or general, any amounts that may have become due from such reinsurer(s), whether such inability arises from the insolvency of such other reinsurer(s) or otherwise.
 ARTICLE 8
ORIGINAL CONDITIONS
All liability of the Reinsurer for Ultimate Net Loss under this Contract shall be subject to the same terms, conditions, waivers and interpretations, and to the same modifications and alterations as the 

-3-

liabilities of the Company under the LPTA.  However, in no event shall this be construed in any way to provide coverage outside the terms and conditions set forth in this Contract.
ARTICLE 9
NO THIRD PARTY RIGHTS
This Contract is solely between the Company and the Reinsurer, and in no instance shall any insured, claimant or other third party have any rights under this Contract except as may be expressly provided otherwise herein.
ARTICLE 10
NOTICE OF LOSS AND LOSS SETTLEMENTS
A.       The Company shall advise the Reinsurer promptly of adverse development that, in the opinion of the Company, may result in Ultimate Net Loss in the aggregate exceeding 90% of the Retention and of all subsequent developments thereto that may materially affect the position of the Reinsurer.
		
	B.
	As respects losses subject to this Contract, all loss settlements made by the U.S. Insurers and assumed by the Company, whether under strict Policy terms or by way of compromise, and any Extra Contractual Obligations and/or Loss in Excess of Policy Limits (as those terms are defined in the [LPTA]), shall be binding upon the Reinsurer, and the Reinsurer agrees to pay or allow, as the case may be, its share of each such settlement immediately upon receipt of proof of loss.

		
	C.
	Should the aggregate of the Company’s Ultimate Net Loss exceed, at any time, an amount equal to the Retention, all additional Ultimate Net Loss thereafter shall be paid by the Reinsurer, subject to the limits of liability stated in the Retention and Limit Article.  Any such payment shall be subject to adjustment in accordance with the terms of this Contract after the Reinsurer’s ultimate liability hereunder has been determined.

ARTICLE 11
CURRENCY
		
	A.
	Where the word “Dollars” and/or the sign “$” appear in this Contract, they shall mean United States Dollars, and all payments hereunder shall be in United States Dollars.

		
	B.
	For purposes of this Contract, where the Company receives premiums or pays losses in currencies other than United States Dollars, such premiums or losses shall be converted into 

-4-

United States Dollars at the actual rates of exchange at which these premiums or losses are entered in the Company’s books.
ARTICLE 12
TAXES
		
	A.
	In consideration of the terms under which this Contract is issued, the Company undertakes not to claim any deduction of the premium hereon when making tax returns, other than Income or Profits Tax returns, to any state or territory of the United States of America or to the District of Columbia.

		
	B.
	1.    Each Subscribing Reinsurer has agreed to allow, for the purpose of paying the Federal Excise Tax, the applicable percentage of the premium payable hereon (as imposed under the Internal Revenue Code) to the extent such premium is subject to Federal Excise Tax.

		
	2.
	In the event of any return of premium becoming due hereunder, the Subscribing Reinsurer shall deduct the applicable percentage of the premium from the amount of the return, and the Company or its agent should take steps to recover the Tax from the U.S. Government.

ARTICLE 13
ACCESS TO RECORDS
		
	A.
	The Reinsurer or its duly authorized representatives shall have the right to visit the offices of the Company to inspect, examine, audit, and verify any of the policy, accounting or claim files (“Records”) relating to business reinsured under this Contract during regular business hours after giving five working days’ prior notice.  This right shall be exercisable during the term of this Contract or after the expiration of this Contract.  Notwithstanding the above, the Reinsurer shall not have any right of access to the Records of the Company if it is not current in all undisputed payments due the Company.

		
	B.
	Notwithstanding the above, the Company reserves the right to withhold from the Reinsurer any Privileged Documents.  However, the Company shall permit and not object to the Reinsurer’s access to Privileged Documents in connection with the underlying claim reinsured hereunder following final settlement or final adjudication of the case or cases involving such claim, with prejudice against all claimants and all parties to such adjudications; the Company may defer release of such Privileged Documents if there are subrogation, contribution, or other third party actions with respect to that claim or case, and the Company’s defense might be jeopardized by release of such Privileged Documents.  In the event that the Company seeks to defer release of such Privileged Documents, it shall, in consultation with the Reinsurer, 

-5-

take other steps as reasonably necessary to provide the Reinsurer with the information it reasonably requires to indemnify the Company without causing a loss of such privileges or protections.  The Reinsurer shall not have access to Privileged Documents relating to any dispute between the Company and the Reinsurer.
		
	C.
	For purposes of this Article:

		
	1.
	“Privileged Documents” means any documents that are Attorney-Client Privilege Documents and/or Work Product Privilege Documents.

		
	2.
	“Attorney-Client Privilege Documents” means communications of a confidential nature between (a) the Company, or anyone retained by or at the direction of the Company, or its in‐house or outside legal counsel, or anyone in the control of such legal counsel, and (b) any in-house or outside legal counsel, if such communications relate to legal advice being sought by the Company and/or contain legal advice being provided to the Company.

		
	3.
	“Work Product Privilege Documents” means communications, written materials and tangible things prepared by or for in-house or outside counsel, or prepared by or for the Company, in anticipation of or in connection with litigation, arbitration, or other dispute resolution proceedings.

ARTICLE 14
CONFIDENTIALITY
		
	A.
	The Reinsurer hereby acknowledges that the documents, information and data provided to it by the Company, whether directly or through an authorized agent, in connection with the placement and execution of this Contract ("Confidential Information") are proprietary and confidential to the Company. Confidential Information shall not include documents, information or data that the Reinsurer can show:

		
	1.
	are publicly known or have become publicly known through no unauthorized act of the Reinsurer;

		
	2.
	have been rightfully received from a third person without obligation of confidentiality; or

		
	3.
	were known by the Reinsurer prior to the placement of this Contract without an obligation of confidentiality.

		
	B.
	Absent the written consent of the Company, the Reinsurer shall not disclose any Confidential Information to any third parties, including any affiliated companies, except:

-6-

		
	1.
	when required by retrocessionaires as respects business ceded in respect of this Contract;

		
	2.
	when required by regulators performing an audit of the Reinsurer’s records and/or financial condition; or

		
	3.
	when required by external auditors performing an audit of the Reinsurer’s records in the normal course of business.

Further, the Reinsurer agrees not to use any Confidential Information for any purpose not related to the performance of its obligations or enforcement of its rights under this Contract.
		
	C.
	Notwithstanding the above, in the event that the Reinsurer is required by court order, other legal process or any regulatory authority to release or disclose any or all of the Confidential Information, the Reinsurer agrees to provide the Company with written notice of same at least 10 days prior to such release or disclosure and to use its best efforts to assist the Company in maintaining the confidentiality provided for in this Article.

		
	D.
	The provisions of this Article shall extend to the officers, directors and employees of the Reinsurer and its affiliates, and shall be binding upon their successors and assigns.

ARTICLE 15
INDEMNIFICATION AND ERRORS AND OMISSIONS
		
	A.
	The Reinsurer is reinsuring, subject to the terms and conditions of this Contract, the obligations of the Company under any Policy.  The Company shall be the sole judge as to:

		
	1.
	what shall constitute a claim or loss covered under any Policy;

		
	2.
	the Company’s liability thereunder;

		
	3.
	the amount or amounts that it shall be proper for the Company to pay thereunder.

		
	B.
	The Reinsurer shall be bound by the judgment of the Company as to the obligation(s) and liability(ies) of the Company under any Policy.

		
	C.
	Any inadvertent error, omission or delay in complying with the terms and conditions of this Contract shall not be held to relieve either party hereto from any liability that would attach to it hereunder if such error, omission or delay had not been made, provided such error, omission or delay is rectified immediately upon discovery.

-7-

ARTICLE 16
INSOLVENCY
		
	A.
	In the event of the insolvency of the Company, this reinsurance (or the portion of any risk or obligation assumed by the Reinsurer, if required by applicable law) shall be payable directly to the Company, or to its liquidator, receiver, conservator or statutory successor, either:  (1) on the basis of the liability of the Company, or (2) on the basis of claims filed and allowed in the liquidation proceeding, whichever may be required by applicable statute, without diminution because of the insolvency of the Company or because the liquidator, receiver, conservator or statutory successor of the Company has failed to pay all or a portion of any claim.  It is agreed, however, that the liquidator, receiver, conservator or statutory successor of the Company shall give written notice to the Reinsurer of the pendency of a claim against the Company indicating the Policy or bond reinsured, which claim would involve a possible liability on the part of the Reinsurer within a reasonable time after such claim is filed in the conservation or liquidation proceeding or in the receivership, and that during the pendency of such claim, the Reinsurer may investigate such claim and interpose, at its own expense, in the proceeding where such claim is to be adjudicated any defense or defenses that it may deem available to the Company or its liquidator, receiver, conservator or statutory successor.  The expense thus incurred by the Reinsurer shall be chargeable, subject to the approval of the court, against the Company as part of the expense of conservation or liquidation to the extent of a pro rata share of the benefit that may accrue to the Company solely as a result of the defense undertaken by the Reinsurer.

		
	B.
	Where two or more reinsurers are involved in the same claim and a majority in interest elect to interpose defense to such claim, the expense shall be apportioned in accordance with the terms of this reinsurance Contract as though such expense had been incurred by the Company.

		
	C.
	As to all reinsurance made, ceded, renewed or otherwise becoming effective under this Contract, the reinsurance shall be payable as set forth above by the Reinsurer to the Company or to its liquidator, receiver, conservator or statutory successor, except (1) where the Contract specifically provides another payee in the event of the insolvency of the Company, or (2) where the Reinsurer, with the consent of the direct insured or insureds, has assumed such Policy obligations of the Company as direct obligations of the Reinsurer to the payees under such Policies and in substitution for the obligations of the Company to such payees. 

-8-

ARTICLE 17
GOVERNING LAW; JURISDICTION AND VENUE
This Contract shall be governed as to performance, administration and interpretation by the laws of Bermuda.  This Agreement shall be construed and interpreted according to the internal laws of Bermuda excluding any choice of law rules that may direct the application of the laws of another jurisdiction.  The Parties hereby stipulate that any action or other legal proceeding arising under or in connection with this Agreement may be commenced and prosecuted in its entirety in Bermuda, each Party hereby submitting to the personal jurisdiction thereof, and the Parties agree not to raise the objection that such courts are not a convenient forum.  

ARTICLE 18
ENTIRE AGREEMENT
This Contract, together with the Interest and Liabilities Contracts attached, sets forth all of the duties and obligations between the Company and the Reinsurer and supersedes any and all prior or contemporaneous written agreements with respect to matters referred to in this Contract.  This Contract may not be modified or changed except by an amendment to this Contract in writing signed by the Company and all persons constituting the Reinsurer.  However, this Article shall not be construed as limiting the admissibility of evidence regarding the formation, interpretation, purpose or intent of this Contract.
ARTICLE 19
NON-WAIVER
The failure of the Company or the Reinsurer to insist on compliance with this Contract or to exercise any right or remedy hereunder shall not constitute a waiver of any rights contained in this Contract nor prevent either party from thereafter demanding full and complete compliance nor prevent either party from exercising such remedy in the future.
ARTICLE 20
MODE OF EXECUTION
		
	A.
	This Contract may be executed by:

		
	1.
	an original written ink signature of paper documents;

-9-

		
	2.
	an exchange of facsimile copies showing the original written ink signature of paper documents;

		
	3.
	electronic signature technology employing computer software and a digital signature or digitizer pen pad to capture a person’s handwritten signature in such a manner that the signature is unique to the person signing, is under the sole control of the person signing, is capable of verification to authenticate the signature and is linked to the document signed in such a manner that if the data is changed, such signature is invalidated.

		
	B.
	The use of any one or a combination of these methods of execution shall constitute a legally binding and valid signing of this Contract.  This Contract may be executed in one or more counterparts, each of which, when duly executed, shall be deemed an original.

-10-

IN WITNESS WHEREOF, the Company has caused this Contract to be executed by its duly authorized representative(s) this _____day of __________, in the year of 2014.
CASTLEPOINT REINSURANCE COMPANY, LTD.

AGGREGATE STOP LOSS REINSURANCE CONTRACT

Interests and Liabilities Contract
(hereinafter referred to as the “Contract”)

of 

AmTrust International Insurance, Ltd.
(hereinafter referred to as the “Subscribing Reinsurer”)

with respect to the

Aggregate Stop Loss Reinsurance Contract
Effective: ________, 2014
(hereinafter referred to as the “Stop Loss Contract”)

Issued to

CastlePoint Reinsurance Company, Ltd.
Bermuda
(the “Company”)

		
	1.
	The Subscribing Reinsurer shall have a 50% share in the Interests and Liabilities of the Reinsurer (as defined in the Agreement) as set forth in the Stop Loss Contract attached hereto.

		
	2.
	This Contract shall be effective from the Closing Date, as defined in the Stop Loss Contract, and shall remain in effect until there is no further liability under the Stop Loss Contract.

		
	3.
	The share of the Subscribing Reinsurer in the interests and liability of the Reinsurer shall be several and not joint with the share of any other subscribing reinsurer.  In no event shall the Subscribing Reinsurer participate in the interests and liabilities of the other subscribing reinsurers.

		
	4.
	In the event that the Reinsurer becomes liable for the payment of Ultimate Net Loss in accordance with Article 10.C. of the Stop Loss Contract, the Company, on a monthly basis, provide the Subscribing Reinsurer such reports as the Company receives pursuant to the LPTA and the Subscribing Reinsurer shall pay to the Company such amounts for which it may be liabile under the terms and conditions of this Contract.

		
	5.
	All notices, requests, demands or other communications to the Reinsurer shall be given in writing and shall be delivered to the Subscribing Reinsurer by personal delivery, overnight mail by a reputable courier service or electronic mail (as provided by the Subscribing Reinsurer) as follows:

AmTrust International Insurance, Ltd.
7 Reid Street
Suite 400
Hamilton HM 11
Bermuda
Attention:  CFO
Tel: 441.444.4803

In Witness Whereof, the parties hereto by their duly authorized representatives have executed this Contract effective ______, 2014.  

CASTLEPOINT REINSURANCE COMPANY, LTD

BY:                                                 

ITS:                                                 

DATE:                                            

AMTRUST INTERNATIONAL INSURANCE, LTD

BY:                                                 
    
ITS:                                                 

DATE:                                            

Exhibit F
INVESTMENT MANAGEMENT AGREEMENT
THIS INVESTMENT MANAGEMENT AGREEMENT (this "Agreement") is effective the __ day of ____, 2014, by and between AII Insurance Management Limited ("Manager"), a Bermuda company and Tower Insurance Company of New York1 ("Company"), a New York property and casualty insurance company.
WITNESSETH
WHEREAS, ACP, AmTrust Financial Services, Inc., a Delaware corporation ("AmTrust"), and National General Holdings Corporation, a Delaware corporation ("National General") are entering into a series of agreements by which Seller has agreed to acquire Tower Group International, Ltd. ("Tower"), a Bermuda insurance holding company, which transacts commercial and personal lines insurance business in the United States through the subsidiaries of Tower set forth on Exhibit A hereto, including the Company, and, in connection therewith, AmTrust and National General have agreed to administer the run-off of Tower's legacy business, provide stop-loss coverage to CastlePoint Reinsurance Company, Ltd., a Bermuda corporation ("CP Re" and, collectively with ACP and the Companies, the "ACP Group"), with respect thereto, and, prospectively, manage and reinsure all business to be written by the Companies after the Effective Time;    
WHEREAS, Manager is duly licensed in Bermuda to engage in business as an insurance manager, in which capacity it also provides investment management services to related companies; and
WHEREAS, Company wishes to retain Manager to perform certain management and administrative services on its behalf and Manager wishes to provide such services.
NOW, THEREFORE, in consideration of their respective promises and covenants hereinafter set forth, Manager and Company agree as follows:
1.Investment Management Services
		
	(a)
	Manager shall perform the investment management services on behalf of Company in accordance with the investment policy and objectives (see Appendix I), which Company may amend from time to time on five business days prior written notice, and under any regulatory requirements that would be placed on those investments.    The Manager shall have the exclusive authority and responsibility to acquire, manage and dispose of Company's invested assets from time to time in its sole discretion, including the authority and power to enter into contracts binding on Company with respect thereto, and to:

		
	(i)
	establish, maintain and terminate discretionary and non-discretionary investment accounts with banks, brokers, dealers, investment advisers or other investment professionals ("Investment Service Providers"), provided, such Investment Service Providers maintain all required licenses, registrations, memberships and approvals required to perform the investment services being offered.  If Manager delegates any of its discretionary investment, advisory and other rights, powers and functions hereunder to any Investment Service Provider, Manage shall remain liable to the Company for its obligations hereunder.  References herein to Manager shall include, as the context may require, any of Manager's affiliates that are selected to manage assets under this Agreement.  

1 NTD: Each member of the ACP Group will have its own version of this agreement.

		
	(ii)
	purchase, hold, sell, write, exchange, transfer, and otherwise invest and trade in property of all kind, without limitation as detailed in the Company's investment policy and objectives as approved by the Company's board of directors.

		
	(iii)
	place orders for the execution of transactions with or through Investment Service Providers as the Manager may select, and allocate transactions to such Investment Service Providers for execution on such markets, at such prices and at such commission rates as in the Manager's good faith judgment are appropriate, taking into consideration in the selection of Investment Service Providers not only the available prices and rates of brokerage commission, but also the relevant factors (such as, without limitation, reliability, financial responsibility, strength of the broker or dealer and its ability to efficiently execute transactions, research and other services provided by such Investment Service Providers which are expected to enhance the Manager's general portfolio management capabilities, the value of the Manager's ongoing relationship with such Investment Service Providers or such other factors as the Manager may lawfully consider (subject to best execution; and

		
	(iv)
	vote proxies, grant consents solicited by or with respect to the issuers of securities in which assets of the Account may be invested from time to time, provided that Company reserves the right to exercise or direct the exercise of voting rights with respect to securities which are Account assets or grant its consent with respect to solicitations by or with respect to the issuers of such securities, in each case upon consultation with Company.

		
	(b)
	Compliance with Statutory Limitations.  

		
	(i)
	Notwithstanding anything in this Agreement to contrary, Manager’s discretion shall be subject to all applicable statutory and regulatory limitations applicable to the investment of assets by such Insurer.

		
	(ii)
	Notwithstanding anything in this Agreement to the contrary, this Agreement is not intended to and shall not transfer to Manager substantial control of the Company or any powers vested in its Board of Directors, its articles of incorporation or by-laws or substantially all of the basic function of such its management.  

		
	(c)
	Information and Reports: Monthly, the Manager shall provide Company a written report and inventory of Company's invested assets in a format approved by Company and such other reports and information as Company shall request.  

2.      Portfolio Transactions.
(a)    Manager may place orders for the execution of transactions for Company with or through Investment Service Providers as Manager may select.  Manager agrees that securities are to be purchased through such brokers as, in Manager's best judgment, shall offer the best combination of price and execution.  Manager, in seeking to obtain best execution of portfolio transactions for the Company, may consider the quality and reliability of brokerage services, as well as research and investment information and other services provided by brokers or dealers.  A broker or dealer that provides brokerage and research services to Manager may be paid an amount as commission for effecting a transaction in excess of the amount of commission that another broker or dealer would have charged for effecting that transaction, if Manager determines in good faith that such amount of commission is reasonable in relation to the value of the brokerage and research services provided by the broker or dealer.  These brokers and dealers may also assist Manager in rendering 

-2-

brokerage and research services to other clients, and not all such services will necessarily be used in connection with the Company.  In addition, where permitted by applicable legal and regulatory requirements, Manager or its affiliates may execute transactions on behalf of the Company.
(b)    Except with respect to investments in private placement, the Investors authorize Manager to, at Manager’s discretion, bunch or aggregate orders for the Accounts with orders of other clients and to allocate the aggregate amount of the investment among the Accounts and other accounts managed by Manager (including accounts in which Manager, its affiliates and/or their personnel have beneficial interests) in a manner in which is fair over time to the participating accounts.  When portfolio decisions are made on an aggregated basis, Manager may in its discretion, place a large order to purchase or sell a particular security for the Company and its Affiliate and the accounts of other clients.  Because of the prevailing trading activity, it is frequently not possible to receive the same price or execution on the entire volume of securities purchased or sold.  When this occurs, the various prices may be averaged and the Company will be charged or credited with the average price; and the effect of the aggregation may operate on some occasions to one or more Investor's disadvantage.  Although in such an instance the Company will be charged the average price, Manager will make the information regarding the actual transactions available to an Investor upon such Investor's request.  Neither Manager nor its affiliates, however, are required to bunch or aggregate orders, and, in connection with investments in private placements, may not bunch or aggregate orders.  In such cases, an Investor may not receive the average price on any given trade.
3.    Affiliated Brokerage; Principal Transactions
(a)    Subject to Manager's execution obligations described in Section 2 above, the Investors hereby authorize Manager, when determined by MAnager in its capacity of a fiduciary to be in the best interest of an Investor, to effect agency transactions and agency cross-transactions through affiliated broker-dealers.  Such transactions shall be effected at prevailing market levels in accordance with the procedures under Rule 17a-7(b) of the U.S. Investment Company Act of 1940 and other applicable law.  The Company at any time without penalty may terminate in whole or in part its authorization to effect such transactions by written notice to Manager.
(b)    When determined by Manager in its capacity as a fiduciary to be in the best interest of the Investors, Manager may effect transactions in which, acting for its own account or an account of its affiliate, Manager buys a security from, or sells a security to, the Company, with the Company’s consent after written disclosure by Manager to the Company of the transaction and the capacity in which Manager is acting before the completion of such transaction, in accordance with applicable regulatory requirements.
4.    Information and Reports 
Manager shall or shall direct the Investment Service Providers to provide to the Company copies of all account statements and account information with respect to accounts Manager establishes for the Company. Monthly, Manager shall provide the Company an account statement and such other reports and information as the Company shall request.  Valuation levels for the assets listed in the written report and inventory will reflect Manager's good faith effort to ascertain fair market levels (including accrued income, if any) for the securities and other assets in the Account based on pricing and valuation information believed by Manager to be reliable for round lot sizes.  Then current exchange rates will be applied in valuing holdings in foreign currency.
5.     Custody
Custody of the cash and assets shall be held by a custodian (the "Custodian") appointed by the Company, pursuant to a separate custody agreement or by the Company.  The Custodian must be a qualified 

-3-

custodian as defined in Section 206(4)-2 of the Investment Advisers Act of 1940, as amended (the "Advisers Act").  The Company authorizes Manager to give Custodian instructions for the purchase, sale, conversion, redemption, exchange or retention of any security, cash or cash equivalents or other investment.  Exclusive responsibility for the custody and safekeeping of the Company’s assets shall remain with the Custodian, and MANAGER and its affiliates shall not have custody or physical control of the assets and cash in the Accounts.  Manager shall provide the Custodian with such documents and information, including certification of Manager's duly authorized representatives, as the Custodian may reasonably request.  All directions given by Manager to the Custodian shall be in writing, and signed by an authorized representative of Manager; provided, however, that the Custodian may accept oral directions from Manager, subject to confirmation in writing.  The Company will give Manager reasonable prior notice of any change the Custodian, together with the name and other relevant information with respect to the new Custodian.
6.    Compensation and Reimbursement of Expenses
(a)    For Investment Management Services performed by Manager pursuant to this Agreement, within 30 days of the end of each calendar quarter, Company shall pay to Manager an amount equal to (i) an annual rate of 0.05% of the average value of the Company's invested assets for the preceding calendar quarter if the average value of the such assets for the quarter was $1 billion or less or (ii) an annual rate of 0.0375% of the average value of the Company's invested assets for the preceding calendar quarter if the average value of such assets for the quarter was greater than $1 billion.  For the purposes of this Section 2(b), the average value of the Company's invested assets shall include all assets managed by Manager for the ACP Group, but not assets which are not actively managed by Manager, including, without limitation, investments in affiliates and certain loans made by the Company Group.
(b)    Company shall reimburse manager for the payment of expenses advanced by manager on behalf of Company.
(c)    Manager shall be responsible for all expenses incurred in connection with the provision of the services hereunder for such items as salaries, benefits, consultants, legal services, accounting services, general overhead, including, but not limited to, office supplies, postage, telephone, and courier services.
7.    Term and Termination
(a)    This Agreement shall remain in effect for a period of one year from the Effective Date (the "Initial Term").  Thereafter, this Agreement shall automatically renew for successive one year terms unless (i) Company or Manager provides notice thirty (30) days prior to the end of a term of its intent not to renew, or (ii) this Agreement is terminated pursuant to Sections 3(b) or 3(c) below.
(b)    Company may terminate this Agreement immediately, upon written notice, upon the occurrence of the following events:
		
	(i)
	Manager fails to comply with any term or condition of this Agreement, or for whatever reason, does not commence fulfillment of duties provided in this Agreement, or once having commenced its duties, engages in neglect of its duties and obligations hereunder, fails or refuses to act to carry out its duties and obligations hereunder;

		
	(ii)
	Manager is sold, undergoes a material change in ownership, in its capital participation or control, change in management, board of directors, officers or key personnel or causes to be sold, transferred or pledged all or substantially all of its stock or assets to a third party; or

-4-

		
	(iii)
	Manager suffers the loss, suspension or revocation of any license or certificate of authority from any regulatory body that is material to the performance of its duties and obligations herein, or such license becomes invalid or expires and is not renewed without any lapse.

(c)    The Manager may terminate this Agreement immediately, upon written notice, in the event that Company is sold, undergoes a material change in ownership, in its capital participation or control, change in management, board of directors, officers or key personnel or causes to be sold, transferred or pledged all or substantially all of its stock or assets to a third party.
		
	(d)
	Upon termination, the Manager shall be entitled to all fees through the termination date.

8.    Confidentiality
It is understood and agreed that all information pertaining to Company, whether developed by Manager or Company, is the sole and exclusive property of Company ("Proprietary Information"). Manager shall maintain the confidentiality of the Proprietary Information and upon termination of this Agreement shall return or destroy all Proprietary Information as directed by Company.  It is further understood and agreed that all of Company's files and records shall be made available only to inspection by directors, officers and employees of Manager, the directors, officers, employees and independent auditors of Company, and anyone properly authorized in writing by Company.
		
	9.
	Choice of Law

This Agreement shall be governed and construed by the laws of the State of New YorkrEach party submits to the jurisdiction of the federal and state courts located in the State of New York, which shall be the exclusive forum for adjudicating any dispute based on, arising out of, or in connection with this Agreement
10.    Assignment
No assignment of this Agreement shall be made by any party.  
11.    Notices
All notices, requests, demands and other communications under this Agreement shall be in writing and delivered in person, by fax, e-mail, recognized overnight courier, or certified mail, postage prepaid and properly addressed as follows
To the Company:
120 Broadway
New York, NY 10271
Attention:  William E. Hitselberger
Facsimile:  (212) 655-2067
E-mail: bhitselberger@twrgrp.com
To Manager:
AII Insurance Management Limited
7 Reid Street, Suite
Hamilton HM 11
Attention: Chris Souter

-5-

Fax No.:

12.    General Control
Notwithstanding any other provision of this Agreement, the Insurers shall have ultimate control and responsibility of the functions delegated to AIM under this Agreement.  The Insurers shall own and have custody of their general corporate accounts and records.
13.    Amendments
This Agreement shall not be amended, modified or terminated except (i) by a writing signed by all parties hereto or their respective successors, and (ii) with the prior approval of the relevant regulatory authorities.

-6-

IN WITNESS WHEREOF, the parties have caused this Agreement to be executed as of the Effective Date.

ACP Re Ltd.
By:                        
Name:                         
Its:                         

AII Insurance Management Limited
By:                        
Name:                         
Its:                         

Appendix I
ACP Re Ltd. 
"Investment Policy and Objectives"  

-1-

ACP Re Ltd. ("COMPANY")
Investment Policy and Objectives

I.    Policy Identification Information
This policy to be approved by Company's Board of Directors
II.    Investment Policy
To maximize investment income and total investment returns subject to an acceptable level of risk.
III.    Investment Committee
Company has established an Investment Committee which will consist of a minimum of three members who are approved by the Board of Directors, which is responsible for monitoring compliance with this Policy, approving certain investments in accordance with this Policy, making impairment evaluations in accordance with Company's Impairment Policy (Schedule 1), regularly evaluating the effectiveness of the Policy in meeting Company's Investment Objectives and the appropriateness of the Investment Objectives and presenting recommendations to the Board of Directors regarding changes to the Policy which result from such evaluations.
IV.    Investment Objectives
		
	a)
	Safety of principal;

		
	b)
	Maximize yield and growth;

		
	c)
	Stability of value—utilization of appropriate risk management techniques; higher levels of risk and fluctuations in asset value must be compensated by a commensurate increase in return;

		
	d)
	Appropriate level of liquidity;

		
	e)
	Proper diversification with respect to types of investments, geographical area, industry, maturity and individual exposures; and,

		
	f)
	Maintenance of an appropriate relationship between assets and liabilities regarding term and nature.

V.    Investment Guidelines
Investment portfolios will be divided as follows:
Debt Obligations and Sinking Fund Preferred Stock—A minimum of 30% invested assets must be maintained in debt obligations or sinking fund preferred stock rated, at time of purchase, investment grade by Standard & Poors, Moody's Investor Service or Finch.

-2-

Other Investments—Up to a maximum of 30% of invested assets may be maintained in high yield bonds, bank debt, common stock or other equity related securities, preferred stock, perpetual preferred stock, defaulted securities, direct debt obligations, put and call options, warrants and swaps.  
VI.    Debt Obligations and Sinking Fund Preferred Stock Portfolio
a)    Eligible Assets 
Debt obligations include U.S. Government and agency obligations, corporate bonds, taxable and tax exempt municipal securities, cash and money market instruments (including repurchase agreements) and mortgage backed securities, collateralized mortgage obligations (CMO's), and asset-backed securities, which otherwise meet requirements set forth in this section.
Preferred stock with mandatory sinking fund provision.
All securities must be rated BBB- and/or Baa3 of higher by Standard and Poors or Moody's Investor Service.
Short term investments shall be rated A2/P2.  Repurchase Agreement counterparties shall be rated A2/P2.
b)    Individual Exposure
Limitation on the dollar amount of investment in any one issue of debt securities by rating category are as follows:
	
			
	Rating
	Limit per Issuer
	Limit by Rating

	AAA
	None
	None

	AA
	10% of capital
	None

	A
	10% of capital
	None

	BBB
	5% of capital
	30% of Debt Portfolio

The foregoing limits do not apply to securities issued by the U.S. Treasury or guaranteed for timely payment of principal and interest by the U.S. Treasury or a government sponsored agency.
c)    Private Placements
All private placements are to be rated pursuant to the above quality/rating and limit per issuer guidelines.  
Investment in private placements, including securities issues pursuant to Rule 144A which do not have registration requirements, will be limited to 25% of invested assets.

-3-

d)    Credit Downgrade
Any security that is downgraded below investment grade, or below NAIC 2 will be carried in Other Investment portion of the portfolio.
VII.       Other Investment Portfolio
Investment is permitted in the following asset classes up to 30% of invested assets.  Investment in any individual security in the Other Investment Portfolio will be limited to $25,000,000.
		
	•
	High yield bonds

		
	•
	Bank debt

		
	•
	Common stock

		
	•
	Other equity related investments, including partnerships

		
	•
	Preferred stock

		
	•
	Perpetual preferred stock

		
	•
	Defaulted securities

		
	•
	Direct debt obligations

		
	•
	Put and call options

		
	•
	Warrants

		
	•
	Swaps

VIII.    Investment Authority
The limitations provided for herein do not apply to investments in affiliates and where Company funds are deemed to be in excess of the security required to be provided under Company's reinsurance agreement(s). 
All investments must comply with any specific underwriting guidelines or investment restrictions under which Company has been placed as a result of entering into any legally binding contracts.
The purchase or sale of (a) any equity interest in excess of $5 million in any issuer, or (b) any debt securities in excess of $20 million issued by an issuer, in a single transaction or series of transactions must be approved by the Investment Committee.
Except as set forth herein, final authority and responsibility for all investment decisions rests with the Chief Financial Officer of Company.   

-4-

Schedule I
ACP Re Ltd. 
"Impairment Policy"  

-5-

ACP Re Ltd. (the "COMPANY")
INVESTMENT SECURITIES IMPAIRMENT POLICY
Statement of Financial Accounting Standards No. 115 (FAS 115) requires that an enterprise recognize an impairment of a debt or equity security that is classified as available for sale or held to maturity if the impairment is other than temporary.  Impairment occurs when the fair value of the security is less than its amortized cost basis.   
The determination of whether impairment is other than temporary is dependent on numerous factors, such as:
The length of time and the extent to which fair value has been less than cost;
The financial condition and near term prospects of the issuer, including any specific events that may influence the operations of the issuer; and
The intent and ability of Company to retain its investment for a period of time sufficient to allow for any anticipated recovery in fair value.
The policy of ACP Re Ltd. ("Company") regarding recognition of other than temporary impairments, which was adopted by the Board of Directors as of March 2012, is set forth below.
I.    Periodic Review
Each quarter, the Investment Committee shall, based on the criteria and guidelines set forth herein:
(a) Evaluate each security which has an unrealized loss as of the end of the quarter for other than temporary impairment and (b) determine the fair value of any security so impaired.
The Investment Committee shall establish an "Impairment Watch List" for securities which meet certain objective quantitative criteria and qualitative criteria, such as:
(i)    Quantitative Criteria
		
	•
	NAIC downgrading to 5 or 6

		
	•
	Market value vs. book value variances (as noted below in II (b), (c) and (d))

(ii)    Qualitative Criteria
		
	•
	Trends in the market

		
	•
	The issuer's capital strength

		
	•
	Any adverse regulatory agreements/rulings

		
	•
	Missed interest or dividend payments

		
	•
	Restructuring

		
	•
	Credit agency downgrading

		
	•
	Poor earnings reports

-6-

The list of criteria is not intended to be exhaustive.  Any information which is relevant to the realizable value of the security should be considered.
II.    Guidelines
Company shall apply the following guidelines in connection with its evaluation of the relevant criteria:
		
	a.
	Subject to paragraph (g), impairment shall be recognized if the issuer has filed a proceeding under Chapter 11 under the United States Bankruptcy Code ("Chapter 11"), except where the investment was made in contemplation of the commencement of the Chapter 11 proceeding.

Subject to paragraphs (c) and (g), impairment shall be recognized if the fair value of the security is 35% below its amortized cost basis and it has been in a loss position for 18 months or more.
Subject to paragraph (g), with respect to securities issued by an issuer with a market capitalization of $1 billion or more, impairment shall be recognized if the value of the security is 25% below its amortized cost basis and it has been in a loss position for 18 months or more.
Company utilizes short sales as a hedge against the market (as opposed to its investment portfolio).  Impairment of a "short" position in a security shall be recognized if the position has been in a loss position for 24 months or more and the fair market value of the security is greater than the "short" position by 40% or more.  
If the qualitative criteria set forth above indicate the need to record an impairment loss earlier than the time frames noted in paragraphs (b), (c) and (d) above, impairment will be recognized as soon as those conditions are identified.  
If a decision is made to sell in the near future a security which meets the criteria noted in paragraphs (b), (c), and (d) above, an impairment loss will be immediately recognized.
Notwithstanding paragraphs (a), (b), (c) and (d) above, Company need not record an impairment loss if the Investment Committee otherwise determines that there is a reasonable expectation that the security will recover its value within a reasonable time.

-7-

Exhibit G
COMMERCIAL LINES BILL OF SALE AND ASSIGNMENT AND ASSUMPTION AGREEMENT
This COMMERCIAL LINES BILL OF SALE AND ASSIGNMENT AND ASSUMPTION AGREEMENT (this "Bill of Sale") is made and entered into as of _________, 2014, by and among ACP Re, Ltd., a Bermuda corporation ("ACP Re"), the Acquired Affiliates (as defined below), who are signatories hereto as Sellers (collectively with ACP Re, the "Sellers" and each one, individually, a "Seller") and AmTrust Financial Services, Inc., a Delaware corporation ("AmTrust").  Capitalized terms not otherwise defined herein have the meaning ascribed thereto in the Master Agreement (as defined below).    
WHEREAS, ACP Re, AmTrust and National General Holdings Corporation, a Delaware corporation ("National General"), are jointly entering into a series of related agreements for the purpose of acquiring Tower Group International, Ltd. ("Tower"), a Bermuda insurance holding company which transacts commercial and personal lines insurance business in the United States through 15 insurance company Subsidiaries and other non-insurance company Subsidiaries (collectively the "Acquired Affiliates"), including the Subsidiaries of ACP Re that are parties hereto;
WHEREAS, in connection with that certain Commercial Lines Master Agreement, dated as of ______, 2014, by and between ACP Re and the AmTrust (the "Master Agreement"), AmTrust is acquiring the assets listed on Exhibit A attached hereto (the "Purchased Assets"); and
WHEREAS, from and after the date hereof, AmTrust is assuming all liabilities and obligations described on Exhibit A (the "Assumed Liabilities").
NOW, THEREFORE, for good and valuable consideration paid by AmTrust to Sellers as of the date of this Bill of Sale, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:
Sellers, by this Bill of Sale, do hereby convey, grant, bargain, sell, transfer, set over, assign, alienate, remise, release, deliver and confirm all of Sellers' right, title, interest in and to the Purchased Assets as of the close of business on the date hereof unto AmTrust, its successors and assigns, to have and to hold, all and singular, forever.
THE PARTIES FURTHER COVENANT AND AGREE AS FOLLOWS:
		
	1.
	For value received, Sellers hereby assign, and AmTrust hereby assumes and agrees to perform and discharge, all rights under the Assumed Liabilities on and after the Transaction Closing Date (as defined in the Master Agreement).

		
	2.
	This Bill of Sale shall not constitute an assignment in whole or in part of any Purchased Asset or Assumed Liability if an attempted assignment of such Purchased Asset or Assumed Liability without the consent of any other party thereto or with an interest therein would constitute a breach thereof or in any way affect the rights of Sellers or AmTrust thereunder or be contrary to applicable law.  If any such consent is not obtained with respect to any such Purchased Asset or Assumed Liability, then the Sellers or AmTrust and their successors and assigns, as applicable, shall act as AmTrust's agent or Sellers' agent, as applicable, 

-1-

in order to obtain for AmTrust or Sellers and their successors and assigns, as applicable, the benefits thereunder.
		
	3.
	Upon written notice delivered to ACP Re and National General within ninety (90) days following the Transaction Closing Date, AmTrust may elect to acquire any assets of ACP Re or the Acquired Affiliates that are reasonably required to conduct the Commercial Lines Business and that are not included among the Purchased Assets (the "Post-Closing Purchased Assets") for no additional consideration.  If within ten (10) days following National General's and ACP's receipt of such notice, neither National General nor ACP Re has objected to the acquisition of all or any of such Post-Closing Purchased Assets, ACP Re shall transfer the Post-Closing Purchased Assets as to which no objection shall have been made to AmTrust.  If National General or ACP Re provides such written objection, ACP Re, National General and AmTrust shall negotiate in good faith to coordinate the transfer or retention of such Post-Closing Purchased Assets among themselves.  If an agreement as to the transfer or retention of any of such Post-Closing Purchased Assets is reached, ACP Re shall transfer such Post-Closing Purchased Assets in accordance with such agreement.  If within thirty (30) days of the delivery of any such objection, ACP Re, National General and AmTrust shall have failed to reach an agreement with respect to the transfer or retention of any of such Post-Closing Purchased Assets to which such objection is related, ACP Re, AmTrust and National General shall enter mediation.  In the event pursuant to such mediation the ACP Re, National General and AmTrust shall reach an agreement as the transfer or retention of such Post-Closing Purchased Assets, ACP Re shall transfer such Post-Closing Purchased Assets in accordance with such agreement. 

		
	4.
	From time to time following the Transaction Closing Date, AmTrust may elect to assume any or all of the real or personal property leases to which any Company or ACP is a party that are reasonably necessary for the Commercial Lines Business.  Upon any such assumption, AmTrust and the applicable Seller or Sellers will enter into assignment and assumption agreements in respect to such leases, on terms reasonably acceptable to the parties thereto.   

		
	5.
	This Bill of Sale is given pursuant to the provisions of the Master Agreement, and, except as herein otherwise provided, the transfer of the Purchased Assets hereunder is made subject to the terms and provisions of the Master Agreement.

		
	6.
	This Bill of Sale shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns and shall not be relied upon, or inure to the benefit of, any other party.

		
	7.
	Any notice, request or other document to be given hereunder or in connection herewith to any party hereto shall be given in the manner described in the Master Agreement.

		
	8.
	This Bill of Sale shall be governed by, and construed in accordance with, the laws of the State of New York.

[Signature Page Follows]

-2-

IN WITNESS WHEREOF, each of the parties by their respective duly authorized officers has caused this Bill of Sale to be executed as of the date first above written.

AMTRUST FINANCIAL SERVICES, INC.
By: ________________________________
Name:     
Title:    
Sellers:
ACP RE, LTD.
By:  ______________________________
Name:
Title:     
TOWER INSURANCE COMPANY OF NEW YORK 
By: ________________________________
Name:     
Title:    
CASTLEPOINT NATIONAL INSURANCE COMPANY 
By: ________________________________
Name:     
Title:    
TOWER NATIONAL INSURANCE COMPANY
By: ________________________________
Name:     
Title:    

Signature Page to Bill of Sale 

HERMITAGE INSURANCE COMPANY
By: ________________________________
Name:     
Title:    
CASTLEPOINT FLORIDA INSURANCE COMPANY 
By: ________________________________
Name:     
Title:    
NORTH EAST INSURANCE COMPANY 
By: ________________________________
Name:     
Title:    
Acknowledged and agreed to:
NATIONAL GENERAL HOLDINGS CORPORATION
By:  ______________________________
Name:     
Title:     

Signature Page to Bill of Sale 

Exhibit A
Purchased Assets and Assumed Liabilities
Purchased Assets:
[List Purchased Assets]

Assumed Liabilities:
[Describe any obligations under contracts being assigned to AmTrust]

EXHIBIT H

Tower Companies
		
	1.
	CastlePoint National Insurance Company, an insurance company organized under the laws of Illinois;

		
	2.
	North East Insurance Company, an insurance company organized under the laws of Maine;

		
	3.
	Preserver Insurance Company, an insurance company organized under the laws of New Jersey; 

		
	4.
	York Insurance Company of Maine, an insurance company organized under the laws of Maine;

		
	5.
	Massachusetts Homeland Insurance Company, an insurance company organized under the laws of Massachusetts; 

		
	6.
	Tower Insurance Company of New York, an insurance company organized under the laws of New York; 

		
	7.
	Tower National Insurance Company, an insurance company organized under the laws of Massachusetts; 

		
	8.
	Hermitage Insurance Company, an insurance company organized under the laws of New York; 

		
	9.
	CastlePoint Florida Insurance Company, an insurance company organized under the laws of Florida; and

		
	10.
	CastlePoint Insurance Company, a New York property and casualty insurance company.

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00234-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00234-of-00352.parquet"}]]